The managed real estate market grew to $10.5 trillion by the start of 2021 (MCSI, 2021), despite a year of unprecedented challenges. The market has grown [160%] since 2010 and, as you would expect, digital transformation has gathered pace to keep up with the opportunities and challenges presented.
There is great interest in blockchain applications in the real estate sector, particularly in relation to transactions and record keeping. However, there is still lots of work to be done leveraging more routine technologies to transform the way we do business. Workflow, document automation, e-signature and document analysis technologies are yet to be fully exploited in day-to-day practice.
Land registries are also doing their part to digitise, yet few countries boast an electronic register. In England and Wales, the Land Registry has made some progress (most recently by ceasing to accept scanned or PDF copies of certain documents for property ownership changes from November 2021) but it is still on its own digitisation journey. We are all looking forward to easy online approvals through a single portal to handle land records – including maintenance and updating of plans, surveys and registration of properties.
PropTech, LegalTech, FinTech, RegTech - spot the common denominator
Real estate lawyers are at the intersection of PropTech, FinTech and LegalTech and can benefit from all three categories first-hand. Change driven by tech, when combined with the seismic changes in the nature and purpose of home and work environments over the last two years, creates an exceptionally interesting time to be in real estate. [What a time to be in the industry!]
It’s still a worldwide evolution – with the potential for revolution – thanks to pace setters. More law firms are now leveraging tech, while others are still discussing it on the ‘innovation agenda’.
In document-heavy legal practice, a key area that has evolved as a result of increased LegalTech adoption is document automation. Not the ‘simple toolkit’ version of doc auto, but deep automation of complex, document-intense transactions.
Some lawyers (perhaps you are one of them!) are still drafting manually without the support of technology other than MS Word; and in the current market, perhaps without the level of associate support they are used to. Ploughing through templates and cumbersome admin has now given way to tech assisted drafting in many firms. Lawyers are progressing their knowledge at a much higher level in firms that embrace tech, with results that outpace rivals and make life considerably easier.
Wherever you are at in your career, you will presumably agree on one point: change is inevitable, and law firms need to adapt (or risk falling behind the market). At a time of significant upheaval and opportunity to transform, what do you see in your workplace? Where is your organisation falling behind?
What does this mean for law firms?
Most law firms operating in this space agree that complacency is not an option, yet the pace of change varies considerably. In the report referenced above, Deloitte echoes the market’s overwhelming sentiment, encouraging the sector to “embrace innovative technologies to improve service.” There are some easy wins here in relation to all areas of legal services delivery in real estate, including in relation to documenting transactions, asset management, construction and development. Let’s focus in on documentation…
The best foot forward
A good place to start is to consider the more complex transactions where LegalTech can have significant and transformational impact. Real estate transactions are by their nature document-heavy, with suites of well-developed precedents. This makes them ideal candidates for automation; to procure a leap forward on a firm’s digital innovation journey.
However, early incarnations of drafting platforms weren’t really designed for lawyers. The first document automation toolkits were too generic, without the ability to behave in the intelligent way that lawyers need them to when drafting complex suites of documents. This led to limited implementation and a lack of engagement. More recently, intelligent drafting solutions have evolved due to the level of legal influence in the design and implementation of the platform. This supports greater trust and credibility of automated drafting software quality.
Go deep, then reap the benefits
Whether it’s leases, sale and purchase agreements or property management documents, there’s a lot of standardised template documents in real estate work – law firm precedents, industry standard forms, client-specific precedents and statutory prescribed forms (such as security of tenure documents) to name a few.
Real estate transactions also rarely involve just a single document. A new lease transaction involves more than just a lease! Deep automation should encompass statutory notices and declarations with accompanying letters (this could be to one party or multiple parties), rent deposit deeds, licences for alterations, further occupation rights and more.
Deep automation of all these routine elements, using a single questionnaire (that then links to all relevant documents in the transaction), also enables lawyers to delegate more of the early drafting to a junior lawyer, paralegal or a member of the support team. This not only means that firms get the first draft to the client quicker but it also frees up senior lawyer time to focus on the negotiation and resolution of complex legal issues driving the transaction.
Keep up the pace is accelerating
Many digitisation pace setters are based in the UK and have embraced this digital evolution/revolution in areas including real estate that impact both the client and the lawyer experience.
Miri Stickland, Knowledge Development Lawyer for Forsters’ trailblazing real estate practice, shares her perspective on the dramatic upturn in the use of LegalTech for commercial property transactions:
“The real estate industry itself has been transformed by technology.” Miri points out. “We have smart buildings which know when to turn the air con and lights on, and we’re starting to see tenants pay their rent in crypto-currency. The way in which we provide legal services has to keep pace with this. So, although not all of the new technology we’ve seen will stay the distance, there are products that really increase speed and efficiency, and which can be flexed to meet changing demands without compromising on quality. These are the ones that are going to stay the course.” Hear more from Miri here.
Outpace rivals by working smarter
Birketts, another UK-based law firm, has been using automation technology since 2016. Marcos Toffanello, Head of Knowledge Management and a self-professed ‘property lawyer in recovery’ shared his view on some of the drivers, including how automation has impacted their clients:
“Filling in a Clarilis questionnaire takes about 15 minutes,” Marcos explains. “From this, we typically get an 80%-ready first draft. This effectively means the client is investing in the last 20%, and that’s the unique part of the deal that makes the biggest difference to them.” Hear more from Marcos here.
Want to de-stress in an agile world?
A smoother, more collaborative working experience for teams working across multiple locations improves lawyer wellbeing. It also serves to attract and retain the best talent – individuals who want to spend more of their time doing the work they trained so hard for. Don’t overlook the wider value LegalTech brings to the bottom line too – clients are already looking to work with law firms who can evidence smart use of LegalTech in their delivery.