What Is Legal Tech, and What to Check Before Using It

Legal tech is software used to create, sign, manage, research or review legal documents and processes: e-signature platforms, contract management systems, document automation, legal research tools and AI that drafts or reviews contracts. For a business, it can shorten the time from draft to signature and make obligations easier to track. Before you rely on a tool, check four things: that its signatures and records are valid for the documents you use it for, where your data goes and who can see it, how accurate its AI output is, and which AI rules apply to you.

What is legal tech?

Legal tech covers any technology that supports legal work. The categories a business is most likely to use, and the main thing to check for each:

Category	What it does for a business	Main check
E-signatures	Signing contracts remotely, with an audit trail	Is an electronic signature valid for this document and country?
Contract management	Storing contracts, tracking dates, renewals and obligations	Access control, retention, data location
Document automation	Generating NDAs, employment contracts, terms from templates	Are the templates right for your governing law and up to date?
AI drafting and review	Summarising contracts, flagging unusual clauses, suggesting wording	Accuracy, confidentiality of what you upload, human review
Legal research	Searching legislation and case law	Does it cite real, current sources you can open?
Online dispute resolution	Negotiation, mediation or arbitration online	Is the outcome binding and enforceable where you need it?

Are electronic signatures legally binding?

Generally yes for commercial contracts, but not for every document. Check the rules of the country whose law governs the document.

United States: a signature, contract or record relating to a transaction in or affecting interstate or foreign commerce may not be denied legal effect solely because it is electronic (15 U.S.C. § 7001). Exceptions include wills, family-law matters such as adoption and divorce, court documents and certain notices (§ 7003).
European Union: an electronic signature may not be denied legal effect or admissibility as evidence solely because it is electronic; a qualified electronic signature has the same legal effect as a handwritten signature and is recognised in all Member States (eIDAS, Art. 25).

A simple click-to-sign is usually enough for routine commercial agreements. Where a document must be notarised, registered or used before an authority abroad, check whether a qualified signature, a wet-ink signature or a further certification is required. Our article on getting Taiwanese documents accepted abroad explains one such route.

What data protection checks apply to legal tech tools?

Treat a legal tech vendor like any service provider that handles your confidential and personal data, and put the terms in writing before you upload anything.

Data-processing contract (EU): when a vendor processes personal data on your behalf, the GDPR requires a binding contract that sets out the subject matter, duration, nature and purpose of the processing, and requires the vendor to act only on your documented instructions (GDPR, Art. 28(3)). The vendor may not use other sub-processors without your authorisation (Art. 28(2)).
Scope: the GDPR can apply even if your business is outside the EU, for example when you offer goods or services to people in the EU (Art. 3). Contracts usually contain personal data about signatories, employees and customers.
Confidentiality: check whether the vendor uses your uploads to train its models, how long it keeps them, where they are stored, who at the vendor can access them, and how you get them back or deleted when you leave.
Professional secrecy: if your lawyers or advisers use the tool on your matters, ask how they protect privileged and confidential material.

Can you rely on AI for contract review or legal research?

Use it as a first pass, not as the final answer. AI tools can summarise a contract and flag unusual clauses quickly, but they can also be confidently wrong.

The High Court of England and Wales put it plainly in June 2025: freely available generative AI tools “are not capable of conducting reliable legal research”; they “may cite sources that do not exist” or quote passages that are not in the source. Lawyers who use them must check the results against authoritative sources, such as official legislation and judgment databases, before relying on them (Ayinde v London Borough of Haringey, [2025] EWHC 1383 (Admin)).

The same discipline works for a business:

Know what the tool was asked: the contract, your role in the deal and what matters to you.
Check every legal statement and citation against the contract text and an official source.
Have a person decide: which risks to accept, what to negotiate and whether to sign.
Keep a record of what the tool flagged and what was decided.

For contracts that matter, our contract review service gives you a person’s reading of the risks in plain language with suggested changes.

Does the EU AI Act apply to legal tech your business uses?

Partly. The AI Act regulates both providers of AI systems and businesses that use them (“deployers”), with obligations phased in over several years (Regulation (EU) 2024/1689, Art. 113). It was amended by the Digital Omnibus on AI, published on 24 July 2026 and in force from 27 July 2026 (Regulation (EU) 2026/1744).

Rule	Applies from	What it means for a business using legal tech
Prohibited AI practices and AI literacy (Chapters I–II)	2 February 2025 (prohibitions added in 2026 apply from 2 December 2026)	Providers and deployers must take measures to support the AI literacy of staff who operate or use AI systems (Art. 4, as replaced in 2026)
General-purpose AI model rules	2 August 2025	Obligations fall mainly on the model providers
General application, including transparency duties (Art. 50)	2 August 2026	For example, people interacting with an AI system such as a chatbot must be told so, unless it is obvious
High-risk AI systems listed in Annex III	2 December 2027 (postponed from 2 August 2026)	Includes AI used by or for courts and in alternative dispute resolution to research and apply the law, and AI used in recruitment and employment decisions
High-risk AI in products covered by Annex I	2 August 2028	Mostly regulated products, not legal tools

Contract drafting and review tools that a business uses for its own deals are not, as such, on the Annex III list. Using AI to screen job applicants or decide on employees is, so check HR tools separately. Outside the EU, AI rules differ by country.

Frequently asked questions

Does legal tech replace a lawyer?

No. It can speed up routine steps such as drafting from templates, tracking deadlines and flagging clauses, but deciding what a contract means for your business, and what to accept, still needs a qualified person.

What should be in a contract with a legal tech vendor?

Data-processing terms, confidentiality, security measures, whether your data is used for training, data location, sub-processors, retention and deletion, service levels and how you export your data when you leave.

Is a scanned signature the same as an electronic signature?

It is one form of electronic signature, but it can be harder to prove who applied it. Platforms that record identity checks and an audit trail give better evidence, and some documents need a qualified electronic signature or a wet-ink original.