AI: Strong interest among small firms
Tech adoption by small law firms is being held back by cost, uncertainty – both in what they need and what can meet their needs – and a reluctance to invest in systems that quickly become outdated or non-compliant, according to research from the Solicitors Regulation Authority (SRA).
Possible solutions included guidance on choosing technology and networking opportunities to learn about new technologies, as well as access to third-party support and funding.
The SRA commissioned Thinks Insight and Strategy to research the approach to technology of firms of up to four partners and a turnover of below £400,000.
The regulator has a strategic priority to support innovation and technology that improves the delivery of legal services and access to them, and said an important part of delivering on this was supporting small firms to adopt technology.
Thinks conducted a literature review, carried out in-depth interviews with 22 law firms, lawtech providers and legal and technology experts, surveyed 138 sole practitioners and small firms, and ran a workshop bringing together lawyers and technology providers.
Its report found that small firms experienced “similar drivers and barriers to the wider sector” but, due to having fewer resources, found the barriers more challenging to overcome.
A desire to increase efficiencies and meeting increased consumer expectations were the most common reasons for more technology.
Communication and accounting software, cloud computing and case management software were the most commonly used technology by small firms – 14% were using artificial intelligence (AI) automation and 12% generative AI. A further 25% were considering adopting GenAI, the highest of any technology.
Small firms were most likely to find out about new technology through their own research and from their peers, with only 21% saying tech providers have approached them directly. “There was a general feeling that most technology is tailored for larger firm needs,” the report said.
Most recognised the value of tech and the importance of keeping up with it, as well as the risk of losing out to competitors if they failed to. “While there is some underlying fear that technology may ‘take over’ jobs, most agree such fears are unfounded,” the report said.
Cost, uncertainty and the reluctance to invest were the main obstacles. “Many of the respondents stated that they lacked time, technical knowledge or confidence to choose the right technology,” the report went on.
“They often relied on advice from peers but felt overwhelmed with options. They felt that they were without clear information on what is compliant or good value. These concerns were more pronounced for newer technology like AI.”
Research participants identified initiatives they believed could support sole practitioners and small firms to embrace technology and innovation, including: “clear, impartial guidance on choosing and using technology”, case studies about similar firms adopting technology, networking opportunities “to learn about innovation, new technologies and to compare different options”, and access to third-party support and funding.
They urged tech providers to tailor their offering to smaller firms, including pricing structures linked to the number of users and making sure that trial periods were offered to multiple members of the team.
Participants wanted the SRA to provide more support, particularly around data protection regulations and what firms should keep in mind when using AI.
The idea of a regulatory sandbox or a testing environment was mentioned. The SRA said: “Our plans to carry out some research to understand the potential demand for and benefits of a safe testing environment.
“As part of this work, it could explore whether such an initiative could help small-sized firms in particular to test, develop and evaluate innovative or technology-based approaches to the delivery of legal services.”
As well as help that membership bodies could also give, the research identified “a desire for impartial advisors”.
The SRA said the research showed “how there are many actors in the legal sector that can help small firms overcome” the challenges they faced in tech adoption. For its part, it would continue to deliver the SRA Innovate programme and enhance the resources on its website.
Chief executive Paul Philip said: “The use of technology in legal services is advancing at pace and there is a risk that smaller firms, who may not have the resources, might get left behind. This research shows that sole practitioners and small firms want to embrace new technology and value the opportunities and efficiencies it can bring.
“The report provides valuable insights for law firms, technology providers and the wider sector to address barriers to adoption and support smaller firms.
“The government’s Plan for Change outlines how greater use of AI and technology in legal services will spur economic growth. As small-sized firms are a gateway to legal services for consumers, unlocking their ability to engage with innovation is key.”
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