The Legal Access Challenge – conclusion and next steps

This report provides a headline summary of the Legal Access Challenge - what we did, how it went, what we learnt and next steps. It sits alongside a much more detailed report on the Challenge from our delivery partner Nesta Challenges. Our report builds on the Nesta Report, with a focus on what we have learnt about innovation and regulation, and how it will shape our future activity in this important aspect of the SRA’s work. The report provides a summary, background to the Challenge, what we learned from it and an explanation of how we plan to maintain and take forward our lawtech work. The current situation with Covid-19 has shown how important some of its developments are for improving access to justice.

We know there are barriers to accessing legal services for many people. Technology can help to address many of these barriers, but development has been relatively slow in the legal sector

We have undertaken a range of work over recent years to promote innovation through our SRA Innovate work - from enabling new types of businesses to creating safe spaces for organisations to try out new ideas.  This has included work to encourage the increased use of legal technology.

We successfully applied for funding from the Department for Business Energy and Industrial Strategy's (BEIS) Regulators Pioneer Fund - administered by Innovate UK - to run the Legal Access Challenge.

The Legal Access Challenge, delivered in partnership by the SRA and Nesta Challenges, was a £500,000 challenge prize for early stage digital technology solutions that could provide help for individuals and SMEs to understand and resolve their legal problems. It aimed to:

• accelerate the development of digital technology solutions that could directly help individuals and SMEs understand and resolve their legal problems
• develop a community of people and organisations with a shared interest in implementing the use of technology to improve access to legal support
• learn whether there are regulatory barriers to legal technology, and if so what adaptations to our approach might be needed to overcome them while making sure the public is appropriately protected.

The Challenge achieved its aims:

• 117 applicants were received from a diverse range of projects and offering accelerated solutions to a range of access to justice issues. The scale of interest in the Challenge resulted in the Regulators Pioneer Fund providing an additional £250,000 of prize funding. All but one of the finalists said the Challenge had accelerated the development of their solution.
• The Challenge encouraged collaboration. For instance, it led to more than 350 engagements, while seven out of eight finalists said they were introduced to new and useful contacts, with five building new partnerships. We also built new relationships, while deepening others.
• We have gained valuable insights, improving our understanding of the impact legal technology is having on the way legal services are being provided in both the regulated and unregulated sectors. Although we did not find any evidence that our regulation was an obstacle to developing legal technology, we found that innovators can be held back by challenges navigating overlapping regulatory regimes, or unregulated organisations understanding how they can involve solicitors in their offer.
• We have already started work on a range of activities to incorporate our greater understanding of this area. This includes continuing to develop our networks of stakeholders; technology and innovation being integral to our corporate strategy for the next three years so that we can understand its implications and development; collaborating on the establishment of a lawtech sandbox pilot to encourage innovators.

The results of the Challenge have bolstered our view that there is significant potential for legal technology to benefit individuals and small business. There is already an encouraging number of innovators working on or keen to develop solutions, particularly among unregulated providers.

There is still much more work to do in this area. The Challenge showed the significant benefits of collaborative working and early, targeted information for innovators.

We have plans to meet the task ahead, including developing more materials to help innovators and others. We will also be considering what scope there may be for carrying out follow up work in considering an application for the second round of the Regulators Pioneer Fund.

The legal access problem

Too many individuals and small businesses struggle to access expert legal help when they need it. Fewer than one in four get professional help or advice when they have a legal problem, and this is more likely to be an accountant than a solicitor. Only one in ten small businesses use a solicitor when they have a legal problem (PDF, 112 pages, 3.6MB).

This means many individuals are not able to defend or enforce their rights, while small business struggle to manage risk or grow their business.

From banking to accountancy, technology has made it easier and more affordable for people and small businesses to access different types of services. Although there are good examples of technological innovation in the legal sector, much of the progress has been in large commercial firms - improving their own processes or services to large business clients.

Our approach to regulation

The SRA is the largest regulator of legal services in England and Wales, regulating 196,000 solicitors and 10,300 firms. We cover around 80 per cent of the regulated market.

Building upon the foundation of our core work - public protection and maintaining high professional standards - we want to help people access the right legal help when they need it.

We are committed to supporting the adoption of legal technology and other innovation that helps to meet the needs of the public, business community, regulated entities and the wider economy.

