Shaping the Future of Law - 2021 The LawtechUK Report - Tech Nation
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The LawtechUK Report 2021 Shaping the Future of Law
Lord (David) Wolfson of Tredegar QC,
Parliamentary Under-Secretary of State for Justice
“I would like to congratulate LawtechUK on
this important and timely report on digital
transformation in our legal services sector, which
forms an important contribution to the debate. In
Government we are excited about the potential
that technology and innovation have to transform
the wider justice system. We are proud to have
one of the world’s largest legal services market
here in the UK. Our ambition is to ensure our legal
services sector continues to be world leading and
an important part of that is ensuring that the UK is
a global hub for lawtech. This is why – together with
Tech Nation and the LawtechUK Panel – we have
funded and developed LawtechUK. The programme
has already delivered a successful Lawtech
Sandbox and the exciting LawtechUK Hub which
has been designed to be accessible to everyone
to provide an introduction to lawtech, as well as
the other fantastic work referenced throughout
the report. This report marks another important
milestone in the LawtechUK programme of work.”
2Jenifer Swallow,
LawtechUK Director, Tech Nation
The law is critical in all our lives and to every element of the sector, from startups LawtechUK
businesses, but the mechanisms through to established legal services businesses and
which we access it are typically opaque, in-house legal teams, regulators, academics, LawtechUK, is a government-backed
expensive and slow. We need and deserve the justice community and policy makers. initiative within Tech Nation, established to
the best possible legal and court services, With sharp focus and concerted effort, support the transformation of the UK legal
delivered through modern methods and we can establish a system and catalyse sector through technology, for the benefit
accessible to everyone - supporting regular behaviours and results that no organisation of society and the economy. LawtechUK
people at important moments in their lives, could achieve on its own. has a targeted work programme focused on
maximising efficiency and responsibility in increasing awareness and understanding
business, and contributing to our collective The UK is in a leadership position to achieve of lawtech and fostering transformative
stability and prosperity through ever- this and show what can be done, across tech innovation, supported by the LawtechUK
changing times. Digital transformation of investment, education and talent, UK-wide Panel. The Panel, established in 2018 by the
legal and court services offers the answer, connectivity, standards and regulation, open Secretary of State for Justice, is a group of
achieved through collective action on data and ESG. leaders and experts from industry and the
lawtech across the sector, without delay. public sector who act as the advisory board
This report identifies seven priority focus to LawtechUK. LawtechUK’s current remit
This report is a call to action - to all members areas. It offers an opportunity to step back is economic growth. Separate government
of the UK’s legal community and in particular from the busy day job and consider the initiatives focus on legal support and access
its decision-makers. Lawtech is a common bigger picture, the part each of us plays, to justice for citizens.
theme around which this community can and the action needed from here. If we work
coalesce: it is relevant to the service of all its together, we can achieve twenty years’ worth This report does not represent
users, clients and customers, and relevant of progress over the next five. government policy
3Contents
Contents 4
Key takeaways 5
Objective and opportunity 9
Priority focus areas 15
Investment 16
New markets 25
Data 29
Connectivity 39
Technology awareness and capability 44
Policy and regulation 52
Sustainable growth 59
Conclusion 63
LawtechUK 65
Collaborators 66
Annex - Lawtech examples and benefits 69
4Key takeaways
Key takeaways
The future of legal and court services is digital and lawtech is key to securing a strong future for society, business, the legal sector, and the
UK. The opportunity and imperative for digital transformation are here now. We have identified seven priorities to shape and accelerate this
transformation through lawtech over the next five years.
1. Investment • Greater investment in technology and R&D is needed. While average R&D investment across all business sectors is 5% or
more of revenue, few legal businesses target as much as 1%.
• While R&D investment is lagging among incumbent legal service providers, the UK lawtech start/scaleup market grew 101%
in the last 3 years - faster than other tech sectors during the same period. The startup dynamic is a catalyst for wider sector
technology innovation.
• General counsels and in-house legal departments can position themselves as the powerhouse of the legal sector, leveraging
their buying power to drive innovation and tech adoption.
2. New markets • There is an £11.4bn per year market opportunity for lawtech and innovation to address the unmet legal needs of SMEs and
consumers by providing accessible and affordable services, including projected savings from online conveyancing services
of 9 million hours and £25m per year.
• As with fintech, reaching consumer markets through lawtech will accelerate the transformation of the sector overall.
3. Data • Embracing and utilising data is critical to the future success of the sector and the people it serves. All within the sector need
to work to improve how data is collected and made accessible.
• Collective effort from organisations, government and regulators is needed to establish common approaches, governance
and standards to enable responsible, secure and equitable access to data and unlock its benefits.
• Investing in Open Legal along similar lines to Open Banking will bring a step change in data structuring, access, portability
and use, towards shared sector goals in the service of business, society and the economy.
4. Connectivity • Collaboration is key to ensuring technology-enabled legal and court services meet the needs of customers.
• Sector challenges can be surmounted more quickly and have a more enduring effect if we can tackle them collectively.
• Promoting connectivity across the UK will enable the lawtech market to thrive and leverage regional strengths.
6Key takeaways
5. Technology • Promoting technology literacy across the sector will provide a foundation for innovation, and the ability to harness more
awareness and advanced technological capability.
capability • Employing and retaining skilled technologists and other digital specialists is crucial for the legal sector to continue to grow
and compete. We have the opportunity to highlight the compelling challenges lawtech can help to address, and change
perceptions of what working in the legal sector means going forward.
6. Policy and • Regulators and policy makers can lead by example on legal innovation, tech deployment and a commitment to open data,
regulation and help build confidence in lawtech.
• Government can leverage industry to help address systemic challenges in law through technology.
