Close partnerships between the legal and tech sectors will unlock growth for firms despite the challenges ahead

Andy Sommerville, Director at Search Acumen, writes on close partnerships between the legal and tech sectors will unlock growth for firms despite the challenges ahead.

Digitisation in the property industry has never been more critical. Case loads for lawyers are going up, while challenging political and economic conditions continue put transactions at greater risk. At the same time, buyers and sellers have been in a difficult position as mortgage rates have risen and inflation has meant clients are increasingly looking to their lawyers to drive cost efficiencies.

Over the coming years, a recession and high living costs will mean these pressures are exacerbated for law firms and their clients. Meanwhile, government departments and local authorities that support property transactions, and are already under great strain, are required to stretch their budgets even further. None of this will take the pressure off embattled conveyancers.

Digitisation will relieve these pressures driving efficiencies that will save lawyers and their clients time and money, despite the headwinds. We have seen vast progress to date moving towards a digital first property sector, both from industry and government.

HM Land Registry’s 2022+ strategy, which sets out plans for transforming the market using cutting-edge technology is an important step, as was the Government’s Autumn Statement decision to protect and increase R&D spending, which will hopefully lead to further innovations that support the property sector in years to come.

At the same time, firms across the country have been investing in new technologies and digital processes since the pandemic and where these improvements have been made and scaled across the industry, they’ve made a massive difference.

However, we need to be realistic about the future. We have a long way to go to achieve truly revolutionary digitisation and, with public spending set to reduce from 2025, this is likely to inflict even more delays on property transactions in years to come. At the same time, a recession will create challenging conditions for firms and their clients, with budgets squeezed for businesses and households alike.

With headwinds swirling, we know firms will need to make efficiencies, both to future-proof their businesses and support their clients, who will similarly be trying to achieve more, with less. Technology is the answer in a volatile world where opportunities for organic growth are less readily available.

This doesn’t require firms to struggle to maintain huge R&D budgets or innovation spending at the same time as trying to make balance sheets add up. Earlier this year we calculated that end-to-end digitisation simply using existing technology can save at least five hours of legal work per transaction. This is a huge amount of time and money saved if you scale this up across every transaction in the country over the year and a big incentive to progress rapid digitisation.

While it’s tempting to believe that taking innovation solely in-house will drive efficiencies further, this is a misunderstanding of the dynamics of the tech sector. Technology is only as successful as its integration and only delivers maximum impact if you continue to upgrade capabilities over time to keep pace with technological change.

A tech partner, therefore, represents a relatively small investment when set alongside the extra efficiencies that come with better integration and maintaining an active approach to incorporating new innovations as quickly as possible.

Perhaps the most high-profile digitisation project of 2022 has been the reforms to AP1s and as HMLR moves to a digital first approach for AP1 submissions law firms have been adapting accordingly. We are seeing firms engage steadily with AP1 digitisation with a 110% jump over the summer in firms adopting digital AP1 processes, and further increases each month since.

As well as being a symbolic transition for the industry, this is a great example of how partnership can work. For those firms we’ve supported along this process, we’ve been able to help them quickly and smoothly integrate a digital AP1 process within their existing conveyancing platform, driving extra efficiency savings, working out any bugs, and designing bespoke workflows to suit specific client needs.

But, there is still a large section of the industry that has not yet finalised a plan for switchover and as these firms make plans, our advice with this process and future digitisations to come would be to get ahead of the game and work in partnership with technology experts who can help you maximise the opportunities that come from these changes.

While AP1s are only one part of the transaction process for firms, this switchover is perhaps more powerful in its symbolism. It firstly showcases the laudable ambition of firms and government to adopt a digital first mindset, spurred on by the wider learnings of the pandemic period about how impactful technology can be.

This ambition to embrace change will be essential to the success of firms in the years ahead. What the AP1 switchover has also evidenced is that those firms which act decisively, in partnership with technology experts, are better able to quickly and effectively integrate new processes, and therefore benefit early on from the financial and operational improvements that follow.

Moving forward, these partnerships between the tech and legal sectors are what will drive innovation and rapid change, positioning the industry to thrive despite the challenges it will face.