UK lawtech startups and scaleups are growing at a rate of 101%, outpacing fintech, climate tech and healthtech, according to a report released today by LawtechUK, a government-backed Tech Nation initiative.
Around 200 legal tech businesses in the UK have attracted £674m in investment as of December 2020 and employ more than 7000 people, with these figures predicted to rise to £2.2bn annual investment and 12,500 jobs by 2026.
The ‘Shaping the Future of Law’ report also values the annual market opportunity across lawtech at £22bn, based on £11.4bn of revenue generated from serving unmet demand, £8.6bn of cost-savings for SMEs and £1.7bn from productivity gains in legal businesses.
Jenifer Swallow, LawtechUK director at Tech Nation, said: “The sector is seeing incredible growth – with lawtech adoption levels increasing during Covid-19 across our courts, legal businesses and in-house legal teams.
“Building on this growth, working collaboratively across the sector, we can realise the full strategic opportunity of lawtech on an accelerated timeline, and deliver results no one organisation could achieve alone – for the benefit of regular people, businesses, the UK economy and the wider global ecosystem. The £22bn in annual economic contribution of lawtech evidenced in this report only scratches the surface of the true impact we can have through digital transformation in law.”
Produced in collaboration with a range of cross-sector contributors, the report details the benefits of widespread use of technology and data in law, including reducing regulatory burdens and improving decision-making for businesses; meeting increasing standards of ESG; and enabling time and cost savings through document automation, data analysis and AI and smart contracts.
LawtechUK panel member Julia Salasky, CEO of lawtech companies CrowdJustice and Legl, says the “real opportunity” for lawtech to create an impact is by improving access to legal services.
“We have now helped individuals pay more than £20m in legal fees and given over half a million people the ability to donate, participate and feel they have a voice in the legal system,” she explains. “CrowdJustice made me realise that there was a huge opportunity to build tech products that could give clients a better experience, and in so doing, give law firms a competitive advantage.
“Now at Legl, where we have over 140 law firm customers, we are driving revenue, efficiency and data in law firm operations, while dramatically improving clients’ experience of their law firm.”
International trade, worth £1.153tr to the UK economy, can be streamlined through digital legal documents and effective use of data. Lawtech will also enable greater consumer access to legal services, and better, faster, more affordable outcomes with apps, on-demand online services and dispute resolution tools.
The fastest investment growth in lawtech is in regulatory compliance, which increased by 214% between 2018 and 2020 to meet the increasing compliance burden on businesses. Lawtech also grew by 74% in the consumer and SME category over the same period, demonstrating the wide market opportunity for lawtech at the core of the future economy.
With government investment in innovation at an all time high and the focus on digital infrastructure and court reform, the UK has a unique opportunity to secure its position as a global leader in law for the future, through investment in lawtech.
LawtechUK is calling for collaborative action from the legal sector, regulators, policy-makers and businesses to capitalise on the growth opportunity and ensure the future of UK law meets the changing needs of business and society. Seven priority areas are detailed in the report:
- Increased investment in lawtech R&D
- Growth of new markets
- Improved collection and availability of data, towards ‘open legal’
- Greater connectivity across the sector
- Increasing technology awareness and capability
- Policy and regulation that supports tech adoption
- Sustainable growth anchored in the purpose of law