Funding and scalability concerns holding firms back from tech innovation, new report says
Smaller firms face significant challenges when investing in new tech according to reasearch from the SRA and Oxford University
Funding and scalability concerns may be holding back law firms from maximising the potential of ‘game-changing’ technological innovations, according to new research from Oxford University and the Solicitors Regulatory Authority (SRA).
The research, conducted by Oxford University’s Saïd Business School on behalf of the SRA, revealed that the use of some existing day-to-day tech-enabled business solutions has reached a fever pitch over the last 18 months for the majority of law firms, with 87% of the 900 surveyed SRA-regulated firms now using video conferencing to meet clients and two-thirds storing data in the cloud.
In terms of advanced technology, just over a third of firms said they currently use advanced systems, such as automated documents, interactive websites and artificial intelligence.
Unsuprisingly, more than half of firms said their use of technology had increased since the start of the Covid-19 pandemic and almost all (90%) believed that tech-focused changes made in the areas of processing work and interacting with clients would remain in place as the legal industry slowly shifts into the post-Covid world.
The research showed that the development of bespoke legal technology, however, is largely focused on advances that will benefit larger corporate clients, leaving smaller firms out of the loop. For smaller firms that primarily serve individuals and small businesses, the barriers to developing more advanced or targeted tech solutions include cost, a lack of inhouse tech skills and uncertainty over the business benefits of making an investment.
Another significant issue for smaller firms might be a lack or low level of investment and funding. The SRA’s research suggests it is ‘especially difficult to attract private investment’ toward the development of bespoke innovations that will ‘ultimately be deployed through services accessed by individuals or small business clients’.
The research said firms working in the small and medium-sized enterprise market are less likely to have spare capital to invest in innovation, or the staff that could develop in-house legaltech solutions themselves.
Anna Bradley, chair of the SRA, commented: “These findings drive home the fact that when we talk about technology, we need to remember just how broad that term is and how far there is for some to travel. This is not just about artificial intelligence, virtual reality or future technologies. Some of the innovation which has the greatest potential to improve access to justice at pace is already available.”
She added that while such technology can be applied on a day-to-day basis to benefit consumers and law firms alike, the challenge lies with working out how to lower the barriers to accessibility in all corners of the market.
In order to address the uneven distribution of the benefits of legal technology across different market segments, the report suggests creating greater support among government, regulators and tech developers, particularly in terms of identifying funding paths. It also suggests increasing tech and innovation skill bases within the legal sector and raising trust in law firm toward new approaches to tech innovation.
Serving unmet demand from small and medium-sized businesses and consumers could be worth up to £11.4bn in annual revenues for the UK legal technology sector, according to a recent freport from Lawtech UK, while also enabling £8.6bn in cost savings for SMEs every year.