Regulators need to bring down the barriers to technology adoption and innovation in the interests of reducing unmet legal need, the Legal Services Board has said.
It is set to issue statutory guidance in a bid to harmonise the approach of all the legal regulators, issuing a draft for consultation this week.
The oversight regulator has been gathering evidence on technology adoption and the barriers to it, most recently publishing a major survey of legal services providers.
This found that the experience of the pandemic has given lawyers greater confidence in innovation and technology, leading to a “step change” in their use over the past three years.
The consultation explained that, nonetheless, “barriers facing technology providers, service innovators and consumers” were slowing adoption.
“Providers face a variety of barriers, including understanding and navigating regulatory regimes, lack of access to legal data, understanding data privacy requirements, and difficulty identifying which regulator or regulators they need to approach to assist with bringing their product or service to market.
“Consumers are also impacted by barriers and concerns which can impact whether and how they use technology to meet their legal needs.
“These include concerns about data security/confidentiality and cybercrime, and whether technology can offer an equivalent quality service to human providers of legal services.”
Further, evidence showed that collaboration and co-operation between a wide range of stakeholders – including regulators, technology providers, law firms and others – such as via the use of regulatory sandboxes, “is already having a positive impact on the adoption of technology and innovation and the realisation of new legal technology products and services coming to market”.
Evidence gathered by the LSB showed that regulatory factors were constraints.
It went on: “There are high levels of unmet legal need in the sector which could be addressed by increased adoption of technology and service innovation based on evidence of the desire on the part of both consumers and legal professionals to use such tools to meet legal needs.
“There is also potential for much greater use of legal technologies and innovations in the sector shown by data around technological up-take and service offering.”
The draft guidance laid out three primary outcomes the LSB wanted to achieve.
The first was that “technology and innovation are used to support improved access to legal services and to address unmet need”.
The second was that “regulation balances the benefits and risks, and the opportunities and costs, of technology and innovation in the interests of the public and consumers”.
The LSB said this outcome required regulators to “understand the benefits and risks” of technology “without being unduly risk averse”.
The third outcome was that “the legal services sector is open to technology providers and innovators and barriers to entry are lowered”.
The LSB said it intended to provide a “flexible framework” for regulators to consider when developing their approaches, while recognising that they “might need to pursue different approaches and adopt different measures”.
However, existing approaches, such as participation in the LawtechUK sandbox, the use of waivers or exemptions to help tackle barriers and the use of pilot schemes and consumer guidance were “not consistent across the sector”, which “potentially limits future adoption of technology”.
The statutory guidance would “harmonise” these approaches” and “provide a signal to regulators of the importance of developing their regulatory approaches in a more consistent way, so that the entire regulated community and consumers can benefit”.
LSB chief executive Matthew Hill said: “Technology and innovation could dramatically enhance access to legal services for the millions of people and small businesses who need them.
“The Covid-19 pandemic has already seen an increase in law firms implementing new technologies like video conferencing, and every day sees new applications for technologies like AI.
“While it will, of course, be important for regulators to understand and respond proportionately to risk, they will need, first and foremost, to adopt an open stance on technology and innovation if we want the public to benefit from the improved access to legal services they can bring.”