7. Sustainable • Lawtech gives us the tools to advance the rule of law, support the ESG agenda and set new standards, to benefit society and
growth our economic prosperity.
compliance and grievances. There is
Lawtech is technology that supports or matter and practice management, risk loads of space for highly investable
enables the delivery of legal and court management and predictive intelligence. opportunities to emerge. On the consumer
services. It is a broad church, spanning a Examples of lawtech and the benefits they side, the good plays will grow the overall
spectrum of applications and possibilities, bring can be found in the Annex to market, democratise the law and empower
including handling and resolving disputes, this report. people. We might also see a crossover with
contract creation, management and insurtech as the market moves to insure
analysis, compliance, paperless trade, away basic legal risk like in conveyancing.”
digital documents and e-signing, process “Lawtech is such a broad category, it is Tom Wilson,
automation, research and information, hard to pinpoint where it starts and finishes, Partner, Seedcamp
marketplaces and advice facilitation, from privacy and regulation, contracts,
78
Objective and opportunity
Objective and opportunity
1 The future of legal and court services Our vision for user outcomes through
is digital and lawtech is key to securing lawtech
a strong future for society, business, the
legal sector, and the UK. Technology in
law has advanced beyond being a back- Legal and court services are economical and
office efficiency tool. It is an enabler of trusted
fundamental change in the frontline delivery
of legal and court services, and a mechanism Everyday business and consumer activities
for doing things differently, setting new around law are as easy as using a
smartphone app
standards, and importantly, putting user
outcomes front and centre.
Decision-making and risk management are
improved and transparent, using big data,
2 The tension, cost and delay in legal and
with appropriate controls
court services can be reduced. The legal
aspects of doing business can become
All but the most complex or contentious 3 With the historic strength of its legal
simple and transparent: how we enter disputes and issues are dealt with within system and legal community, the UK is in
into and manage a partnership, evaluate days or weeks and are non-adversarial
a leadership position to deliver this - re-
a business decision, keep up to date and
thinking and re-engineering outdated
comply with regulations, handle intellectual
structures and using technology to
property, and administer governance. The
introduce new services and enhanced
legal moments that shape our lives can be
capabilities. With the vast changes we are
affordable, fair and smooth: buying a home,
Documents and processes are seamless, all experiencing, outdated structures and
administering assets, dealing with death,
interoperable and efficient, speeding up models are exposed for what they are and
disputes, employment and insurance. We
activity and saving money society is asking for vested interests to be set
can have access to accurate, real-time data
aside - the imperative for transformation and
to help us make well-informed decisions.
growth has rarely been greater.
10Objective and opportunity
4 To achieve fundamental change requires a strategic approach, spanning the following elements:
Disputes A fully digitally enabled court service that triages user issues, maximises user choice and integrates alternative ways of resolving or
dissolving disputes.
Legal practice Modern legal practice, delivered digitally, in effective and affordable ways, proactively evolving.
Laws Substantive law and regulation that is fit for purpose, by being able to accommodate emerging technology in a timely way and
recognise its legal and commercial functionality and value. The law needs to adapt not only to technological advances, but also
to be prepared for future developments.
Education Overhauled legal education where legal professionals and other specialists are equipped to deliver 21st century legal services;
re-evaluating what they are trained to do and be, and how training is delivered.
Culture An environment and culture in which innovation, user-centricity and challenging the status quo are the norm from diverse contribu-
tors, aligned around shared purpose and good governance.
Trust High levels of public confidence in the legal system, the legal sector and the technology they use, realising fair, accessible and
transparent outcomes.
5 All this requires the legal services against every measure of success. Lawtech
community to adjust our posture and work is not a panacea, but it has become a vehicle
together for wholesale, systemic change, for innovation, it is attracting investment and
with no sacred cows. Perpetuating an talent, and it offers the potential to genuinely
analogue status quo, tinkering around the transform legal and court services.
edges of digital transformation, or simply
digitising current processes would fall short
11Objective and opportunity
6 The legal sector has been one of the rules that require physical presence or • Government commitment to technology,
slowest to evolve,1 without a burning platform hard copy documents, the need to be innovation and R&D is at an all time
or external pressure to change and with a familiar with the basics of technology, high, with £22bn per year committed
range of sector-specific barriers impacting legal services costing too much. by 2025,3 an ambitious National Data
the adoption of technology.2 But it has now ‘Digital-first’ is not going away and Strategy4 and National AI Strategy,5 and
reached an inflection point. The capacity entirely new expectations abound. a focus on global leadership in science
and imperative for digital transformation of and technology, as well as active
the legal sector are here now. • The technology we need to go to the backing for lawtech across policy, court
next level is ready and available for all reform and grant funding.
• As a result of Covid-19 restrictions, who reach for it. Although technology is
everyone working in legal and court constantly evolving, it is not hard to find
services has used technology for remote or hard to use. New capabilities become
working and experienced its potential. new standards and responsibilities.
Progress that would previously have
taken years was achieved in weeks, like • Legal businesses, in-house legal A recent McKinsey & Company report
introducing video court hearings and teams and regulators are focused on described digital adoption as having taken
law firms adapting to remote working. technology, as never before. Tech ‘a quantum leap at both the organizational
The learning curve was steep, but it was and data capability are board level and industry levels’, with its data indicating
successful and prepared the legal sector priorities, no longer sidelined as Covid-19 precipitated a ‘tipping point for
for genuine digital transformation. nice-to-have. technology adoption and digital disruption
of historic proportions - ...more changes will
• The response to Covid-19 demonstrated • Covid-19 has reshaped organisations be required as the economic and human
the possibilities of technology in law, and the economy. The possibility and situation evolves’.6
and increased the population of impact of future crises and volatility is
advocates for change in legal and understood and the drive to stabilise,
court services. innovate and contribute has never been 7 By forcing legal and court services to
greater. No part of the ecosystem is embrace remote working, the response to
• Being forced to go digital also unaffected. Each has a part to play in Covid-19 has already changed the status quo
highlighted the challenges: the lack of defining the future. when it comes to tech adoption. Now it is for
remote document access, processes and the legal community to build on this progress,
1 - Frontier Economics, ‘Economic Contribution Of Lawtech’ (LawtechUK); RELX Group, ‘The RELX Emerging Tech Executive Report 2020’ (2020).
