In the ever-increasingly competitive legal market place, the role of lawtech in enabling smaller businesses to access effective and efficient advice and representation has perhaps never been so important. Unsurprisingly, it’s the smaller firms who risk being left behind – these are the firms with fewer resources to throw at the latest lawtech and innovation.

Research

The regulator recently published the results of major research carried out on its behalf by the University of Oxford. It follows an independent study into innovation in the legal sector, which the SRA commissioned to “increase its understanding” of innovation and tech in legal services and identify areas in which it could “support progress”.

The study attracted almost 900 survey responses from firms regulated by the Solicitors Regulation Authority and involved interviews with 50-plus organisations from the legal and tech sectors (and others).

The research revealed that law firms most likely to innovate are new firms (five years or younger), ABS and firms servicing larger corporate clients. Those not currently innovating said they were uncertain of the business benefits (36%), it was not seen as a priority (31%) – and concerningly, more than a quarter (27%) did not see the need for tech or innovation in their business.

While most of the firms surveyed were using technology in their delivery of legal services, the gap between large and small firms widened dramatically when researchers delved into specific areas. The results revealed:

87% of firms were using video conferencing to meet clients and two-thirds (66%) were storing data in the cloud.
The use of technology was found to be highest among younger firms
37% of law firms said they were currently using advanced tech such as automated documents, interactive websites and artificial intelligence - with a further 24% planning to do so in the future
Fewer than 2% of advertisements for solicitors mentioned lawtech skill requirements but up to 15% of jobs in other legal settings did mention lawtech skill requirements

Small firms

While the use of some tech has soared during the covid-19 pandemic, the research identified that money was the key obstacle for small firms. Other common barriers beyond affordability included a lack of inhouse technology skills, uncertainty over the business benefits from making an investment and regulatory uncertainty around the risks of using tech.

It also found that the development of bespoke legal technology was largely focused on advances benefiting larger corporate clients. As Mari Sako, professor of management studies at the University of Oxford and project lead for this research, commented: “Benefits from legal technology are not evenly distributed across different market segments”.

The researchers identified three particular areas of importance as a result of the findings:

Greater support and co-ordination among government, regulators and tech developers – especially in terms of encouraging innovation and identifying funding paths
Increasing public and law firm trust in new approaches and technologies
Increasing the technological and innovation skills and knowledge bases within the legal sector.

The SRA says it welcomes the report’s findings but acknowledged that it needs to do more consumer research in this area. But what of the costs of lawtech? The regulatory also noted that for many firms the best opportunities will come from “embracing simpler, more common or generic technology”.

“We will therefore look into how we can challenge this perception by collating and sharing information on the typical costs of common technologies and innovations”, it said.