# It’s time the legal industry caught up
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-05-21
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: Digital Transformation in Commercial Mortgages: Time for
Meta Description: Join Mike Coates as he explores the digital transformation in commercial mortgages, calling for the legal industry to catch up. Learn how technology can
URL: https://financedigest.com/its-time-the-legal-industry-caught-uphtml

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_By **Mike Coates,** Founder and Director of Commercial Expert_

In recent years, we’ve seen the commercial mortgage industry undergo a major digital transformation through the introduction of Open Banking, AI, Challenger Banks, Fintech and more. However, the legal industry continues to lag behind when it comes to digital transformation. For the industry to continue on the path it is, it’s [time for the legal industry to](https://www.financedigest.com/how-occupancy-data-can-support-the-banking-industry-in-challenging-times.html "How occupancy data can support the banking industry in challenging times") catch up.

With many [businesses being hit hard by the covid-19 pandemic](https://www.financedigest.com/post-pandemic-recovery-for-businesses.html "Post Pandemic recovery for businesses"), in particular small-to-medium enterprises (SMEs), record numbers have resorted to borrowing.  Ernst & Young forecasts that by the end of 2021, UK firms will have borrowed over £60bn throughout the pandemic.  In fact, net lending to [SMEs in 2020 was 30 times](https://www.financedigest.com/no-time-to-procrastinate-for-smes.html "No Time to Procrastinate for SMEs") higher than in the previous yeari. The Government, the Bank of England, [banks and lenders have all played crucial roles in supporting](https://www.financedigest.com/comserve-to-support-allied-irish-bank-nationwide.html "COMSERVE TO SUPPORT ALLIED IRISH BANK NATIONWIDE") businesses, through lowering interest rates and allowing borrowers to defer loan repayment start dates until 2024.

But, this recent frenzy of commercial borrowing combined with enforced social distancing [operating](https://www.financedigest.com/iveco-to-transfer-nordic-retail-and-commercial-operations-to-hedin.html "Iveco to transfer Nordic retail and commercial operations to Hedin") procedures by law firms has exacerbated the delays in commercial finance where property transactions are prevalent. These transactions have historically been lengthy and are a source of frustration for all parties involved.  The process is slow, manual, with multiple stakeholders involved, and it’s not as seamless and integrated as it could be.

**The issues**

Demands are changing rapidly, particularly post-pandemic, where people [expect highly accessible online services](https://www.financedigest.com/what-to-expect-in-2022-financial-services-trends-according-to-salesforce.html "What to expect in 2022? Financial Services Trends, according to Salesforce"). The majority of solicitors don’t have online systems where you can track progress, particularly when you are dealing with small solicitor firms.

Let’s use an example of a [property investor](https://www.financedigest.com/uks-most-liveable-city-manchester-sets-its-sights-on-the-world-from-tourists-to-property-investors.html "UK’s most liveable city, Manchester sets its sights on the world, from tourists to property investors") looking to expand his portfolio. Once the [buyer has found a property](https://www.financedigest.com/a-year-in-property-google-searches-reveal-what-buyers-were-looking-for-this-year.html "A year in property: Google searches reveal what buyers were looking for this year"), from a legal perspective, this is only the start of the transaction. The next steps are to undertake searches, negotiate documents and draft reports, which collectively take time.

![Mike Coates](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/mike-coates-commercial-expert-200x200-1-1736838322060-compressed.jpg)

Mike Coates

Delays can occur before the search process can begin. For example, if the [property doesn’t have a site plan provided by the seller’s solicitor or landlord](https://www.financedigest.com/4-tips-for-landlords-to-increase-rental-property-profits.html "4 Tips for Landlords to Increase Rental Property Profits"), this will hold things up.  It can take a long time to receive replies from other solicitors involved.  In addition, solicitors require [money on account](https://www.financedigest.com/what-is-a-money-market-account.html "What Is A Money Market Account") of the searches, therefore, any delay in payment will contribute to delays.

The local authority search takes the longest, potentially taking between 3 and 8 weeks (location dependent) to complete. The local authority carries out the search, and unfortunately not all local authorities have yet fully digitised their records.

Drafting a “heads of terms” takes [time and this requires all parties to agree](https://www.financedigest.com/nissan-and-renault-agree-to-overhaul-alliance-this-time-as-equals.html "Nissan and Renault agree to overhaul alliance, this time as equals") on the finer points before solicitors can pull a detailed one together.