2 - The Law Society, ‘Lawtech Adoption Research’ (2019).
3 - Department for Business, Energy & Industrial Strategy, ‘UK Research And Development Roadmap’ (2021).
4 - Department for Digital, Culture, Media & Sport, ‘National Data Strategy’ (2020).
5 - Office for Artificial Intelligence, Department for Business, Energy & Industrial Strategy, and Department for Digital, Culture, Media & Sport, ‘AI Roadmap’ (2021).
6 - Mckinsey, ‘How COVID-19 has pushed companies over the technology tipping point—and transformed business forever’ (2020).
12Objective and opportunity
address the early challenges with introducing consistently high-quality, strategic and
technology and systems without notice, and 8 LawtechUK commissioned research exciting work, increased productivity,
harness the true breadth and benefits of estimates the annual demand for lawtech to lower overheads, lower risks and kinder
technology and data resources available. be worth up to £22bn7 to the UK economy, and more sustainable working practices,
With this shift in demand and capability, made up as follows, and excluding a range fuelling greater diversity and inclusion.
the 2020s will be a period of technological of elements such as exports and demand
revolution in law. relating to regulatory compliance: • For the legal sector, the prize is
increased efficiency and profitability,
• Up to £1.7bn annually in productivity contributing to a thriving society and
“Lawyers are moving to browser-based gains for legal services providers economy, and recognition as a leading
platforms, adopting new technology at through increased use of lawtech. global resource for business and justice.
scale. New ways of working during the
pandemic have accelerated this change. • Up to £11.4bn in annual revenues from • For the UK, where legal and court
At Juro we saw customer contract volumes lawtech meeting unmet demand for services underpin society, trade and
increase by 300% from one month to the legal services from SMEs and consumers. the rule of law, the prize is stability,
next during the pandemic as they migrated prosperity (including jobs, revenue,
key commercial relationships online. It’s • Up to £8.6bn per year in cost savings for business growth, inward investment,
exciting to think how post-pandemic SMEs from using lawtech services. exports and more) and leadership on the
lawyers will carry these new skills and world stage. Evolving the legal sector
experiences with them. Lawyers who have and leveraging lawtech capability as
experienced real-time, cross-border changes 9 The opportunity is significant. a core jurisdictional strength can help
to regulation, or feeding health workers at the UK be the number one place to do
scale, or navigating regulatory frameworks • For customers, the prize is renewed business and resolve disputes globally.
for hand sanitizer overnight, can probably confidence in and easy access to legal
handle just about anything the future can services - their legal needs met fairly, 10 Developing effective systems, standards
throw at them.” effectively and economically. and technology in law that advance us all
Richard Mabey, should be a top priority, and we need the
Ceo, Juro • For those providing legal products and vision, commitment and leadership to drive
services, the prize is satisfied clients, it through. We have a responsibility to keep
new revenue streams and models, evolving alongside changing legal needs and
7 - Frontier Economics, ‘Economic Contribution Of Lawtech’ (LawtechUK).
13Objective and opportunity
the technology used to address them - there 12 There are specific steps to be taken,
will be new technologies, jobs, capabilities - working across disciplines in a targeted
and challenges - in the coming years that do way. The answers will not be found in a
not yet exist. single product, solution or process or through
a single person, organisation or skill set.
11 Technology has ceased to be a They will be found at the intersection of a
discretionary element for governments, range of ideas, specialisms and experience,
businesses and consumers, increasingly and in practical application through R&D.
impacting all aspects of our lives - law, Importantly, they will be realised through
education, food, security, transport, energy coordinated efforts towards a
and health. The changes we will see over the common purpose.
next five to ten years will be foundational,
paving the way for new opportunities 13 At LawtechUK, our purpose is to support
and challenges. the transformation of the UK legal sector
through technology, to meet and exceed the
“It’s taken 20 years to get to the start line, evolving demands of business and society.8
the next 20 years is when it gets really This report sets the path towards the future
interesting.” and identifies the areas in which concerted
Saul Klein, effort can bring about accelerated progress
Founding Partner, LocalGlobe in law.
8 - LawtechUK, LawtechUK Vision (2020).
14Priority focus areas
Priority focus areas
There are seven priorities for targeted action to accelerate digital transformation of the legal sector.
1) Investment
Startups and scaleups
14 Entrepreneurs are critical to market (‘lawtechs’) at the time of writing,13 including
disruption. As we have seen in other sectors “While the tech sector has been growing at the ‘regtech’ sub-sector focusing on legal
such as finance and health, technology pace over the last decade, the pandemic compliance. The range of companies and
entrepreneurs identify specific market has cemented its place at the core of our level of activity is illustrated by the high
challenges around which to innovate. They economy. The everyday need for technology engagement with legal sector incubator
bring together subject matter expertise and has been accelerated, along with the programmes and the Lawtech Sandbox,
technology to find new ways to meet and importance of supporting technology which attracted 65 applications in a 10-day
exceed customer needs at a competitive founders - those who are creating the window for the pilot.
price point, creating new business models solutions today to tackle the biggest
and opportunities, disrupting incumbents challenges of our lifetime. Challenging
and shaking up the status quo. This explains times are innovative times from which new
the £572bn in value of UK tech startups growth can flow - we saw the equivalent of a
and scaleups9 and the median tech job new tech business created every 30 minutes The Lawtech Sandbox was developed by
salary being £10k greater than the national during 2020. The opportunities span all LawtechUK to fast track transformative
average.10 These numbers do not reflect sectors, not least those ripe for disruption, ideas, products and services that address
the surge in innovation and startup activity such as lawtech is bringing to the legal the legal needs of businesses and society.
prompted by the impact of Covid-19.11 sector.” It provides pioneers accepted on the
Estimates show that AI technologies - used Stephen Kelly, programme with access to a number of tools,
in all sectors, including legal - could deliver Chair, Tech Nation services and people, including a single, fast
a 10.3% increase in UK GDP by 2030, the response forum of regulators known as the
equivalent of an additional £232bn, making Regulatory Response Unit, and access to
it one of the biggest opportunities in 15 The UK has a leading lawtech market, with legal data through a matchmaking service.
today’s economy.12 just under 200 lawtech startups and scaleups
9 - Tech Nation, ‘Tech Nation Report 2021’ (2021).
