The UK's Tech Industry has just passed the $1 trillion mark, joining the only other two over $1 Trillion tech industries, US and China
The UK tech industry is now valued at $1tn (£764bn), a landmark milestone that has previously only been reached by the US and China. The UK’s thriving digital economy is now worth more than double that of Germany’s and almost five times larger than France and Sweden according to data by Dealroom analysed for the UK’s Digital Economy Council.
In 2018, the UK’s tech ecosystem was valued at $446bn and was steadily growing and two years later, in 2020, it surged 42% to $942bn which has helped to catapult the valuations of many companies from unicorns to decacorns — companies worth $10bn or more. The latest figures cement the UK’s position as one of the world’s leading tech hubs and as revealed earlier this year, UK tech companies made up 38% of the combined valuation of European unicorns in 2021 which is the highest percentage across the continent.
The UK is now home to 13 decacorn companies of which 10 have gone on to IPO, and are the most highly valued tech companies in the country which is double that of Germany which has 6 decacorn companies and three times that of Sweden which has 4 deacon companies. They are big data company Markit, semiconductors company – ARM, fintech companies WorldPay, Checkout.com, Revolut, FNZ, Wise (formerly known as TransferWise), Rapyd, Admiral Group and eToro, e-commerce companies Ocado Group and Deliveroo, and data centres company Global Switch.
This rapid rise in the value of UK tech follows sustained investment in the digital tech sector over the past few years and can be, in a large part, attributed to a wave of tech adoption ranging from digital health apps, to education platforms, video conferencing and e-commerce during the COVID-19 pandemic. The products and services that kept us connected at home have become key parts of our daily lives now, helping propel company valuations higher and the UK tech ecosystem into a new league.
New and emerging tech trends for the industry include an increase in the prominence of edtech, CreatTech, health tech, and climate and agricultural tech and future areas of tech sector growth included Mobility Tech, TravelTech, FoodTech, InsurTech, and continued prioritisation of investment in tech innovation. And as the space for digital-led innovation grows, legal technology innovation is happening rapidly thanks to its ability to simplify complex or time consuming legal tasks including processing legal documents, signing contracts and even raising legal fees.
The boom in the tech industry of the UK has brought about positive changes in the legal sector too. Tools for law that support remote work and virtual collaboration have undoubtedly become crucial for business continuity and client service – so it is no surprise that law firms plan to continue to invest in legal technology. Recent data from various sources suggests that the legal sector in the UK has remained fairly stable throughout the pandemic and although it is clear that there are some areas of the law which have suffered, the general trends in numbers of regulated lawyers seen prior to the pandemic have continued and there is no significant change. Even before Covid-19, lawyers acknowledged they were tech laggards – a Gartner CEO survey from December 2018 found that legal departments positioned to support digital business efforts can increase on-time project delivery by 63% and increase the number of digital projects with appropriate risk management measures in place by 46%. Now, a few years on, with most firms engaged in a phased return to offices, there is general agreement that hybrid working, and communication, and at least partial digitalisation of law firm operations is here to stay. A report shows that the sector faces a fresh set of challenges – including attracting and retaining staff, remote legal work, and the risks from cyber-crime. Covid-19 turned out to be profitable for most law firms and UK-based international firms reported record earnings in their first full year of trading during the pandemic – by the end of 2021, Crowe’s Law Firm Benchmarking survey found that 91% of City firms and 75% of regional firms reported increased profits. The top 50 firms generated revenue of £19.5bn up from £18.7bn last year.
In the last five years or so, the legal industry all around the global including the UK has changed a lot as domains like legal tech and legal software tools started becoming more popular and successful. Most law firms have transitioned to using legal practice softwares these days. This has revolutionised how employees work at law firms and how lawyers go about their practice. Doing insignificant manual chores is not something a firm expects its employees to do anymore and besides, using a legal softwares means you have more and precise billable hours, and your firm is more efficient and quick with all kinds of work. As we have seen over the last five years or so, many administrative tasks have become automated by legal tech software and there is no reason to expect that this won’t continue.
According to one study done by Intapp, called Shaping the Future of Law, fewer than 50% of law firms in the UK were using legal workflow automation softwares. Here, it was found that it was mostly small and medium sized businesses or individual lawyers who didn’t use or have access to legal softwares. Serving this unmet demand could be worth up to £11.4bn in annual revenues, while also enabling £8.6bn in cost savings for small and medium sized law businesses every year. Around 200 legal technology solution businesses in the UK have attracted £674m in investment as of December 2020 and employ more than 7000 people, with these figures predicted to rise to £2.2bn annual investment and 12,500 jobs by 2026. Attitudes to legal technology software have changed in UK financial institutions since 2018 – back then, while there was some enthusiasm over what the future of legal technology could offer, there was also scepticism from some about its potential impact.
In the next few years, the software for the legal sector will become a lot cheaper and simpler and will be time-efficient for the lawyers and the clients alike with legal software tools implemented in the law firm, a high level of analysis can be done in a few minutes – for example, fast calculation, advanced reports, management of cases turnover, caseloads control, document management, among other things. As legal technology adapts to the new digital economy, a more profitable and efficient law firm is one that is able to reduce costs while embracing change to improve service to clients and grow the firm.