**The** [benefits of technology](https://www.financedigest.com/five-industries-benefiting-from-multi-carrier-sim-technology.html "Five Industries Benefiting from Multi-Carrier SIM Technology")

We have witnessed how the adoption of digital [technology has revolutionised other sectors](https://www.financedigest.com/why-its-time-to-centralise-public-sector-technology.html "Why it’s time to centralise public sector technology").  For example, the use of automated valuation models (AVMs), a software-based [pricing model](https://www.financedigest.com/tesla-cuts-u-s-model-s-and-model-x-prices-between-4-and-9.html "Tesla cuts U.S. Model S and Model X prices between 4% and 9%") used in the real estate market by estate agents, brokers and mortgage lenders for property valuation.  AVMs offer higher levels of accuracy, exhaustive coverage as well as [saving time](https://www.financedigest.com/how-to-use-algorithms-to-save-time-and-make-money-when-trading-currency-crypto-shares-etc.html "How to use algorithms to save time and make money when trading (currency, crypto, shares etc)").

It’s [time that the legal industry underwent a radical digital](https://www.financedigest.com/playground-xyz-study-finds-carbon-emissions-from-digital-ads-fall-by-63-on-average-when-measured-and-optimized-for-attention-time.html "Playground xyz study finds carbon emissions from digital ads fall by 63% on average when measured and optimized for attention time") transformation.

A cloud-based [communication and document](https://www.financedigest.com/document-redesign-clarifying-communications-for-cx-excellence.html "Document redesign: clarifying communications for CX excellence") storage system could undoubtedly improve efficiency and security for solicitors.  Instead of issuing huge packs in the post, solicitors could upload documents electronically for all necessary parties to access instantly. Digital signatures could be embraced, [saving time](https://www.financedigest.com/why-now-is-the-time-to-implement-a-time-saving-business-model-encouraging-team-members-to-discuss-their-challenges.html "Why now is the time to implement a time saving business model, encouraging team members to discuss their challenges") on a postal to-and-fro.

Face-to-face meetings could be replaced by solicitors providing [legal advice](https://www.financedigest.com/some-credit-suisse-at1-bondholders-seek-legal-advice-law-firms.html "Some Credit Suisse AT1 bondholders seek legal advice -law firms") virtually.  In addition, adopting ‘live chat’ or AI-based chatbots can allow general enquiries and questions to be dealt with more quickly and effectively, freeing up a solicitor’s [time to undertake more knowledge-intensive work](https://www.financedigest.com/time-management-strategies-that-work.html "Time management strategies that work"), such as working on the heads of terms.

Ultimately, I [see that efficiency will be the biggest](https://www.financedigest.com/global-equity-funds-see-biggest-weekly-outflow-in-five-weeks.html "Global equity funds see biggest weekly outflow in five weeks") catalyst for digitalisation.  Embracing digital solutions is being advocated by the Law Society, and many anticipate that it will be key to [recovery from the impacts of Covid-19](https://www.financedigest.com/covid-19-recovery-tips-for-2021.html "COVID-19 Recovery tips for 2021") for many firms.  Research by McKinsey & Co. found that when law firms have performed a [digital transformation](https://www.financedigest.com/future-of-finance-2023-digital-transformation.html "Future of Finance 2023: Digital Transformation"), they are “23-times more likely to acquire customers, 6% more likely to retain customers, and 19-times more likely to be profitable.”ii

Whilst there is clearly a cost associated with adopting new digital systems, with these figures in mind, the question is can you afford not to [invest in a digital transformation of your business](https://www.financedigest.com/analysis-uk-crisis-forces-off-kilter-businesses-to-halt-investment.html "Analysis-UK crisis forces ‘off kilter’ businesses to halt investment")?

**References:**

i [https://www.ey.com/en\_uk/news/2021/02/by-the-end-of-2021-uk-firms-will-have-borrowed-over-p60bn-through-the-pandemic](https://www.ey.com/en_uk/news/2021/02/by-the-end-of-2021-uk-firms-will-have-borrowed-over-p60bn-through-the-pandemic)

ii https://www.lawyer-monthly.com/2018/12/rise-of-the-digital-demand-are-law-firms-meeting-clients-digital-needs/


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