10 - Tech Nation, ‘Jobs And Skills Report’ (2020).
11 - ‘Business demography, quarterly experimental statistics, UK: October to December 2020’ (Office for National Statistics, 2021).
12 - PwC, ‘The Economic Impact Of Artificial Intelligence On The UK Economy’ (2017).
13 - Frontier Economics, ‘Economic Contribution Of Lawtech’ (LawtechUK).
16Priority focus areas
16 LawtechUK commissioned research in a moderate scenario and £6.7bn in a
indicates: high scenario within five years, from a
private investment total of £674m
to date.15
101%
• Average annual growth rate of
investment in lawtechs between 12500 by 2026
2017 and 2020 was 101%, which is • Employment within lawtechs on a similar
considerably higher than the average growth trajectory rises from 5,600 today
for other applied tech sectors in the to 8,000 in a moderate scenario, and
same period, including fintech (20%), 12,500 in a high scenario.16 The gross
climatetech (5%) and healthtech value added contribution of this level
(47%). Annual investment in lawtech of employment is in the range of £1bn
at the beginning of this period (2017) to £1.5bn, accounting for around 5% of
was much smaller than in other sectors the GVA17 of the UK legal services sector,
(£24m compared to £98m in the second which is a similar ratio to the current UK
smallest, insurtech).14 fintech and financial services industry
GVA of around 6%.18
£2.2bn by 2026
• Investment in lawtechs could reach 214%
£1.6 to £2.2bn per year by 2026, with a • Segments seeing the fastest growth
high scenario (50% annual growth rate) in lawtech are regulatory compliance,
comparable with fintech investment growing at 214% over the last three
in 2018 and a mid scenario (30% years, consumer and SME lawtech
annual growth rate) in line with current services, growing at 74%, and legal
investment in healthtech. Cumulatively, document creation, management and
that equates to £5.3bn of investment review, growing at 24%.19
14 - Frontier Economics, ‘Economic Contribution Of Lawtech’ (LawtechUK).
15 - Frontier Economics, ‘Economic Contribution Of Lawtech’ (LawtechUK).
16 - Frontier Economics, ‘Economic Contribution Of Lawtech’ (LawtechUK).
17 - Eurostat, ‘Glossary: Gross value added’ (2019).
18 - Frontier Economics, ‘Economic Contribution Of Lawtech’ (LawtechUK).
19 - Frontier Economics, ‘Economic Contribution Of Lawtech’ (LawtechUK).
17Priority focus areas
Fundraises and exits
Exizent ContractPod Farewill DocuSign
Platform to support professionals Contract lifecycle management Wills and probate services buys Clause for an
and teams managing probate software undisclosed sum
Smart agreement creation
Location: Scotland Location: London Location: London software
Raised in round: £3.6m Raised in round: $55 million Raised in round: $25 million
Employ: 32 Employ: 133 Employ: 123
Thomson Reuters buys HighQ for
an undisclosed sum
Legal work and matter
management platform
17 Consistent with growth trajectories in • Easier buying decisions for buyers facing interoperability of products enabling
other tech sectors,20 lawtech is moving a proliferation of vendor and end-to-end working and the ability
beyond its initial phase of growth involving product choices to design bespoke workflows using
the formation of many startups, into a compatible products
period where formation of new companies • Emergence of market leaders and known
slows down, existing companies grow and brands, as is now seen with the neo • Economies of scale for lawtechs able
others are acquired, merge, or otherwise banks and accounting software, which to operate across product types, for
exit. Year-on-year growth of new lawtechs lowers concerns around investing in example being able to use common
slowed from 2019 to 10%, but fundraising has unknown products datasets, as large datasets can be
maintained its pace, reaching 42% in 2020.21 difficult and expensive to produce, for
These early signs of consolidation indicate a • Faster decision cycles and lower a range of tech development
maturing market that will benefit buyers and research and onboarding costs, for both
sellers and contribute to market growth, by buyers and sellers22 “At the UN Commission on International
providing: Trade Law, I worked on a project to increase
• Increased standardisation and the resolution of disputes online, cross-
20 - Tech Nation, ‘Jobs And Skills Report’ (2020).
21 - Frontier Economics, ‘Economic Contribution Of Lawtech’ (LawtechUK).
22 - Bronwyn Hall and Beethika Khan, ‘Adoption Of New Technology’ (National Bureau of Economic Research, 2003).
