The legal sector of the future will be centred on tech-driven cross-border solutions built around individual needs, according to a new report commissioned by the Ministry of Justice. The report also questions whether reserved activities ‘continue to make sense in an increasingly digital world’.
The report, produced by specialist legal advisory firm Hook Tangaza, offers an in-depth analysis of the current legal sector and explores how reform and innovation can increase growth and competitiveness, with the aim of ensuring UK legal services ‘remain at the forefront of global excellence’.
Writing in the foreward to the report, Sarah Sackman, the minister of state for courts and legal services (pictured), said the legal sector is ‘one of the UK’s great success stories’ and ‘a vital national asset’.
‘In 2023 alone, the sector contributed over £37bn to the UK economy, representing 1.6% of total Gross Value Added, and posted a trade surplus of £7.6bn, making it one of the UK’s strongest exporting professional services sectors’, Sackman said.
She added:
“The strength of the sector has been built over decades through our liberal, competitive, and high-quality legal market, the global appeal of English and Welsh Law, and the integrity of our independent judiciary.
“The exceptional contribution of those working across the legal services ecosystem – from law firms and chambers, to regulators, academics, innovators and the judiciary – positions the UK as a global leader in legal services.”
The legal services sector has grown by 200% in real terms since the late 1990s, valued at £43.2 billion in 2022 and contributing £37 billion to UK GVA in 2023. Key drivers, according to the report, have been the growth of business demand, exports, and reforms to corporate and regulatory structures.
Supply-side reform has been key to enabling the growth of legal services, the report finds, with the widening of reserved practice rights to different types of legal professionals, and in some cases non-legal professionals, creating greater choice and competition.
Referring to the removal of the English and Welsh solicitor profession’s monopoly on conveyancing in 1985 as ‘a classic example of the challenges to and benefits from liberalisation’ of the legal sector, the report points out solicitors adapted pricing in anticipation of licensed conveyancers entering the market, leading to a 20% fall in fees between 1983 and 1986:
“The ability of solicitors to respond to a changing market was made possible by other regulatory changes introduced around the same time, such as the relaxation in advertising restrictions. This illustrates the importance of removing the barriers that prevent lawyers themselves from behaving competitively, when increasing the potential for new entrants to come into the market.”
Creating a more open and competitive legal sector has contributed to the ‘extraordinary growth’ of export trade in recent decades, the report suggests: between1997-2022, UK legal sector exports increased by over 340% in real terms, with imports up by 290%.
The current trade success is attributed to three areas: extensive use of English and Welsh law in international business contracts; the courts and dispute resolution institutions ‘internationally recognised for their quality and efficiency’; and the breadth of the legal services sector and its specialisms across the country.
Innovation will play a major role in future success, the report suggests, with the LawTech sector now a key driver of growth. In 2022, the UK was responsible for incubating almost a quarter of all known global legal startups and is home to 370 LawTech businesses attracting £1.7 billion in investment.
As LawTech advances, AI may replace some legal jobs, the report admits, but adds that new skills will be demanded in their place and ‘redefine’ legal services:
“The next revolution in law may not look like law at all – solution services, driven by tech and built around user needs, could redefine what legal support means in practice.”
‘There is more that could be done to support the expansion of UK LawTech, especially into consumer law’, the report notes, and suggests key changes to meet growing demand:
- Reassessing the boundaries of regulation and, in particular, whether current reserved activities continue to make sense in an increasingly digital world.
- Rethinking the architecture of regulation to reflect the changing legal market.
- Developing a framework to facilitate the recognition of LawTech businesses crossing borders in the same way that the WTO-GATS gave countries a framework for enabling the entry of foreign legal service providers into their territories.
- Encouraging like-minded jurisdictions to co-operate in the recognition of LawTech businesses, in order to build markets that are attractive for the development of better consumer facing services.
‘This report sets out a bold vision for a legal services sector that is open, innovative and global by design, underpinned by the rule of law and powered by world-class talent’, Sackman concluded.
“Now is the time for us to build on this vision – together – and ensure the UK legal services sector remains at the forefront of global excellence.”
Image credit: Sarah Sackman ©House of Commons
One Response
1. With respect, the report cites a 20% reduction in conveyancing fees between 1983–1986 following the introduction of licensed conveyancers. The data is about 40 years old and does not reflect current market conditions, regulatory changes, or inflation. Moreover, lower fees do not equate to better or safer conveyancing services. Modern conveyancing requires significant technical skill, compliance, and risk management.
2. The report also claims that, according to SRA data, 71% of conveyancing solicitors use technology to deliver services, but this data was published in July 2021, almost 4.5 years ago https://www.sra.org.uk/sra/research-publications/technology-innovation-in-legal-services/
3) Can someone explain what the report means by phrases such as, “Supercharging the Consumer Legal Sector”, or “A legal services sector that is open, innovative and global by design, underpinned by the rule of law and powered by world-class talent”?
4. While I assume Hook Tangaza are specialists in their field, I cannot see that they have any expertise in Conveyancing.
5. And, ministerial endorsement does not confer technical credibility. The foreword is written by Sarah Sackman KC MP, who is undoubtedly an excellent housing policy expert, but this area of law is very different to Conveyancing.