Small and medium size law firms (SMEs) are contributing to the growth of Bristol and Bath’s burgeoning legal technology sector, a new report says. 

The The Bristol & Bath LegalTech Report 2021, published by strategic research consultancy firm Whitecap, reveals that collaboration between SME firms and local legaltech companies is playing a role in the region’s journey to becoming one of the UK’s standout hubs thanks to 'higher-than-anticipated' rates of tech adoption despite these firms not being core targets for legal tech providers.

More than 30 legaltech firms, including tech companies working in the legal sector and legaltech arms operating within the region’s law firms, have a significant presence in the West of England, marking the region as a standout after London, the country’s primary hub. 

The report was commissioned by a group of regional stakeholders including the Bristol Law Society, the West of England Combined Authority and legal tech innovation and community group Bristol+BathLegalTech.

SME firms make up the vast majority of Bristol and Bath’s legal market, representing 88% of the firms present in the region excluding barristers.

‘Due to their size and ability to make streamlined decisions, these firms can be more agile and responsive to new opportunities,’ the report says. ‘Whereas historically the latest technology may have been beyond the reach of smaller firms, the advent of digital solutions and cloud-based software means their engagement in tech has turned on its head and has been pushed up the agenda for many firms.’

The report suggests these firms are playing a greater regional role than large firms because of their tendency to work with local suppliers. It argues that encouraging SMEs and large law firms to collaborate, as well as fostering cross-sector links between legal tech companies and fintechs, will help secure the region’s continued development as a legaltech hub.

According to the report, more than 750 people in Bristol and Bath work in either legaltech or legal innovation roles, making up 19.2% of the region’s digital workforce, higher than in any other region, demonstrating that the sector is “disproportionately” strong.

It says many law firms with bases in the region, including Burges Salmon, Foot Anstey and VWV, possess a strong focus on IT and innovation and have made 'significant' investments in legaltech over the course of the pandemic.

The report also points to the pandemic’s role in encouraging collaboration between law firms and tech companies as firms look to improve their digital competency to meet client needs despite the forced shift to remote working. 

However, John Manley, high sheriff of Bristol and former director of cloud services at HP Laboratories, said law firms could do more to support the sector.

“Legal tech in the region won’t reach its potential until law firms work with leaders from the technology and creative industries, and domain experts from the city’s academic law schools,” he said. “These industries can bring true innovation to the challenges identified by the legal sector.”

Independent law firms in Europe developing their own technology solutions include Serbian firm BDK, two of whose partners have launched and financed a document automation startup to help in-house teams streamline the creation of standardised legal documents.

In February last year, a number of leading Spanish law firms teamed up with legal tech startups and universities to set up a legal technology hub in Barcelona while the Singapore government has been a consistent supporter of its legal technology market.

In 2019, the Law Society of England and Wales published a report identifying the top ten marketing-leading cities for legal tech vying to become the top destination for start-ups. While the report named San Francisco as the unofficial world leader in legal tech, it said London sat in a strong position to challenge it, ranking close to San Francisco in specialist markets for AI suppliers.