UK: Banks On Journey To 'Complete Digitisation' Of Legal Functions

Last Updated: 30 April 2018
Article by Lucy Shurwood and Luke Scanlon

Originally published by Out-Law.com

Major UK banks are agreed that they are "on a journey to complete digitisation" of their legal functions, but the most advanced legal technologies are among the least adopted to-date, according to research commissioned by international law firm Pinsent Masons.

Pinsent Masons, the law firm behind Out-Law.com, partnered with Meridian West to conduct a series of in-depth interviews with leaders in innovation, legal and commercial management at the UK's six biggest banks on the subject of legal technology in the banking sector.

The study found that there is already widespread adoption of legal technologies at the banks in some areas, from those used for e-billing to online data rooms and online compliance training tools.

However, more advanced legal technologies such as transaction automation tools and AI-powered document review and e-discovery tools are only used by around one third of the respondents, while just 7% of the interviewees said their organisation uses predictive tools for disputes.

According to Pinsent Masons' report, interviewees from across the banks all agreed that improving the efficiency of the legal function was a "key driver of technology adoption", from controlling costs to freeing up lawyer time and improving the speed of execution.

Many also highlighted that it would be either impossible of prohibitively expensive to carry out some tasks manually and without legal technology. Examples given included in the context of large scale due diligence and document review, such as in response to the PPI scandal, and making changes to comply with regulations, including to meet the requirements of 'ring fencing'.

However, a lack of skills and difficulty in making a business case for funding when in competition with other projects were among the barriers to the adoption of new legal technologies identified by the bank representatives. The study also found that there is an "expectation gap" between in-house lawyers and innovation teams on the integration of legal technology in their organisation.

Some banks are keen to explore potential partnerships with legal technology providers to address these issues, the report said.

"Some banks are willing to invest financially in co-creating technology in partnership with external law firms," according to the Pinsent Masons report. "They hope that, with their view of the external market, law firms can generate ideas for innovation... For banks who find funding to be a challenge, collaboration with law firms is often viewed as a way of reducing the upfront cost of legal technology."

"Collaboration is also viewed as a way of solidifying the bank's strategic vision for legal technology. Many interviewees also expressed a hope that the law firms would be able to 'tell us what we want'. They hope to access insights from the law firm's clients in other sectors, especially technology companies like Google and Apple," it said.

Banking expert Lucy Shurwood of Pinsent Masons said: "We are encouraged by the confirmation in the report that bank legal teams are keen to drive innovation through the use of legal technology. We are increasingly seeing bank clients come to us asking for technology solutions and the report underlines the continuing importance for law firms of being able to meet that demand. The report also highlights the challenges facing the developing legal tech market and some of the solutions that may help that development."

Luke Scanlon, a specialist in financial services and technology law at Pinsent Masons, said: "I subscribe to the idea put forward by professor Richard Susskind, (one of the UK's leading voices on legal technology and a consultant to Pinsent Masons) that AI will mean more of a focus on interesting work for lawyers and less time spent on mundane tasks."

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