We have already made good progress on making changes to encourage innovation and make the legal market more competitive.

We have reformed our rules to allow new types of businesses to come into the market - enabling multi-disciplinary practices and firms owned by those who are not lawyers.

We also set up SRA Innovate to help businesses with new ideas to offer legal services in different, and potentially more affordable ways. This has included creating a safe Innovation Space where businesses can work with us collaboratively to test out ideas in a safe space, making sure the right consumer protections are in place.

The Legal Access Challenge was an opportunity to build on this work.

The Legal Access Challenge and its aims

In 2018, the Department for Business Energy and Industrial Strategy (BEIS) launched the £10m Regulators Pioneer Fund, which was to be administered by Innovate UK.

The aim of the Regulators Pioneer Fund was to promote cutting-edge regulatory practices to help make the UK the world's most innovative economy, while protecting citizens and the environment.

Projects were required to:

• help businesses develop products and services and demonstrate the need for change
• support the Industrial Strategy ambition for the UK to be the world's most innovative economy
• show value for money and any matched funding opportunities
• be collaborative, particularly on 'cross-cutting' issues affecting several regulators
• show any lasting benefits, including plans to scale up and spread best practice.

We successfully applied for funding to work with Nesta Challenges to create the Legal Access Challenge. Using the Challenge prize approach adopted in other sectors it is intended to help attract new innovators to change the status quo, as well as encouraging existing providers to work in different ways.

An 18-month programme, the Challenge was a global competition with a £500,000 prize fund to find technological solutions for individuals and small and medium size businesses (SMEs) in the UK to better understand and resolve their legal problems.

The programme, however, was more than a prize fund to accelerate new ideas. Developing insights that can help us regulate effectively and encouraging collaboration were integral to the Challenge.

The aims of the Challenge were to:

• accelerate the development of digital solutions that help individuals and SMEs to resolve their legal problems in more affordable and accessible ways
• develop a community with a shared interest in the use of technology to improve access to legal support
• understand more about the regulatory - and other - barriers to development of legal technology solutions and what we can do to break these down.

What happened

The Challenge received 117 applications. We were pleased by the number of applications and the diversity with:

• half from commercial organisations, with the rest a mix of individuals, charities, social enterprises and academic institutions
• different types of solutions ranging from online dispute resolution to tailored guidance; assistance completing documents to platforms for collective action
• different types of technology including guided pathways, automated document assembly, prediction analytics and tools using machine learning to power chatbots
• a broad range of legal areas were covered including housing, employment, consumer rights, immigration and social welfare, while half the applications could apply to multiple areas.

The scale of interest in the Challenge resulted in the Regulators Pioneer Fund providing an additional £250,000 of prize funding.

In September 2019, eight finalists were each awarded £50,000 from the Challenge prize fund.

The eight finalists included a mixture of applicants. This included both commercial and not for profit organisations, with local and international entrants. We wanted them to focus on individual and small business users, as well as support for those who might be particularly vulnerable if they were unable to access the right legal help.

In addition to funding, we offered finalists access to a support package to develop their proposals. In addition to support from us and Nesta Challenges, winners could get expert advice from our Challenge partners, including:

• support on data and privacy issues from the Information Commissioner's Office (ICO)
• a workshop with Her Majesty's Courts and Tribunals Services (HMCTS) to provider research insights and guidance on integration principles
• pro-bono legal advice from Hogan Lovells
• technological support from The Engine Room and
• support from the Law Society who offered access to policy committees and promotional channels.

We also worked with other organisations as issues arose. For instance, the Financial Conduct Authority offered one-to-one advice with finalists on what was possible within their regulatory boundaries.

In April 2020, our judging panel chose two winners to receive an additional £50,000. They were:

• RCJ Advice who created a technology platform which helps survivors of domestic abuses protect themselves, through integrating technology with human advice and support.
• Mencap and Access Social Care who developed a chatbot to assist people, including those with learning disabilities, understand their social care rights.

Both finalists offered potential solutions in overcoming the restrictions imposed by the current Covid-19 crisis. The need for support to women facing domestic abuse was seen as being particularly urgent in the present lockdown.

