LawtechUK has today published a feasibility study and proof of concept for a new technological approach to the late payment challenges facing British business – an ‘SME online dispute resolution’ platform, produced in partnership with a consortium of legal, technology and alternative dispute resolution experts from 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 – 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 published today highlights the critical need to change how payment disputes are resolved – an issue affecting 72% of UK small businesses1. The lack of an efficient way of recovering debts costs the UK economy £2.5bn each year, with wider impacts for business owners, their employees and communities2.  SME late payment debt has risen to £23.4bn and collecting money owed costs SMEs £4.4bn each year3.

LawtechUK’s evidence for a new online platform

The study details how a new SME online dispute resolution platform can provide an affordable, easy to use way to recover unpaid debts, as 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, accounting 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 – both operationally and financially.  The solution deploys a non-adversarial methodology to enable business relationships to be preserved, and 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 and 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, and 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 take the online platform – or the principles within it – forward.  While LawtechUK is not funding or developing the platform itself, it aims for the study to:

  • Encourage innovative developers to build and finance the technology, which is recommended 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, comments:

“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, and seize the moment to help recovery, growth, and innovation UK-wide.”  

Richard Susskind, LawtechUK Panel member comments: 

“This study offers a roadmap for the future of legal dispute resolution – an inexpensive, straightforward, online alternative to a traditional hearing but 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.” 

Helen Dodds and Mark Beer, co-chairs of the project comment:

“It’s been a great pleasure to work on this project alongside our talented consortium. The system we have come up with aims to do more than merely move adversarial proceedings online. It creates an asynchronous and resolution focused process that delivers ease of use within a constructive environment.”

This approach is an embodiment of the vision for civil justice reform now laid out by the new Master of the Rolls, Sir Geoffrey Vos, that embraces the best of public and private offerings to achieve optimal user outcomes in dispute resolution. 4