Legal IT Newswire: LONDON, 29 June 2017 – Investment into UK lawtech start-ups has reached £16m, reveals Movers and Shakers: UK Lawtech Startups, a new report by Thomson Reuters, the world’s leading source of news and information for professional markets, and Legal Geek, the UK’s largest lawtech community.
The report, which tracks and analyses fast-growing start-ups in the legal technology space across the UK, says that while the market is still at an embryonic stage, the value of investment in the sector shows encouraging levels of backing by venture capital firms, angel investors and players in the legal services market.
The report features a visual map that plots the start-up scene based on the iconic London Underground map. First created in 2016, the map provides an overview of the latest start-ups and uses different “Tube” lines to indicate the various categories or market segments that lawtech start-ups are targeting.
Thomson Reuters and Legal Geek say the level of investment in lawtech is likely to grow in the coming years as more players in the £25.7bn* per year legal services market look to invest in and harness the latest technology to increase efficiency, reduce costs or provide a broader scope of services.
Examples of some of the larger investments in UK lawtech start-ups include:
£2.1m in venture capital funding for CheckRecipient, a cybersecurity tool which prevents emails being sent to the wrong recipient
£1.6m in seed capital for CrowdJustice, a litigation crowdfunding platform
£800,000 in angel investment for ThoughtRiver, a machine learning/risk visualisation tool
In comparison, investment in UK fintech businesses totalled £614m in 2016, down from £941m in 2015**.
“The UK has become a global leader in fintech, but people do not often talk about lawtech in the same way,” said Jimmy Vestbirk, founder of Legal Geek. “However, the UK has a progressive regulator for law firms, access to capital, tax incentives for angel investors and a world-leading legal profession. There is also a huge tech talent pool, particularly in artificial intelligence, so what better place for lawtech to thrive?”
“The prospects for the lawtech start-up community are very exciting and lawyers are increasingly aware of the efficiencies these start-ups can bring to the market,” said Samantha Steer, director, Large and Medium Law Firms, at the Legal UK & Ireland business for Thomson Reuters “The real challenge is to understand where the innovation is happening and just how disruptive these emerging start-ups might become. Our report with Legal Geek provides this insight and it’s a great starting point for anyone who wants to know the current state of play in UK lawtech.”
Eighty-seven percent of lawtech start-ups aimed at B2B
Thomson Reuters and Legal Geek say that 87 percent of lawtech start-ups in the UK are aimed at the B2B market, with only 13 percent targeting consumers directly. The research shows that of the UK’s 64 leading lawtech startups, 56 are aimed at business customers, such as law firms, large corporations, SMEs and barristers.
Of the 13 lawtech startups that target consumers directly, the most common services provided are in the ‘marketplace’ sector – using online platforms to connect lawyers with clients – and ‘law for good’, in which businesses focus on increasing access to justice for the wider community.
Practice management, contract automation key sectors for lawtech start-ups
Leading lawtech start-ups targeting the B2B market include those focused on practice management, which make up 27 percent of all lawtech start-ups. 22 percent are focused on contracts, including legal documents as a service, contract management and contract analysis through Artificial Intelligence.
Thirty percent of lawtech start-ups founded by ex-practicing attorneys
According to the report, 30 percent of the lawtech start-ups were founded by former lawyers, making up the largest group of founders. This compares with 12 percent of founders who are from a finance or business background, and software developers, who make up 8 percent of lawtech start-up founders.
Women make up 15 percent of lawtech start-up founders
Fifteen percent of the lawtech start-ups featured in the research were founded by women. This compares favourably with recent research showing that only 8 percent of directors of fintech businesses are women (source: DHR International).
Further findings of the Thomson Reuters/Legal Geek report include:
The subscription-based business model is the most popular in lawtech, with 57 percent of start-ups operating under that model
2015 was the peak year so far for lawtech start-ups, with 26 new startups hitting the market in that year. Sixty eight percent of the leading lawtech startups have been in business for three years or less
*Source: The Law Society
**Source: Innovate Finance
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