formatting toolbar in document editing app

I'm working on an web app (not mobile) which allows the creation and collaboration of legal documents. The business owner wants to have a fixed toolbar as per this editing tool I'm using to write this question or as per word etc.

I personally like the way Medium works in that you have to highlight the text you want to edit and then it brings up mini toolbar just above the text.

What do you think works best from a UX perspective?

Thanks

Dan