18Priority focus areas
border. We had big ambitions, but I realised 18 As with other tech sectors, the growth Brian Liu,
the real opportunity to create impact was of lawtechs is an indicator for the degree Co-Founder and Founding CEO, LegalZoom,
on the ground – so I left to found a platform of transformation of the legal sector and LawtechUK Panel member
called CrowdJustice, to try and give more overall, stimulating competition, increasing
individuals better access to legal services. geographical and market reach, generating
We have now helped individuals pay more new service opportunities and business 19 Investors are increasingly interested in
than £20M in legal fees and given over models, and contributing to innovation opportunities to fund disruptive businesses in
half a million people the ability to donate, as part of a virtuous circle that ultimately regulated sectors.
participate and feel they have a voice in empowers and benefits customers.
the legal system. CrowdJustice made me Entrepreneurialism can come from anywhere; “The lawtech segment is getting extremely
realise that there was a huge opportunity to whether from lawyers who see first-hand interesting. We have been talking to a
build tech products that could give clients what is not working or from people with range of companies and seeing increasing
a better experience, and in so doing, give backgrounds outside legal who recognise a investments and emerging success stories.
law firms a competitive advantage. Now market opportunity or a new way of solving a Legal practice is crucial to literally every
at Legl, where we have over 140 law firm significant problem. organisation and the market is global, yet
customers, including a dozen in the top 200, unlike its operational peers - from HR and
we are driving revenue, efficiency and data “When I first sought to raise funds for finance to sales and marketing - legal has
in law firm operations, while dramatically LegalZoom, the venture capital community seen minimal disruption. This is a massive
improving clients’ experience of their looked at us like we were crazy. How were opportunity, especially for the UK as one of
law firm. two lawyers going to disrupt the legal the largest hubs for legal services and home
industry, and how big was the opportunity? to many of the world’s largest corporates.
From the bureaucracy of the UN to creating They kept on telling us that we might have Now is the time for entrepreneurs (who don’t
products that people use every day on the a fine little ‘lifestyle’ business. Fast forward have to be lawyers...) to rethink the exciting
ground, it’s been a journey that’s been driven twenty years, and the tremendous scope of value that lawtech can unlock for enterprise,
by learning and listening to the market and the opportunity is clear. Furthermore, in the SMEs, and consumers. And not just with
trying to create something that drives real same way that VCs no longer think computer point solutions but with holistic offerings.
value for customers.” engineers can’t be CEOs, a whole generation Investors will follow.”
Julia Salasky, of entrepreneurial lawyers are changing the Mish Mashkautsan,
CEO, CrowdJustice and Legl, and way the outside world views innovation in the General Partner, LocalGlobe and Latitude
LawtechUK Panel member legal space.”
19Priority focus areas
20 Supporting the startup and scaleup help make the environment ripe enough to 22 Innovation and technological development
community to grow, enabling good access to seed the next Google, TransferWise or other continue to rank at the top of government and
capital, and removing systemic impediments breakout company, whether in lawtech or board agendas.25 R&D is acknowledged to
to that growth are critical to realising the other categories - companies that on their be fundamental to innovation, with economic
full opportunities of lawtech disruption own can contribute more than the entire theory emphasising its importance for
and securing the UK’s position as the legal sector to the economy.” economic growth.26 Technology has become
global hub for lawtech, alongside fintech. Reshma Sohoni, a priority for many law firms27 and 77% of in-
As a common comparable, fintech grew Co-Founder and Managing Partner, house legal teams now report increased focus
in a heavily regulated environment with Seedcamp and investment in lawtech.28 UK government
significant barriers to entry and powerful, investment in R&D is at an all-time high with
well-capitalised incumbents. In lawtech, a commitment of £22bn per year to R&D by
there are many activities, products and 21 Projected growth rates for lawtech 2025, focused on recovery, economic growth
service lines that do not require regulatory investment range from 10% to 50%23 tracking and global trade, and £12.4m of UK Research
authorisation or integration with government paths and timelines similar to other more and Innovation funding committed to lawtech
or incumbents’ infrastructure, and in terms established technology sectors. In 2026 R&D, supporting 23 projects in the last two
of total addressable market, although legal lawtech would attract levels of investment years.29
services is a smaller market overall, all broadly comparable to fintech in 2018, based
businesses, organisations and people are on a 50% growth rate, putting it eight years
potential users of lawtech. behind the fintech curve.24 Perhaps more
comparable in terms of user behaviour with
sectors such as health and education, it is
“Investors globally are looking at the UK as also possible that lawtech investment will R&D initiatives like the Stanford Research
the best place to invest remotely or set up accelerate faster, confounding comparison. Park30 have fueled business and technology
shop. It is a buoyant time for venture and UK Lawtech can find its place at the core of the ecosystems such as the widely emulated
tech success stories are fueling a range of future economy. Silicon Valley and government R&D support
alumni start-ups. There are few better places has enabled the acceleration of entire
now to set up or scale your company and the Technology and R&D industries, like in renewable
opportunity for the legal community is to energy technology.31
23 - Frontier Economics, ‘Economic Contribution Of Lawtech’ (LawtechUK).
24 - Frontier Economics, ‘Economic Contribution Of Lawtech’ (LawtechUK).
25 - McKinsey, ‘How boards have risen to the COVID-19 challenge, and what’s next’ (2021).
26 - Rachel Griffith, ‘How important is business R&D for economic growth and should the government subsidise it?’ (The Institute for Fiscal Studies, 2000).
27 - PwC, ‘Embracing change to succeed: PwC Law Firms’ Survey 2020’ (2020).
28 - ‘How legal tech is used in law firms and in-house 2020’ (Statista, 2020).
29 - Frontier Economics, ‘Economic Contribution Of Lawtech’ (LawtechUK).
30 - ‘Past, Present & Future: Who Are We, How We Began, And Where We’re Going’ (stanfordresearchpark.com).
31 - Department for Business, Energy & Industrial Strategy, the Rt Hon Anne-Marie Trevelyan MP, ‘Over £90 Million Government Funding To Power Green Technologies’ (2021).
