The legal sector, often seen as resistant to change, is undergoing a significant transformation led by the rise of law tech. In the UK, lawtech is thriving, with annual demand estimated at £22 billion, and it’s home to 44% of all lawtech startups in Europe. However, a glaring gender disparity persists in this burgeoning field, where only 18.3% of ventures have at least one female founder.
The law tech revolution
The legal sector’s transformation is being driven by cutting-edge technologies, including generative AI, which enhances the efficiency, accessibility, and affordability of legal services. The UK has positioned itself as a global hub for lawtech innovation, with initiatives like LawtechUK, backed by the Ministry of Justice, playing a pivotal role in supporting the sector’s growth. As a member of the LawtechUK Panel, Professor Mimi Zou, a lawyer and founder of an all-women-founded AI startup, highlights the need to address the gender disparity in this thriving industry.
The gender gap in lawtech
Despite the UK’s leading role in lawtech, women founders face significant challenges. One of the most formidable hurdles is securing funding. Shockingly, for every £1 of equity investment in the UK in 2021, all-female founder teams received a mere 2p, a situation reminiscent of equity investment in ventures founded by entrepreneurs from ethnic minority backgrounds. A study commissioned by the SRA found that only 8% of lawtech venture funding went to female founders. Moreover, female founders often find themselves clustered in ‘PeopleLaw,’ which caters to individual and small business clients, making their ventures less appealing to investors than ‘BigLaw’ corporate-facing startups.
Overcoming bias in funding
Subconscious gender bias is a pervasive issue in the funding process. Female founders often face different investor questions than their male counterparts. While men are asked ‘promotion’ questions about potential gains and growth, women are more likely to be asked ‘prevention’ questions about potential losses. This discrepancy in questioning can significantly impact the amount of capital raised, as founders who ask more promotion questions tend to secure more funding.
Additional challenges
The demanding nature of startups and societal expectations and responsibilities can discourage women from pursuing entrepreneurship in the lawtech sector. Paradoxically, the traditional legal career’s rigidity can also drive some women towards entrepreneurship. The absence of female mentors role models in the sector, and limited business support networks further exacerbates these challenges.
The path forward
To address the gender disparity in lawtech entrepreneurship and harness the benefits of diversity in innovation and growth, several steps can be taken:
1. Understanding barriers
Everyone in the sector must gain a deeper understanding of the specific challenges hindering women entrepreneurs. Identifying these barriers is the first step towards dismantling them and creating a more inclusive environment.
2. Setting goals for the sector
While mentoring and networking programs for women entrepreneurs are growing, there is a need for the sector to set and actively pursue goals and metrics to measure progress. This would create a sense of accountability and drive positive change.
3. Addressing bias in funding
Greater awareness and education about unconscious bias in the funding process can lead to adopting objective criteria for investment decisions. Some venture capitalists and funders have already moved towards ‘pitch-less’ investment processes and consider gender diversity in leadership teams as a factor in their decisions.
The future of lawtech is not just about technology; it’s about the people who drive it and the benefits it brings to society. Addressing the gender disparity in lawtech entrepreneurship is a matter of equity and inclusion and a strategic imperative for fostering innovation and growth. Startups co-founded by women have shown the potential to deliver better returns for investors, making gender diversity a key driver of success in the sector.
For the UK lawtech sector to reach its full potential, it must confront the gender disparity head-on. Women should not merely be participants in the lawtech revolution but catalysts who shape its future. By breaking down barriers, setting goals, and addressing bias, we can create an environment where women-founded and women-led lawtech ventures thrive, benefiting both the sector and society.
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