We have a long heritage of working with property lawyers and legal conveyancers and have seen both the residential property and commercial real estate markets evolve over the years. The last 18-months have however brought the greatest changes: the way we work, where we work and how we work have all changed in some way and transaction volumes have been anything but seasonally typical.
The work-from-home requirement originally driven by national lockdowns and Covid restrictions has also created a huge shift in working practises, with many firms now offering a formal hybrid approach to staff. This has led to many re-evaluating what they want from their work/life balance which has had an influence on the residential property market, as people looked for homes with office potential, more outside space or in a location not necessarily within a commuter belt.
From an operational perspective, we know the pandemic has accelerated digitisation strategies as well as highlighting gaps where further advances could be made, to enhance the overall transaction process. In fact, we commissioned an independent research study with 42 senior commercial real estate legal professionals and a significant 95% confirmed that the pandemic has accelerated their digitisation strategies and adoption of new technologies, and a further 76% agreed that the pandemic made them appreciate the value and benefit that software and technology brings.
The Commercial Real Estate Lawyers of the Future research not only looks at the impact of the pandemic, but homes in on firms’ adoption of digitisation, automation and AI in the legal transaction process, both now and in the near future.
We probed into the maturity of digitisation strategies today and found that the pandemic has sharpened lawyers’ focus on technology, with firms increasing their investment in digitisation and technology spurred on by the pandemic. Many are already seeing the benefit of their investment, while 71% suggested it has also highlighted ‘gaps’ where LawTech could further enhance their working practises.
Active steps are being taken by many in this area, with just over a quarter of those we interviewed confirming that they already have a digitisation roadmap in place, whereby they are transitioning away from as many paper-based processes as and wherever possible. To add, 38% said that they are working on putting their roadmap in place now, while the remainder stated that they intend to prioritise this within the next 1-2 years. Just 5% said they have no digitisation plans on their current roadmap.
Interestingly, adoption of Artificial Intelligence-led solutions is already on many firms’ radars, with 29% confirming they are already using AI and automation in parts of their business, and a further third (33%) currently reviewing plans to understand how AI and automated processes could make a difference to customer service delivery, transaction timescales and risk management processes.
What is the driving force to tech adoption? Just under three quarters (71%) of the senior professionals interviewed felt that digitising aspects of the legal process provides their firm with a competitive advantage or differentiation over other firms. In a world where all lawyers are working from the same book of law, demonstrating a point of difference from the wider market is key.
Furthermore, 60% of property professionals also suggested that there are wider-reaching benefits internally, with digitisation enabling lawyers to personally evolve or upskill in other areas. As this means less time is spent on manual interventions to progress transactions, they can instead concentrate on the more complex or individual areas of law. Just over half (52%) mentioned that having the support of a technology creates valuable time saving efficiencies.
A Glimpse Into The Future
With a clear appetite for continued digitisation, we then looked ahead to 2025 to consider what the future legal process may look like at this point.
Almost everyone we interviewed (98%) agreed that administrative tasks will become automated, meaning lawyers can concentrate on more revenue-generating or client facing activities. A further 95% believe that more data insights or due diligence fed into the process, earlier or upfront, will mean buyers and investors can make better informed decisions sooner, and receive fewer (or no) surprises later in the legal process.
The results of this benefit all in the process: 43% believe that the overall customer service experience for clients, buyers, investors and sellers alike will improve as a result.
It is clear that lawyers agree that more data and automation will play their part in speeding up commercial real estate transactions. By serving up more data earlier and reducing manual interventions, practitioners will be able to closely focus on completing deals while reducing the risk of human error.
We believe that technology, such as AI, machine learning and the digitised flow of data through cases, is there to empower partners, paralegals and secretaries. It should not be seen as a direct replacement of specialist people or teams, but instead used to complement their expertise, remove human error and manage risk.
So while it may be challenging to predict transaction trends in the property markets over the coming months, as we continue to emerge from the impacts of the pandemic, it is safe to say that a focus on innovation and technology will continue to help law firms offer a modernised service and remain agile, in what continues to be a highly competitive industry.
Dr Thomas Quirke, managing director, SearchFlow