20Priority focus areas
23 Board and government level focus is sustainability in the rest of the economy they
translating into increased investment in serve. It is key to ensure R&D investment “There needs to be an embrace of what
technology and R&D activity in the legal does not stop at the investment stage, but corporations across the world do all the time,
sector. Legal businesses and in-house teams has the support to ensure it tracks through which is to invest in R&D. Lawyers often
in particular have begun to invest more into impact on the ground. Incumbents have not looked at things that way and it
into R&D, as evidenced by the many entries can contribute by being clear about the is great to see the larger firms start to take
received to the FT Innovative Lawyer awards, challenges to address and what they want that investment seriously for not only their
and the hubs and labs, such as the University and need to achieve.” own benefit but critically for their clients. It
of Oxford’s Deep Tech Dispute Resolution Stephen Browning, is this that will make a difference because
Lab. 1% productivity improvements in legal Challenge Director, Innovate UK innovation creates a healthy competition to
services a single year has the potential to deliver the best service - which is what we
boost UK GDP by approximately £1bn by want to see in every aspect of services, in
2050.32 A challenge for many organisations 24 With a different organisational context and outside of legal.”
has been the need to fix foundational IT, such and drivers, in-house teams also lack the Judy Perry Martinez,
as practice management systems, human data necessary to understand and manage Immediate Past President, American Bar
resource systems and client and matter risk,34 do not have the technology they Association
inception and management systems, but need to do their job35 and are struggling to
adoption of mobile apps, client collaboration manage increasing workloads.36 Greater
tools, and automated/semi-automated focus on process optimisation and leveraging 25 There remains a significant gap in
document production has progressed with the opportunities of technology and R&D maturity between the increased use of
more than 50% of top 100 firms using these can enable legal teams to be run to the level foundational and mainstream technologies
applications.33 of capability now expected across business and strategically transformative
operations and in the face of ever tightening technologies, such as artificial intelligence
budgets. One way of achieving this without and smart contracts.37 It is also unclear how
“Legal services, like financial services, increasing their expenditure is leveraging the much current R&D goes to the heart of legal
underpin the rest of the economy. capabilities of their legal service providers, service transformation - reinventing delivery
Investment in these sectors therefore particularly those who highlight their methods, exploring new business lines and
provides double leverage, creating direct innovation and technology programmes. models and delivering additional services
economic growth and productivity in the and substantial cost benefits to clients - as
sector itself and also enabling growth and opposed to surface-only change. LawtechUK
32 - The Law Society, ‘Legal Services’ £60Bn Economic Contribution Must Be Heeded In Brexit Talks’ (2020).
33 - PwC, ‘Resilience Through Change: Pwc Law Firms’ Survey 2018’ (2018)
34 - Cornelius Grossmann and others, ‘The General Counsel Imperative: How Do You Turn Barriers Into Building Blocks?’ (EY, 2021).
35 - Blickstein Group in collaboration with Morae Global, ‘Continuing To Mature While Bracing For Uncertainty’ (2019).
36 - Cornelius Grossmann and others, ‘The General Counsel Imperative: How Do You Turn Barriers Into Building Blocks?’ (EY, 2021).
37 - PwC, ‘Resilience Through Change: Pwc Law Firms’ Survey 2018’ (2018).
21Priority focus areas
commissioned research estimates that up positive steps and see our peers and clients
to £60m per year is spent on R&D by UK doing the same, there is still a long way to go
law firms above 250 employees, though when compared with other industries.”
the benefits of R&D are available to firms April Brousseau,
of all sizes.38 This £60m of investment is Director, Research & Development, “We think about tech investment across
low, compared to the average R&D ratio Clifford Chance 3 dimensions: (a) core technology, which
in business of 5% or more of revenue.39 For is about basic modernisation; (b) near
legal businesses contributing the £37bn term, which is about reengineering legal,
of legal services revenue in 2020,40 5% of 26 Whilst fixing foundational IT issues has which is where our MDR Lab sits here; and
revenue would amount to a collective £1.85bn played its part in hampering investment (c) horizon, which is about genuine R&D -
of R&D investment in a single year. in R&D, cultural and emotional factors, smart contracts sits here, for example. We
preconceptions and lack of understanding, benchmark to make sure we are investing
can play a large role in both successful sufficiently across all three, looking at
“We strongly believe that to transform the deployment and decision-makers’ willingness metrics such as percentage of revenue and
delivery of legal services, it’s important to invest in what they consider riskier how our tech strategy maps into our fee
to do more than just talk about it - we propositions, especially where returns on structure. We are seeing significant returns
need to commit to really doing it and investment (ROIs) from R&D can be more on investment, including on data analytics
that means investment in people, process difficult to quantify due to the longer, non- and monetising and divesting our tech
and technology. Our new R&D function linear nature of the innovation process. projects with clients and partners in both the
is the culmination of years of experience Research confirms that strong leadership, public and private sector. Being bold on our
with digital solution development and is agile execution and focusing on bold, clear, client T&Cs has been a key success factor,
consistent with our conclusion that if you’re digital priorities are critical to successful and enabling us to maximise our R&D and giving
going to really do it, you need to invest sustainable change.41 More can be done to us the scope to adopt innovative technology
in doing it well. In this function we have support legal businesses and departments in our own operations.”
brought together our product development to quantify the benefits and practicalities of Nick West,
expertise together with technical, research investing, including collaborative evaluation Partner and Chief Strategy Officer,
and project management professionals to of benefits and ROI with stakeholders and Mishcon de Reya
create a team that is wholly dedicated to users, and sharing learning on successful
both research and digital development. case studies, implementation strategies and
But it is a journey and, while we are making outcomes across the sector.
38 - Frontier Economics, ‘Economic Contribution Of Lawtech’ (LawtechUK).
39 - ‘OECD Science, Technology And Industry Scoreboard 2017’ (OECD, 2017).
40 - ‘Dataset: Index Of Services Time Series’ (Office for National Statistics, 2021).
41 - McKinsey Digital, ‘Five moves to make during a digital transformation’ (2019).
22Priority focus areas
than substituting human labour.
