Guest post by Chris Gorst, director of challenges, Nesta Challenges
Go back a year and look at what the legal industry predicted 2019 would hold. Process automation, document review and blockchain-backed smart contracts were all mooted, and they have been making an impact.
With record external investment  going into UK legaltech start-ups, 2019 has indeed been transformative, but it still looks like the beneficial effects of legaltech are being almost exclusively felt in the corporate sector.
Perhaps it’s not surprising that investment is currently focused on this end of the market. Legaltech development requires significant investment and looks for equivalent returns. Naturally it is the corporate end of the legal services spectrum that has the deepest pockets and the resources to support their tech ambitions, and the strongest incentives to stay at the technological cutting edge.
However, the sands are shifting; consumer- and small business-focused innovations are starting to take off. I predict that 2020 is the year that legaltech will begin to enter the mainstream and make a difference beyond the offices of large-scale law firms to broaden access to legal services for a far more diverse audience.
There are pioneers in the consumer space that show us what is possible and are already gaining traction. Do Not Pay launched in the 2015 – a free legal chatbot originally established to help contest parking fines after its entrepreneurial creator, British-born Joshua Bowder, wrote software to automatically appeal tickets he’d been issued with at school.
The self-styled ‘robot lawyer’ has been expanded to include landlord disputes, challenging bank charges and even helping users take advantage of free trials offered by companies that it will automatically cancel before they roll into a subscription. This year DoNotPay raised nearly £4m in investment from the early backers of Facebook and Airbnb.
That American investment is the equivalent of 6% of the UK’s total legaltech investment in 2019 – an extraordinary achievement for a consumer-facing start-up.
Virtual law firms like UK-based Lawbite are disrupting the legal advice sector too. After answering questions or uploading a contract, the service connects small business users with an appropriate lawyer to assist with anything from intellectual property to dispute resolution. As a virtual service, it is able to offer legal advice at around half the cost of traditional law firms, with flexible price points more suited to less well-off small business users.
Other similar examples include the likes of RocketLawyer and LegalZoom in the US, and new contenders in the UK like Sparqa Legal which recently announced a partnership with business-focused neo-banks Revolut and Starling.
Though technological solutions will not always be right for every issue, or every audience, for the legaltech revolution to truly succeed, it needs to benefit people in all parts of society, from the wealthiest corporate clients to struggling sole traders and small businesses, from individuals with generous financial means to the most vulnerable in our communities.
Currently, too many people are underserved by legal services in England and Wales, with a ‘legal gap’ leaving individuals and small businesses to fend for themselves. Legaltech could have an important part to play in narrowing this gap.
The Solicitors Regulation Authority (SRA) has identified it as a priority. It has already made a range of changes to create safe-spaces for innovation, while getting rid of particular rules that might restrict new businesses entering the legal market, or prevent solicitors working in different ways.
Innovation and supporting the adoption of new technology is a key priority in its proposed new strategy.
We at Nesta Challenges have been working with the SRA to support this work. Together we launched the Legal Access Challenge last year to promote technological tools and solutions for people who currently find themselves on the wrong side of the ‘legal gap’.
Eight prizes of £50,000 have been awarded to the challenge finalists , two of whom will receive an additional £50,000 each when the winners are announced in April 2020.
The finalists’ products are already in development with some just launched and others on the cusp of launching in early 2020.
The challenge prize offers not only financial help, but expert advice throughout the finalist phase to accelerate their entry to market. Initiatives like the Legal Access Challenge and the ingenuity of its finalists are shifting the focus of legaltech development significantly on to solutions that can help members of the public with the positive impact set to be felt in the years ahead.
Legal Access Challenge finalist Glow is a platform which connects individuals and small businesses with similar legal claims to efficiently take collective legal action.
Its aim is to redress the balance between organisations and individuals, by empowering the affected parties to unite and better challenge bodies acting illegally. By allowing the individual complaints to be treated as a much larger whole, it enables collective bargaining and cost sharing among the claimants.
These groups, at present, can be hugely time-consuming to manage, but using a technological solution like Glow, will simplify the process significantly for not only the claimant, but also solicitors, litigation funders and insurers.
Having been announced as a finalist, Glow has been successful in raising a further £200,000 investment.
In a similar vein, MyDigitalRights from Doteveryone is an independent one-stop shop to help people exercise their digital rights and access systems of redress when online services fail to respect them. MyDigitalRights users will be asked eight simple questions to help establish whether they have a legal issue and will then sign-post them to the best route of redress.
While these examples pursue redress on a broad scale, other finalist solutions are focused on helping people with specific legal problems.
Working as specialist divorce and finance lawyers, Formily’s Alex Woolley and Sam Littlejohns saw just how complicated getting all the documents right for an initial court hearing can be. They also saw how much it can impact a case if they are completed incorrectly.
The Form E, dealing with financial matters arising from a divorce is longer than a tax return and the government guidance about a tax return combined (even without any attachments) but the advice available for litigants is extremely limited.
Formily breaks the Form E down into simple questions that the user does not need a lawyer to understand and helps them compile the evidence that is required in court. Finally, it asks the user a few questions about their case to generate the documents that they will be obliged to provide to the court at their first hearing.
The benefits of legaltech innovation have been felt most powerfully in the upper echelons of the legal industry, but we are starting to see a shift. 2019 has been a landmark year for legaltech in the corporate sector; thanks to innovators like Joshua Bowder and products like Glow, MyDigitalRights, Formily and the five other solutions in the running to win the Legal Access Challenge, 2020 and the decade ahead should see legaltech enter the mainstream to empower consumers and small businesses too.