“How do you accelerate a sector that doesn’t have to move?”
That rhetorical question is posed by Jenifer Swallow, Executive Director of the United Kingdom’s Lawtech Delivery Panel as we discuss the thinking behind a new legal services research and development initiative aimed at speeding up the development and deployment of new technologies and solutions in the sector.
As Swallow – herself a lawyer – acknowledges, the procurement processes of the legal profession can run very, very slowly and cautiously. Lawyers and those who work within the industry have their own tried, trusted and well-regulated practices. Consequently, there may be a certain reluctance to engage with innovators.
And yet, significant amounts of investor cash are being pumped into U.K. Lawtech ventures. According to figures drawn from analysts Beauhurst and Dealroom and cited by Tech Nation, £290 million was invested last year – three times higher than in 2018
Arguably, that level of investment reflects a perception, that technology has the potential to bring about some major changes in the way that legal services are delivered. “It’s not just about technologies that create efficiencies,” says Swallow. “There is also scope to do something more disruptive.”
Lawtech doesn’t quite enjoy the media profile of, say, fintech but there are significant opportunities to deliver technology-driven innovation. As Swallow points out, the sector contributes £35 billion to the economy annually. Good news for lawyers, but perhaps not so great for small and medium-sized businesses who pay a lot to access legal services. So there is, therefore, scope for the sector to make the sort of improvements that will deliver a better deal to clients. That is, of course, assuming that lawtech ventures are given a chance to prove the utility of their solutions.
So, this week, Britain’s Ministry of Justice, the LawTech Delivery Panel and Tech Nation – a government-sponsored body created to support the digital economy – have jointly announced plans for the creation of an R&D sandbox. A place where new concepts can be tested in a regulatory compliant environment.
The inspiration for the sandbox came in part from a similar exercise carried out by the Financial Conduct Authority (FCA) in 2015 to allow financial technology companies to test ideas. It’s an initiative that has played a role in driving the success of Britain’s fintech sector.
So what can we expect from the Lawtech Sandbox? Well, it is early days. Over the next few months, work will be carried out to prove the concept and if all goes well, the delivery partners will invite interested parties – including startups – to get involved.
An early priority is the establishment of an SME Dispute Resolution Platform to help address the £11.6 billion paid in litigation fees paid annually by small companies and the £50 billion issue of late payments. “We want to focus on SME access to legal services,” says Swallow. In parallel, there are plans to create a lawtech “hub” and training center.
At this stage, it isn’t possible to say exactly what type of solutions will be developed within the sandbox. However, Swallow sees scope for digitization in a number of key areas, such as machine learning-enhanced due diligence and proactive (as opposed to reactive) risk control. However, she is keen not to be prescriptive.
“What I would expect to see is a rising tide of small boats,” she says.
As Swallow sees it, the sandbox is being established at a time when the legal services market is poised for transformation. “I feel the landscape is going to change on an ongoing basis – driven by global developments, politics and the pandemic,” she says. At the same time, however, the development of lawtech is often hampered by legal and compliance issues. If all goes according to plan. The sandbox initiative should help innovators to test their concepts in a regulator-friendly environment.
Article courtesy of Trevor Clawson, Forbes, 22 May 2020