“We currently take a thousand flowers venture with IBM and CSIRO’s Data61 to
blooming approach to lawtech R&D, develop smart contract infrastructure.” 28 Buyers of legal services, whether they
investing in lots of small different projects. Susanna Kipping, are corporate legal departments, business
This doesn’t always go down well with our Head of Legal Operations, Process & owners or private individuals, increasingly
IT colleagues, who want a single consistent Automation, Herbert Smith Freehills look for data-driven advice, and have
system, but it works for the team as we can greater expectations around online access,
experiment, learn quickly, and produce speed and cost of service delivery, and
solutions to very specific challenges, for 27 For those who are financially able to rigorous ESG standards on risk. 82% of
example we have successful R&D projects invest or harness funding from government corporate legal departments want their
running for IP rights, commercial contracts, grants to assist with innovation projects, the external legal providers to leverage
sales and litigation.” opportunity is great. R&D is identifying new technology and 81% say that over the next
Rosemary Martin, and better ways of serving customers or the three years they will make demands about
Group General Counsel and Company wider business, and staying competitive in the technology their providers use to increase
Secretary, Vodafone Group Plc, and the market. R&D is known to contribute not productivity.45 It will therefore become
LawtechUK Panel member only to organisational rates of return - up to impossible to deliver legal services to the
30% improvement in output and productivity required standard without excellent technical
- but also to ‘social’ rates of return, capability and fully online user experiences.
“When it comes to tech, HSF builds, buys whereby innovation spills over, benefiting
and bends a range of solutions to meet supply chains and industry communities.42
both the current and future needs of LawtechUK commissioned research provides “Legal services are part of a supply chain
our clients. While much of this tech is an example rate of return on investment from that only exists and is only important
developed or bought as a point solution, one legal business of £2 to £5 for every because of the user. We need to be attentive
we are increasingly creating end-to-end pound invested,43 and, drawing on evidence to the gap between what those users need
solutions. We are experimenting with the in other sectors, indicates increased use of and what they are actually getting and the
latest technologies and investing in tech that digital technology by legal service providers impact this has on trust. Tech can help with
enables the firm to deliver the new legal could lead to productivity gains worth up to this, but it is really about taking a ‘human
products and services our client’s businesses £1.7bn annually,44 including improvements in first’ approach to service delivery and the
need – smart contracts being a key focus, the quality of advice and better outcomes impetus must come from the clients. GCs
including through our DLT Co. collaborative for clients/customers, complimenting rather play an important role in driving this and
42 - Department for Business, Innovation and Skills, ‘Rates Of Return To Investment In Science And Innovation’ (Frontier Economics, 2014).
43 - Frontier Economics, ‘Economic Contribution Of Lawtech’ (LawtechUK).
44 - Frontier Economics, ‘Economic Contribution Of Lawtech’ (LawtechUK).
45 - Wolters Kluwer, ‘2020 Wolters Kluwer future ready lawyer: performance drivers and change in the legal sector’ (2020).
23Priority focus areas
can demand better, knowing there are great positive impact on teams. Equally, there is heavily in lawtech adoption in legal services
service alternatives out there for a growing body of collaboration occurring to realise its benefits, for example Singapore
them today.” between in-house teams and firms to providing S$3.68m in subsidies to fund
Dana Denis-Smith, create tech solutions that focus on shared law firm tech adoption costs and S$10.8m
CEO, Obelisk Support and Founder of the problems to be solved, such as our work with for research on digitising rules and legal
First 100 Years Project LawAdvisor - a Barclays Eagle Lab LawTech documents.
member - and international law firms to
develop a matter management platform.
29 The in-house community therefore has This moves us on as an industry, beyond the Key takeaways:
an opportunity, as the powerhouse of the parade of tech solutions looking for problems
legal sector, to leverage their individual that fit, and puts in-house counsel firmly in Greater investment in technology
and collective buying power to drive the driving seat.” and R&D is needed. While average R&D
technological change throughout the sector, Martin Halford, investment across all business sectors is 5%
and themselves embrace technology, to lead Managing Director - Head of Legal, of revenue, few legal businesses target as
the way. Barclays UK much as 1%.
While R&D investment is lagging
“A healthy mix of competition and 30 Alongside this, continued strategic among incumbent legal service providers,
collaboration orchestrated by in- investment is needed at a national level, the UK lawtech start/scaleup market grew
house teams drives greater adoption of stimulating and supporting the development 101% in the last 3 years - faster than other
lawtech. Mandating use of technology of infrastructure, standards and cooperation tech sectors during the same period. The
as a key criteria for joining a panel and across the sector and accelerating startup dynamic is a catalyst for wider
then measuring innovation value add as progress. Government backing is critical, sector technology innovation.
part of performance evaluation, creates such as through our work at LawtechUK,
competitive tension to do more than pay lip removing systemic impediments, stimulating General counsels and in-house legal
service to lawtech adoption. We have seen prioritisation and confidence, and fostering departments can position themselves as the
a marked increase in the use of technology new standards. As has been shown in other powerhouse of the legal sector, leveraging
by law firms, with this often being the key sectors, government involvement and their buying power to drive innovation and
differentiator in tenders. Firms are also investment is a key driver for growth and tech adoption.