Meeting our aims accelerating digital solutions

We were pleased with the number and diversity of applicants, as well as the creativity and quality they demonstrated. Beyond the finalists, many of the applications were developing well-thought out solutions that could make a real difference to how individuals and small businesses can access legal help.

The Challenge was successful in accelerating the development of innovative solutions. Out of the eight finalists:

• seven said the Challenge had accelerated development of their solution
• six agreed that the Challenge provided them with support that they would otherwise not have been able to access, and it helped clarify the objectives of their solution
• five said they had developed a completely new solution or functionality.

We are encouraged that several of the finalists made progress during the Challenge period in other competitions and raising investment and grant funding.

We are confident that the finalists are now well positioned to continue developing their innovations, which could help more people - from different communities - access the legal help they need.

Meeting our aims: encouraging collaboration

A key aim of the Challenge was to help develop a community and promote collaboration. We were pleased to see the emergence of strong partnerships and genuinely collaborative approaches among the Challenge innovators, and between ourselves and other regulators.

As a result of the Challenge:

• more than 350 people engaged with the Challenge - from attending events, workshops or through the Challenge Slack Channel. Feedback showed that these opportunities for connection had led to valuable contacts and new working relationships
• we saw examples of applicants pooling together their expertise, particularly technical and design capabilities
• seven out of eight finalists said they were introduced to new and useful contacts, with five building new partnerships
• Almost a third (28 per cent) of surveyed applicants said they met new contacts during the application stage
• Our Innovators showcase event enabled non-finalists to share and test ideas. Attended by more than 50 people, we received feedback that suggested many attendees found such events useful. For instance, attendee responses included: "We've made really valuable connections" and "The feedback was helpful and a good 3 to 4 companies have asked to collaborate after the event."

It also helped develop and strengthen our relationships, including with other regulators such as the ICO and FCA, representative bodies and member networks, and individual organisations, particularly lawtech innovators.

We are committed to continuing those relationships and developing this focus in greater depth as our work programme continues beyond the Challenge.

Meeting our aims: regulatory insights

We were pleased by the range and depth of insights the Challenge gave us. It gave us insight into the progress of legal technology. It also helped us understand the implications of our regulatory approach, including areas where we can do more work to help facilitate innovation.

The results of the Challenge bolstered our view that there is significant potential for legal technology to benefit individuals and small businesses. There is already an encouraging number of innovators working on or keen to develop solutions, particularly among unregulated providers.

The Challenge also showed the significant benefits of bringing a range of organisations - such as regulators, businesses, innovators, charities - together. It can help build new relationships and insights that can help identify challenges and opportunities to inform future work.

Below we have outlined some of our key insights, focused on regulatory issues. There is further detail on wider learnings in Nesta Challenges report.

Regulatory barriers to innovation

Research carried out through the Challenge and the competition itself showed that regulation is not an obstacle to innovation, since our regulation is principles based and not prescriptive - even more so since the introduction last year of our new Standards and Regulations

However, there are other softer barriers which may not be in the gift of a single regulator to solve. The challenge showed that some of the main obstacles to progressing innovative ideas are:

• Overlapping regulatory regimes across the legal services market. Providing innovators with useful guidance needs careful management and input from other organisations, including the Financial Conduct Authority (FCA) and the Information Commissioners Office (ICO). It supports the case for closer coordination and collaboration between regulators responsible for those regimes and other organisation driving change in the digital legal ecosystem such as HM Courts and Tribunal Service (HMCTS).
• Low technical knowledge and awareness amongst the innovator community about the Legal Services Act 2007's regulatory requirements and the interplay between the regulated and non-regulated sections of the market. Many lawtech solutions are being developed by non-regulated organisations. Innovators do not know what the regulatory requirements are to involve solicitors or regulated firms in some way with the innovation. There is therefore a risk that new platforms might find it difficult to expand to provide opportunities for access to advice given by solicitors. We may therefore have a role in providing useful guidance for all lawtech providers to allow them to understand some of the key factors of operating in this market.

Our work with Glow, one of the finalists, highlighted how effectively this could work. Their platform allowed individuals and SMEs to take legal action against organisations in the form of Group Litigation Orders, a legal mechanism allowing groups of common individual claims to be treated as one. We were able to provide guidance on how the relationship might work between their product, solicitors who wish to take on the case and with claimants who register. We were also able to coordinate input from the FCA, so Glow could understand how their requirements might impact on their solution.

