KEY CONTRIBUTORS
REGULATORS AND TECH INNOVATION
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What role do regulators have in the fast-moving world of technological innovation?
he Government’s Fourth Industrial Revolution white paper identifies the need for “a more agile approach to regulation, that supports innovation while protecting citizens and the environment”. This statement holds true for our legal services market. Indeed, since effective legal services underpin all parts of the economy and a well-functioning society, it is vitally important that regulation in this sector keeps pace with the greater role that technology is playing in the delivery of legal services to consumers. Research we carried out last year found that fewer lawyers view legal services regulation as a barrier to innovation than three years ago. While taking pride in this result, we also found innovation in the sector as a whole has not increased and that there has been limited adoption of new technology. Legal professionals told us the main barriers they face to adopting LawTech are lack of expertise, the risks involved in using unproven technology, and the potential for greater ethical problems. This tells me that innovation and ethics go hand in hand and underlines the importance of a well-designed regulatory framework that both encourages technology and addresses the risks it creates. With this in mind, we have set ourselves a five-year policy objective that access to legal services is increased through the promotion of responsible technological innovation that carries public trust. To kick this work off, we have commissioned a series of expert papers and recorded podcasts on various aspects of technology and regulation. The first paper, by Alison Hook, considers the different approaches taken by regulators internationally. In her analysis, regulators are taking one of four strategies: wait and see, resist,
“Research we carried out last year found that fewer lawyers view legal services regulation as a barrier to innovation than three years ago” accommodate, facilitate. England and Wales fall into category four: facilitate. I think we can all be encouraged by this. Compared to many other jurisdictions we have a liberalised regulatory framework that encourages external investment. The regulatory framework also means that regulation operates more independently of the profession than in other countries. Codes of conduct are built around highlevel outcomes. Together, these foundations leave us well positioned to respond in an agile way to the opportunities and challenges that technology presents. In his paper, Professor Roger Brownsword of Kings College London emphasises the importance of social acceptability: that the regulation of new technologies should be broadly acceptable to legal professionals and consumers, as well as being compatible with general societal interests. In his view, regulation will not be acceptable if a technology is permitted to cross any ‘red lines’, if there is either overregulation or under-regulation, or if there are unanticipated negative consequences. Interestingly, data from the Legal Services Consumer Panel’s most recent annual tracker survey shows that more services are being delivered online than ever before, but nearly half of consumers view lack of
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trust as a barrier to using services provided through AI-type technologies. A third paper, by Noel Semple, Associate Professor at the University of Windsor, Ontario, assesses the impact of technological innovation on the sustainability of the Legal Services Act regime itself. He too identifies risks of both regulating too little or too much. In the first instance, consumers or other interested parties could be exposed to risks and detriments brought about by innovation. Alternatively, over-regulation could choke the flame of technological innovation and thereby deprive the public of innovation’s benefits. His overall conclusion is that the risks posed by technology are real, but the existing regime remains capable, for the time being, of responding to them. It’s too easy to portray regulation as stifling innovation and call for regulators to get out of the way. While badly designed regulation can block progress, it is equally true that well-designed regulation can unlock progress. Technology is not a panacea that will fix all ills, but it can make a really positive contribution to improving access to justice and the administration of justice, and to making markets more competitive in the consumer interest. Effective regulatory leadership, by government, the Legal Services Board and the regulatory bodies we oversee, will support the sector to maximise the benefits of LawTech while successfully managing its risks. The research papers can be found on our website – legalservicesboard.org.uk, and our Talking Tech podcast is available on Apple Podcasts and most podcast apps.
Dr Helen Phillips
is Chair of the Legal Services Board