seeing the commercial efficiencies and change. Globally, jurisdictions are investing
24Priority focus areas
2) New markets 2) New markets 2) New markets
31 Legal services largely do not meet the “When we started SeedLegals, I thought 33 There are a range of benefits for SMEs from
needs of small to medium-sized enterprises the problem was all about creating legal lawtech products and services: cost savings,
(SMEs) and consumers, whose unmet legal documents. But what we learned is that greater transparency and certainty as to
needs present a vast opportunity for sector nobody is looking for legals, they’re looking costs and service delivery, the convenience of
growth and delivery that can be achieved for a solution to raising investment, hiring being able to access online services outside
over the near term, through utilising someone, incentivising their team with share office hours and asynchronously, and faster
technology. The untapped market for SME options, whatever. And it turns out that the response times. LawtechUK commissioned
and consumer combined is potentially worth solution to that is data that shows the most research estimates cost savings for SMEs
£11.4bn each year, with potential business common choices made by others like them, using subscription-based lawtech offerings
from SMEs worth up to £9bn and consumer an always-on platform that lets them sort it of between £2.3bn and £8.6bn per year.51
business worth up to £2.4bn per year.46 at 10PM on a Sunday night, real-time chat Use cases for SMEs over the near term focus
that lets them get answers from an expert in around less complex legal work, such as
32 The UK’s 6 million SMEs - private minutes, and a billing model that provides access to legal information, find-a-lawyer
businesses with less than 250 employees - unlimited help and support for one fixed services, business formation documentation
make up 99.8% of all UK businesses, account cost. Oh, and legal documents, of course… and contracts. These services are scalable
for 52% of private sector turnover, employ but that’s a byproduct of the above. And as stand-alone lawtech offerings or through
16.6m people,47 which is 60% of jobs, and we then see an amazing social engineering partnerships with existing legal service
produce a large proportion of the nation’s change, where companies make choices providers. Regulatory compliance is also a
innovation and intellectual property. 30% of based on the available ready-to-go product growth opportunity in the SME market in the
SMEs report dealing with at least one legal solutions. It’s not automated legals that near term, making it easy and efficient for
issue each year, and sometimes many more. will ultimately disrupt law firms, it is the businesses to understand and meet their legal
But 50% of SMEs handle their legal needs expectation that your legal solution platform responsibilities and satisfy their stakeholders
on their own48 and many do not identify the will be as always-on, instant, data driven and insurers, in a complex regulatory
problems they face as legal issues. 96%49 of and with an intuitive workflow, just like every environment. Growth of lawtech products
SMEs regularly experience bad debts, and other business tool you use.” for regulatory compliance can meet this
commercial disputes alone cost them £11.6bn Anthony Rose, opportunity, with investment in this segment
per year.50 CEO, SeedLegals growing at the fastest rate of all lawtech
segments - 214% in the last three years.52
46 - Frontier Economics, ‘Economic Contribution Of Lawtech’ (LawtechUK).
47 - Department for Business, Energy & Industrial Strategy, ‘Business Population Estimates For The UK And Regions: 2019 Statistical Release’ (2020).
48 - BMG Research, ‘The Legal Needs Of Small Businesses 2013-2017’ (Legal Services Board, 2018).
49 - Escalate Disputes, ‘Time For Change: Late Payment And Commercial Disputes 2019 Survey Results’ (2019).
50 - Federation of Small Businesses, ‘Tied Up: Unravelling The Dispute Resolution Process For Small Firms’ (Federation of Small Businesses, 2016).
51 - Community Research, ‘Qualitative Research Into SMEs’ Legal Needs And Adoption Of Lawtech’ (LawtechUK, Legal Services Board).
52 - Frontier Economics, ‘Economic Contribution Of Lawtech’ (LawtechUK).
25Priority focus areas
34 The LawtechUK feasibility study for SME
resolution of payment disputes53 specifically “There is a real need for the sector to
targeted the vast problem of late payments improve its ability to quantify the extent,
to SMEs. Pre-Covid-19, 54% of SMEs and cost, of unmet legal need. People
A survey respondent in LawtechUK experienced overdue payments, collectively won’t always understand that they have a
commissioned research, Tony, runs a small amounting to £23.4bn and incurring £4.4bn legal need, and they may seek help from
architectural business in Glasgow. He is costs to chase payments. The average SME other agencies, such as their GP or Citizens’
a sole trader and has been in business for spends 1.5 hours a day chasing five invoices, Advice. This leads to system-wide impacts,
twelve years. worth approximately £8,500.54 These figures and costs, that aren’t always understood or
have risen through Covid-19.55 All of this quantified. Technology can help to open-up
underlines the importance of developing and access to legal services and to reduce unmet
“The key advantage [to lawtech] is providing legal and court services that can legal need.”
that there are a variety of ‘off the shelf’ handle urgent issues quickly and at scale. Aisling O’Connell,
offerings, which would make me reconsider Technology and Innovation Policy Lead,
what my legal requirements actually 35 On the consumer side, 40% of consumers Legal Services Board
are. I know what I know and if I request handle their legal issues without assistance56
something from a traditional legal service and only 22% get professional legal help. Six
or my accountant, they will respond to that in ten consumers experience a legal issue 36 Much of the success of fintech was
request without necessarily advising me of every four years, and 53% of these cause achieved by taking market share from
other things I should consider. Reviewing them anxiety.57 There are nearly 67m adults incumbents serving retail clients by providing
the templates and offering made available in the UK.58 If 78% of people experiencing more convenient, cost-effective solutions. In
online would expand my knowledge to a legal issue are not getting professional legal services, the opportunity beyond this
consider other areas where I may need support today, there is a significant unmet is also to reach people who need assistance,
to consider legal services. Also the cost legal need and a substantial latent market but currently do not receive any service at
of services will be driven down due to for legal services, the majority of which could all - and deliver what can be considered
being competitive and the provider being be delivered online. People increasingly want as basic legal health solutions. Using new
aware of this. This is a huge benefit and … digital communication with their lawyers products and services potentially opens
transparency of costs and no hidden costs via email or an app rather than in person, consumers up to further, related product
[are] a massive selling point.” and 71% of clients are now comfortable with offerings, for example users of fintech
video consultations.59 banking subsequently engaging with
53 - LawtechUK, ‘SME Online Dispute Resolution UK Feasibility Study’ (2021).
54 - Sarah Penney, ‘New Research: UK SMEs Chasing £50Bn in Late Payments’ (Tide Business, 2020).
55 - Federation of Small Businesses, ‘Late Again: How the coronavirus pandemic is impacting payment terms for small firms’ (2021).
56 - Competition and Markets Authority, ‘Legal Services Market Study’ (2016).
57 - YouGov, ‘Legal Needs Of Individuals In England And Wales’ (Legal Services Board and The Law Society, 2020).
58 - ‘Overview of the UK population’ (Office for National Statistics, 2021).
59 - IRN Research, ‘UK Legal Services Market Report 2021’ (2021).
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