LawtechUK has published a feasibility study for a new technological approach to the issue of late payments. The company is now looking for a partner to develop a technological solution – a proof of concept platform. The issue of late payments is a major challenge facing British businesses. An ‘SME online dispute resolution’ platform is being sought. Produced in partnership with a consortium of legal, technology and alternative dispute resolution experts. The partners included the University of Oxford, Oxford Computing Consultants, Resolve Disputes Online and Jur.
LawtechUK is a collaboration between Tech Nation, the LawtechUK Panel and the Ministry of Justice. In May 2020 it launched four initial programmes – including the exploration of an ‘SME online dispute resolution’ platform. The intent is to help accelerate the digital transformation of the legal sector to best serve the needs of business and society. The study is independent of government and does not represent government policy.
The study highlights the need to change how payment disputes are resolved – an issue affecting 72% of UK small businesses. The lack of an efficient way of recovering debts costs the UK economy £2.5bn each year. It directly impacts business owners, their employees and communities. SME late payment debt has risen to £23.4bn and collecting money owed costs SMEs £4.4bn each year.
LawtechUK’s evidence for a new online platform
The study details how a new SME online dispute resolution platform can provide an affordable, easier way to recover debts. It is an optional alternative to traditional court proceedings, which are time consuming, costly and can jeopardise business relationships. LawtechUK estimates the platform could empower UK businesses to resolve 200,000+ disputes over a five-year period. This accounts for £3.4bn in debt value, and enabling SMEs to resolve disputes within six to eight weeks.
LawtechUK has published a research study, business case and solution design detailing the mechanism through which it can be achieved. This is both operationally and financially. The solution deploys a non-adversarial methodology to enable business relationships to be preserved. It also provides a digital self-service experience, innovating on how disputes can be resolved.
The study anticipates that a first release of the online platform could be brought to market within nine months. It provides the baseline design to enable this. It recommends a private and public sector co-funding structure, setting out how the platform could become financially self-sustaining within four years.
The service would sit alongside existing court infrastructure, providing user choice for dealing with disputes. Businesses would elect to resolve their disputes within the platform instead of starting legal proceedings in court. Any resolutions achieved through the platform would be legally binding. Enforcement of such resolutions could be facilitated through court where needed.
Seeking engagement to bring the new technology to market
LawtechUK is now encouraging potential developers and backers to deliver the online platform, in alignment with the principles behind it. While LawtechUK is not funding or developing the platform itself, it aims for the study to:
- Encourage innovative developers to build and finance technology, likely to come from a combination of public and private funding.
- Encourage government support, as a critical enabler of the platform in its initial stages.
- Raise awareness within the legal and tech community on the opportunity and methodology it presents. LawtechUK encourages feedback and ideas-sharing between dispute resolution and technology experts, policymakers and other interested parties.
Jenifer Swallow, Director of LawtechUK at Tech Nation, says, “Small businesses are critical to our communities and economy. Late payments cripple them and the legal system should be there when they need it. It should not be slow, adversarial and hard to access. Our LawtechUK study shows that technology can address this problem. Disputes can be resolved quickly and easily, and in a way that maintains business relationships. Delivering this online platform can help make the pain around late payments a thing of the past for SMEs.
“Our consultation on the study has been met with support in terms of the capability and approach of the platform. This is an opportunity to deliver business and justice outcomes through technology. To seize the moment to help recovery, growth, and innovation UK-wide.”
A roadmap for future legal dispute
Richard Susskind, LawtechUK Panel member suggests, “This study offers a roadmap for the future of legal dispute resolution. An inexpensive, straightforward, online alternative to a traditional hearing. Yet connected to the courts in case a formal judicial determination is needed. The proposed system offers SMEs an easier and more affordable solution to sorting out their late payment problems. The result – greatly increased access to justice for small businesses.”
This approach supports the vision for civil justice reform laid out by Master of the Rolls, Sir Geoffrey Vos. An approach that embraces the best of public and private offerings to achieve optimal user outcomes in dispute resolution.
Enterprise Times: What this means for business?
Late payments is a massive issue, particularly for SMEs, many forced into 120, 160 days payment terms from larger enterprises. During previous general elections, opposition parties have suggested legislation forcing companies into more sensible payment terms and reduce late payments. How can technology can support to resolve this particular issue? LawtechUK is calling developers, policymakers, legal and tech community to consider how to bring the technology and ethos to market.
However, the feasibility study document is 150 pages long. Furthermore, it is written in an academic tone, as opposed to a business case justifying the investment. This is a real shame. LawTechUK is seeking tenders to undertake the proof of concept for a transformative, industry-led Lawtech enabled, online disputes platfom to be developed. The aims are positive. A solution made available for SMEs to provide a user-friendly, efficient and effective platform to recover unpaid debts. However, why re-invent the wheel? For more then two decades, eCommerce companies like eBay, PayPal, and Alibaba have established and deployed their own internal systems. They already have alternative dispute resolution and online dispute resolution systems that handle hundreds of millions of disputes every year. Perhaps, one of them will step up and support this project?