The government-backed LawtechUK initiative launched in collaboration with tech industry body Tech Nation has created a ‘sense of urgency’ around the development of legaltech, according to an external impact report. 

The assessment, conducted by microeconomics consultancy Frontier Economics, focused on how LawtechUK has delivered against its grant objectives and the wider impacts of its different initiatives. The programme's high level of engagement had much to do with its neutrality as a government-funded entity, which meant it was able to galvanise startups to participate and commit to its long-term vision, according to one tech lead at a global law firm. 

LawtechUK was launched in 2019 with a £2m grant from the Ministry of Justice in a bid to promote investment and innovation in legaltech. The programme's initiatives included the LawTech Sandbox, the establishment of an online dispute resolution platform offering SMEs a cheaper alternative to resolving late payment disputes and the development of the Lawtech Online Hub and Training Centre.

So far, the programme has leveraged an estimated £2.30 to £2.60 from the private sector for every £1 it received from the government, indicating a high level of value for money, the assessment said. Private contributions considered in the report’s estimates included secondments, pro bono advice and design and development of content, as well as staff contributions. 

The assessment found the most influential initiative was the Lawtech Sandbox, which ushered in five legatech startups chosen out of 65 applicants in its first cohort in December 2020. 

‘Following engagement with the sandbox, in particular, regulators have taken steps to actively encourage innovation and start-ups and help create an environment of innovation, rather than focusing only on authorisation and the “usual” set of immediate priorities,’ the assessment said. 

Feedback on the sandbox’s impact was similarly strong from regulators, the assessment found, with several noting that the sandbox gave them the chance to create more coordinated approaches to the adoption of tech in the legal sector as part of the programme’s regulatory response unit.

Paul Mosson, executive director of member services and engagement for the Law Society of Scotland, said: "What LawtechUK’s regulatory response unit is uniquely placed to do is take a problem, very fast and very succinctly right to the heart of regulation across the United Kingdom, irrespective of practice area, discipline or jurisdiction. There is no other organisation than LawtechUK that has achieved that. No one else has that convening power across all three UK jurisdictions."

The LawtechUK sandbox was inspired by the Financial Conduct Authority’s (FCA’s) sandbox, which was launched in 2016 and has been credited with aiding the UK’s burgeoning fintech sector by allowing the testing of new products in a controlled environment. Two law firms have participated in the FCA’s sandbox – CMS was selected as a member of its seventh cohort last summer and DLA Piper was chosen for the sixth cohort in 2020.