How innovation can unlock legal services for the majority

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Guest post by Chris Gorst, head of better markets at Nesta Challenges

Gorst: Legal services market is an outlier in its limited adoption of digital technology

In a recent speech, the Lord Chief Justice, Lord Burnett, set out a challenge for the legal sector: “It is not every generation that is called upon to question the fundamentals of their systems, of their ways of working. The implications for all of us of the digital revolution are all too apparent. Justice cannot be immune from them.”

The rule of law should apply equally to each of us, regardless of circumstances, yet this is not always the reality. Being able to access expert legal support could be the difference between defending your rights when faced with a bullying boss or maintaining contact with your children after a family breakdown.

Unfortunately, our legal services market lags behind other sectors in adopting the kinds of innovation that have transformed and enhanced other parts of the economy, making access to the law out of reach for the majority of everyday people and small business owners.

In many areas of our lives, from financial services to transportation to education, the trend in recent decades has been towards greater openness and ease of access – enabled and accelerated by an ongoing revolution in digital technology.

The combined effect of technology and competition in many markets has been to make ‘user journeys’ ever more seamless, intuitive and tailored to the individual, often while lowering cost.

Whether it’s doing your banking on your mobile or being able to compare hundreds of different car insurers in a few clicks, other sectors have been transformed by new technology and power rebalanced from providers to customers.

Yet, the legal services market is an outlier in its limited adoption of digital technology.

As the Lord Chief Justice stresses, legal services cannot be immune from the digital revolution. But there is a tension in the use of “cannot”. On the one hand, it suggests inevitability and, on the other, moral imperative – but are what will happen, and what should happen, in alignment?

Digital technology is certainly reaching into legal services. Whether called lawtech or legaltech, it’s clear that the legal sector is in the early stages of technological disruption with start-up investment in legaltech crossing the $1bn mark in 2018.

However, this investment is overwhelmingly focused on helping commercial law firms raise the productivity of their lawyers and better serve their corporate clients. Meanwhile, the public sector has embarked on a hugely ambitious transformation of the courts and tribunals system to streamline processes.

What is still in notably short supply is the use of digital technology to directly support individuals and small businesses in accessing legal services, conveniently and affordably.

The paucity of such services in the UK in 2019 is concerning. Without them, access to legal help will continue to be seen by many as an opaque and stressful process, accessed only as a last resort and, even then, only if it’s affordable.

The result is a ‘legal gap’ in the UK where many people and SMEs experiencing legal problems do not receive professional legal support.

Legal Services Board research shows that over half of adults in England and Wales faced a legal problem in the last three years, and yet only one in three sought expert advice or assistance. The rest instead dealt with the problem alone, with the help of friends and family, or did nothing.

Indeed, the average small business faces eight legal issues every year, but only one in 10 takes advice from a lawyer, with small businesses being more likely to approach an accountant.

Both the public and small businesses cite a number of barriers to using legal services, with cost perceived as a major issue – 63% of people do not believe that professional legal advice is affordable for ordinary people.

In addition, some people are simply not aware that their problem is a legal issue and do not know how to start addressing their problem.

While the scale of the challenge in reversing these numbers seems daunting, we can view this as an exciting time for this generation of legal professionals, when innovation and technology could transform how legal services are delivered, accessed and experienced.

Imagine if ordinary people and small businesses were able to diagnose their issue and understand their options at their convenience, take steps to resolve their problem without a lawyer where one was not really needed, and identify a lawyer who was right for them where one was.

Then the lawyer, possibly supported by modern machine intelligence of the kind now being adopted in commercial law firms, would be able to provide efficient and effective advice at the point they can really add value.

There are some examples of solutions working towards achieving this vision, such as tools to support appeals against benefits decisions, eviction notices, and others which help businesses to create tailored contracts.

However, the development of innovative solutions that directly help individuals and small businesses to address their legal problems are still in their infancy. The reasons include barriers to adoption such as a fragmented market, deeply ingrained ways of working, lack of awareness and trust, and challenges for providers in developing sustainable business models.

Action is required on multiple fronts if we are to change the legal services sector’s ability to innovate to better serve ordinary people.

In 2016, the Competition and Markets Authority highlighted inadequate competition and innovation in direct-to-consumer legal services for ordinary citizens and SMEs. Since then, there has been some progress as firms have established technology committees, and the industry now holds forums and events dedicated to the future.

However, bolder action is needed.

The Solicitors Regulation Authority (SRA) has been working on a package of measures designed to support the wider industry to adopt innovation. This includes its innovation space, and changes to give legal businesses more flexibility, and solicitors more freedom as to where and how they work.

But, given the scale and urgency of the challenge, there is also a case for direct efforts to stimulate innovation, demonstrate the kind of change that is possible, and identify and remove any barriers that prevent responsible innovation.

This is why the SRA is partnering with Nesta Challenges to deliver the Legal Access Challenge.

The Legal Access Challenge will seek out digital innovations which directly help individuals and small businesses to understand and resolve their legal problems in more affordable and accessible ways.

Applications will open in late May and a limited number of finalists will receive initial development grants of £50,000 with an additional £50,000 prize in spring 2020 for the winner from among the finalists.

A challenge prize is a proven way of stimulating innovations to tackle social problems and learn about what works.

They are also much more than a financial prize. Their design is unique in that they offer entrants additional support, advice, new partnerships and experts that the organisation would not normally be able to access. They also encourage ideas from the widest range of sources and, in such a fast-paced world of technological disruption, it’s vital to consider every idea.

The Legal Access Challenge will support the development of new solutions and prototypes, or improve functionality of current prototypes, as well as encouraging partnerships between parties interested in innovating in this space.

It exemplifies a proactive approach towards regulation – using innovation to achieve regulatory goals – and there will be deep engagement between the SRA and the innovators throughout which will in turn support the SRA in its goal of enabling law firms to take advantage of these new developments.

The Legal Access Challenge cannot, on its own, resolve problems that – to paraphrase the Lord Chief Justice – get to the very “fundamentals of the system”.

But our hope is that, through demonstrating the kinds of customer-focussed innovations that are possible, the challenge can point the way to a different future where firms are able to provide quality, lower cost services to a greater range of customers while freeing up lawyers’ time for higher value tasks.

As a result, the lawyer, assisted by technology, could one day become a trusted advisor to the majority.

For more information about the challenge and to get involved, visit the website.