The Legal Future according to Legal Futures

Legal Futures is an English web-based resource on the changing business of the law. Its sixth annual conference, held yesterday, provided interesting coverage into four factors driving innovation in the private sector: de-regulation, external investment, market change and technology.

A Legal Futures conference, of which this was the most successful to date, has a rather different vibe from that of one closer to the legal startup community like  Legal Geek. For a start, we were in a swanky Mews conference centre round the corner from the BBC and not in a  trendy Shoreditch converted brewery. There was a distinct lack of rock music and Red Bull. This was Legal Geek’s sober elder brother on parade even though some of the speakers could have doubled up at both events. And the spark behind Legal Futures is less technology than the Law Society’s loss of self-regulation and the consequent role of a new statutorily appointed regulator, the Solicitors Regulatory Authority (SRA), in allowing third party ownership of law firms. According to the SRA’s latest annual report (for 2015/16), the proportion of ABSs relative to conventional law firms is small – but growing: 550 as against 10,415 (foreigners should remember that the English legal system is such that the Bar is separate from – if not above – all this).

One consistent conference theme was that the success of ABSs revealed that, in the words of a bullish Adrian Biles, ’the traditional ownership model [of partnership] is no longer fit for purpose’. It is certainly not fit for his firm, Gordon Dadds Group PLC. This is a publicly listed company which describes its background thus:

•Turnover for the financial year ended 31 March 2017 was £25m with £2m adjusted profit before tax

•Gordon Dadds LLP has expanded revenues at a compound annual growth rate of 70.7 per cent since 2013

•The UK legal services market is poised for increasing consolidation, especially in the Company’s target market pool of £6.6bn of annual revenue – consisting of c1000 UK firms with annual revenues in the range of £2 million to £40million

•Gordon Dadds has a purpose built, sophisticated and fully integrated technology platform based in Cardiff, which has received £3.2m of investment since 2013 and is ready to incorporate future acquisitions

•Gordon Dadds’ strong management team has already successfully integrated 10 firms onto this cost-efficient platform.

For this purpose, the interesting point is the investment in the technology platform which has been possible through external financing.

The impact on the legal services market more generally was described by John Llewelyn-Lloyd of stockbrokers and investment bankers Arden Partners. He promoted the idea, also advanced by future guru Richard Susskind, that the future structure of work in legal services will move from the traditional pyramid structure with partners at the top to a diamond shape with fewer partners and trainees at top and bottom but more paralegals, data and other specialists in the middle. He saw four main groups in the legal services market: the elite, currently of around 300 firms but likely, he thought, shortly to reduce to 200; a middle market, business-orientated group of firms likely to be squeezed by the growth of larger, corporate models of organisation; and a third group dealing with consumers, with whom he seemed less interested, and which he felt would be dominated by fixed fees and digital delivery. There would also be some niche specialist survivors.

Some of the innovative businesses encouraged by deregulation were on display. Insurance companies and Trade Unions both had absorbed legal firms – the latter leading to a bringing in-house of formerly lucrative work that had gone to private practice. Craig Arnott of Burford Capital talked about the expansion of investment possible in ‘finding litigation assets and unlocking their value’. This had begun in relation to individual cases and was now moving much more to taking on portfolios of cases. He remarked – darkly for some – that this was ‘seen by some governments as a potential replacement for legal aid’. If it were then the domestic legal profession might want to review the enthusiasm with which it greeted the demise of champerty and maintenance.

The final session showcased three developments more relevant to those concerned with access to justice and technology. Joshua Browder promoted his chatbots. Chrissie Lightfoot of Robot Lawyer described her product LISA and – in a rather different category – Stephen Ward took the audience through his Billy Bot which is part of a barrister’s clerking operation. Mr Browder gets quite enough publicity for products whose potential is outstanding but performance underwhelming.  Ironically, he won what was effectively a raffle for an Alexa speaker which indicates the direction in which his interactive advice products might go. There is no reason why Alexa, Siri or some other autonomous bot could not answer basic – or even complicated – legal questions in due course. LISA is a clever system that allows two parties collaboratively to draw up an agreement – such as one covering a tenancy. It is a step up from a basic document assembly programme. And is an engaging chatbot front end to a barristers chambers which can carry out certain automated tasks and is being programmed currently to make coffee in the office.

The conference was, thus, effectively in two sections. First, we had the serious money men (as largely they were) intent on making serious returns – many of them well on the way to transforming the legal services market. The second showcased ideas – in Billy Bot’s case for automating procedures and humanising contacts with an existing business and in the other two floating ideas with potential to improve access to justice that had yet really to be proved. Either way, Neil Rose, the former journalist behind Legal Futures should be proud of his six year old baby. It is growing up nicely. As to access to justice, the overall picture is not so good but  there may be possibilities.

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