Data protection

• We learned from the engagement innovators had with the ICO. For instance, where data protection is involved, there is a need to consider data protection and privacy requirements from the very start (data protection-by-design).
• We can now signpost our regulated firms to the valuable insights we gained on this issue.

Guidance to help support innovators

More broadly, our engagement with the finalists and wider tech community during the Challenge has shown us that regulated firms and tech providers would benefit hugely from toolkits and guidance that help them:

• understand what online solutions could fall within our regulation and therefore how our Standards and Regulations would apply
• navigate more easily across regulatory regimes where overlapping requirements may apply
• design products and platforms that enable regulated firms and individuals that may wish to use them or interact with them to do so.

Research has shown that one barrier to law firms innovating may be an inherent risk-adverse attitude, particularly in smaller firms to adopting legal technology. We will draw on feedback from the Challenge on where our regulations, or those of others, are creating pinch-points to the adoption of technology and explore solutions. For instance, issuing tailored guidance towards the use of particular products and services such as digital ID checking to address the assumption by some solicitors that regulation will not allow them to use it.

Machine learning, artificial intelligence and predictive technologies

Cutting edge technologies such as machine learning, artificial intelligence (AI) and predictive analytics raise complex regulatory questions. For instance, where does liability lie when something goes wrong with this type of service. There may also be specific regulatory or ethical issues on matters like the transparency of data used to ‘train' the algorithm of an AI solution.

The Challenge means we are well positioned to progress work in this area. We will focus our energy on developing an approach that helps firms use technology in a reliable and appropriate way by making available useful guidance and being proactive in being involved in discussions on how this can be achieved. We will seek to address the potential deterrent to using AI solutions due to regulatory uncertainties.

In developing our approach, we will need to continue to work with other regulators, innovators, educational institutions and thinktanks, as well as other stakeholders. Collaboration and collectively developing frameworks will more likely mean we can recognise and respond to challenges in this area. For example, through the Challenge, we have developed good relationships with:

• Oxford University Unlocking the Potential of Artificial Intelligence for English Law research programme, which aims to explore the potential and limitations of using artificial intelligence (AI) in support of legal services.
• The Information Commissioners Office (ICO), who supported our finalists on data privacy issues and who have a priority programme of work on AI. This includes providing a comprehensive framework to audit AI applications and ensure they are transparent, fair and include measures to manage data protection risks.

Funding models

The issue of a sustainable funding model has been highlighted as a barrier for developments in legal technology. Particularly because the consumer and SME sector are not yet seen as an attractive area for investors to focus on.

We were pleased to see a range of funding models emerge during the Challenge process, which is highlighted in the Nesta report.

Innovators are balancing a need to achieve financial sustainability with making their service as affordable for as many people as possible.

Our research and public engagement, combined with insight from applicants, showed that even a low fee be a significant barrier to use. Low cost or no cost solutions are important. Some innovators provide the services free at the point of use for the most vulnerable consumers while generating revenue by promoting and licensing their products that generates income from other sources. This provides the possibility of establishing a sustainable funding model while not introducing a cost barrier that might deter the most vulnerable from using the product.

User testing

To be successful legal technology solutions need to work well for consumers. This requires user testing, from an early stage, but the Challenged showed that some innovators are struggling to get access to the right people at the right time.

The Legal Services Consumer Panel has highlighted the importance of regulators promoting and facilitating engagement by developers with a range of consumer representatives to participate in the design and development of legal technology solutions.

During the Challenge we offered a range of help to finalists, so they could find support to help them test their proposals.

Unregulated services and building trust in technology

Most legal services are still provided by regulated law firms, but there are some indications that there may be growth of unregulated providers offering legal advice and services in certain areas of law (PDF, 44 pages, 836KB).

When it comes to technological innovation, the Challenge showed that much consumer-facing innovation is coming from outside the regulated-legal sector - all eight finalists were from organisation that we do not regulate.

This offered fresh insight into how legal technology solutions may develop in this sector.

The likely high concentration of services offered by unregulated providers also raises questions of trust. Research by the Legal Services Consumer Panel suggests that 47 per cent of consumers lack trust in artificial intelligence (AI) technology when used to deliver legal services.

