Features & Analysis

How lawtech is a catalyst for change in the legal profession

As we all know, the UK recently made waves by announcing the first ever digitally-focused trade agreement signed by a European nation, through the Digital Economy Agreement (DEA) with Singapore, the world’s leading tech hub. But, with the increasing implementation of technology in the legal industry, it raises the question of how lawtech is changing the face of the legal profession for good.

A recent study commissioned by LawtechUK revealed that the annual demand for lawtech is worth up to £22bn to the UK economy. Particularly, up to £1.7bn is to be gained annually in productivity gains for legal service providers through the increased use of lawtech, and up to £11.4bn is to be gained in annual revenues from lawtech meeting “unmet demand” for legal services from SMEs and consumers.

With the new DEA between the UK and Singapore capitalising on these economic benefits, the agreement encourages both legal hubs to share knowledge and suppliers of lawtech in a bid to explore business opportunities in the other’s markets. Both countries announced they will work together on emerging technology, they will share best practice, promote collaboration on R&D, and seek opportunities for investment. But, as an agreement welcomed by many in the sector, what implications will this actually have for UK legal services?

A spokesperson for the Law Society of England and Wales shares that Singapore is a “world-leader in lawtech”, and so collaboration, cooperation, and increased opportunities for innovation through the agreement will “provide great benefits to both our legal professions”. Currently, lawyers, law firms and workplaces operating internationally are required to deal with a large regulatory patchwork of data and digital provisions, which leads to “higher compliance costs, uncertainty for businesses and often conflicting positions and protections for individuals”, the Law Society reveals. 

Ultimately, the DEA “provides greater clarity and certainty for businesses operating internationally in the digital sector”, the Law Society spokesperson says. This will therefore put the UK’s legal services “on the map in international trade negotiations”, and it will “recognise the growing importance of the UK as a lawtech hub”.

Shruti Ajitsaria, partner and head of Fuse at Allen and Overy (A&O), the firm’s very own tech innovation hub, asserts that Singapore’s lawtech scene “permeates throughout the entire ecosystem”, and so the UK will get to see where Singapore is ahead of us and the places where it is doing things differently or “more interestingly”. She says that accessing Singapore’s lawtech market will allow UK firms to “expand our reach and see not just what’s best in-class to use in the UK, but actually what is the best in-class in the world”.

She adds: “Every single country is being impacted by technological change, so it makes common sense to acknowledge that lawtech is an important emerging theme that each country needs to be cognizant of. How you work together and collaborate on that is important because lawtech is boundless”.

But with the growing discourse around technology permeating through the legal sector, why is it that lawtech is becoming increasingly important? Well, LawtechUK’s research found that “the growth of lawtech is an indicator for the degree of transformation of the legal sector overall, increasing geographical and market reach, generating new service opportunities and business models, and contributing to innovation as part of a virtuous circle that ultimately empowers and benefits customers”.

With client benefits at the forefront of the lawtech scene, Ajitsaria reveals that A&O’s Fuse was created to “meet client expectations and client needs on cost and accuracy”, albeit through AI review, document automation, building structure diagrams, reviewing documents or accessing knowledge. Doing this through the “best in class legal technologies” has made the work of the firm’s lawyers “more efficient”, says Ajitsaria.

She also reveals that clients are “becoming increasingly savvy about what they should and shouldn’t be paying for”, and that people are “becoming more ambitious in trying new things, and trying to deliver services to clients in a different, more efficient, and more cost-effective way”. She continues: “It’s leading to better client outcomes, a better employee value proposition, and it’s therefore leading to some cultural change”.

According to the LawtechUK’s report, technology has become a priority for many law firms as 77% of in-house legal teams now report an increased focus and investment in lawtech. A Law Society spokesperson explains that “lawtech is becoming important for all lawyers as lockdown has seen a huge push towards greater digitisation as processes which were undertaken manually, such as signing documents, became much more difficult under Covid restrictions”. 

They declare that “technology has been pivotal in the justice system continuing to operate during the pandemic, with hearings taking place remotely”. As the legal profession progressively utilises technology, “the justice system is seeing increasing access to justice, greater consistency and control, and better efficiency from automation”. Law firms of all sizes are also now looking at how they can use technology to enable hybrid working, and to digitise manual processes. The spokesperson states that through lawtech, workplaces can “maintain an edge over competitors by improving client experience” with improved outcomes, greater customisation and flexibility.

They add: “We are seeing increasing numbers of employers utilising new technology to make their legal businesses more efficient while increasing access to justice for clients. Research conducted by KPMG for the Law Society reveals that every £1 of productivity savings in the legal services sector could generate between £3.30 and £3.50 of additional gross domestic product (GDP) for the UK by 2050”.

With an exciting future ahead for the UK lawtech scene, it’s important to take a step back and look at how technological development is changing the way in which legal services are being delivered. According to Ajitsaria, “A&O have seen use of legal tech speeding up transactions because you’re doing things more efficiently. We’ve seen it reducing cost, and it feeds into the employee value proposition”. 

The Law Society notes: “Our research has found the adoption of new technologies could increase productivity growth in the legal sector from 1.3% to 2.7% per year. Lawtech is already changing the way law firms operate and includes collaboration tools, document management, intellectual property management and e-billing solutions. There are also products for legal analytics, legal project management, governance and compliance.”

Overall, the DEA agreement represents a step in the right direction for the UK legal industry. LawtechUK’s research revealed that “law firms, legal teams, lawtech companies and those in the justice community are evaluating their current balance of skills around technology and considering both the need to upskill legal professionals and hire critical digital and operational roles to fill the gap”. 

But to cater to the increasing implementation of technology in the legal industry, the Law Society recommends that “the sector must build the capability of its workforce by nurturing their technology skills during their training, so they can use AI and automation to cut down labour intensive tasks and use their empathy and insight to gauge client needs.”

With this in mind, Ajitsaria adds that helping young people to invest in lawtech early on in their careers is essential because “things are changing in law and people who are working in law firms will need to be different – with different skills to what our lawyers have today, and with the ability to know how to work multidisciplinary teams”. Therefore, to invest in the future of the industry, the “only smart thing to do is to train people up from now.”

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