Public focus groups we ran on the back of the Challenge showed a general preference for regulated providers, and caution when it came to the option legal help from providers who are not regulated law firms or solicitors.

Lack of consumer confidence could be one reason why the progress of legal technology solutions lags behind other sectors such as financial services.

If the potential benefits of more affordable and easier to access legal services are to be realised, regulators will need to consider how they address issues of consumer trust. We will need to work with others to explore whether there are more flexible cross-regulatory approaches to provide consumers with the assurances they need.

This will be even more crucial as legal technology develops, and the boundaries between unregulated and regulated legal help and advice are likely to blur further.

The Challenge has strengthened our view that there is significant potential for technology to transform the legal market. When so many people struggle to get the right support, it is important that we make sure we prioritise supporting innovations that could make legal services easier to access and more affordable, while still ensuring appropriate public protections.

The recent Covid-19 crisis has bought into sharp focus the importance of flexible, easy-to-use, effective digital services.

There are already a number of things we have done - or started to do - as a result of the Challenge:

• It has informed our Corporate Strategy for 2020 - 2023. In addition to direct feedback on our proposals from 20 applicants, insights from the Challenge and the networks we built, contributed to the support of legal technology and other innovation being one of our three strategic objectives.
• We are already continuing to provide bespoke support to Challenge applicants who are exploring how to develop existing products to include access to regulated legal advice.
• The Challenge has demonstrated the transformation benefits of networks in building our knowledge, identifying issues and opportunities, and facilitating collaborations. We will continue to use existing networks, such as the Better Regulations Executive's Regulator Forum and the Regulators Innovation Network. We will maintain and expand our Challenge network to continue to realise these benefits, keep our insights up to date, and help shape our future work.
• We have already started doing this. For instance, in May 2020 we partnered with a Challenge applicant and a third party-managed account provider to explain the practicalities and potential opportunities for working as a freelance solicitor or running a virtual law firm.
• We will explore new opportunities to work with others, such as business schools and charities, to develop collaborative innovative-based projects.
• We have an immediate opportunity to further help build such networks and help facilitate new legal ideas. We are part of the recently announced Lawtech Sandbox. Developed by Tech Nation, it aims to encourage and support innovative ideas in the legal sector. It brings together technologists, legal and other businesses and public bodies¹.

Other work we plan to do includes:

• Building on our learnings from the Challenge address the pinch-points with our regulations that are creating barriers for firms in adopting legal technology to deliver legal services by providing toolkits and guidance to help them.
• We will make resources available to legal technology start-ups to help them navigate regulatory requirements and better able to develop their solutions in a way that solicitors and law firms can take advantage of them whilst being assured they are compliant with SRA regulation. Given the often overlapping regulatory regimes, we will seek to work with other regulators to aid co-ordination.
• We anticipate that technology could blur further the boundaries between unregulated and regulated legal help. We will explore how we can provide relevant information and tackle the potential issues of distrust that exist on using certain technology.  We will work with others to explore whether there are approaches to provide consumers with the assurances they need.
• Our role means we have built strong relationships with consumers, consumer representative bodies and other stakeholders. We want to help innovators engage with these groups, particularly consumers, to help them participate in the design and development of legal technology solutions. One area of particular focus will be driving development by bringing people together, including through a dedicated online community, to help build new networks and grow opportunities for collaboration. The aim is to build a sustainable platform for wider technological innovation across the legal sector, helping to widen access to legal services.
• We will carry out research to segment the market. It will focus on where and at what level the adoption of new technology is taking place and what benefits and risks there might be for consumers. This includes those who are vulnerable. We will also consider the impact so far of innovation and technology on legal service provision.
• There is a second round of the Regulators Pioneer Fund. Given the successes of our Legal Access Challenge, we will explore whether we should apply for funding for another project to support access to justice through technology.
• We want to be able to help support and signpost legal innovators seek additional sources of funding and investment. As an example, the British Business Bank have set up a new Future Fund which aims to support UK companies in science, innovation and technology by providing finance which will be unlocked by additional third-party investment on a match funded basis. The financing will support companies that typically rely on private equity investment but are impacted because of the current economic situation.

Our plans for our further work over the next three years are set out in more detail in our business plan, which we are currently consulting on.