Legaltech and the law: How tech will change the practice

Meet Ross, a lawyer who sifts through thousands of legal documents to find the best passages to bolster his client's case. No, he's not the fictional protagonist of the legal drama Suits, lawyer Mike Ross. Nor is Ross even human. Ross is a bot powered by artificial intelligence (AI) that reads through all case law and provides lawyers with the collection of cases needed to develop legal positions. His first employer was one of America's largest legal practices, BakerHostetler. While Ross may be just a virtual lawyer, without a law degree nor having passed the Bar exam, the threats that he and his robot peers are posing to the legal sector, especially to junior lawyers or low value legal work, are very real. The Business Times looks at what such technology means for the legal fraternity.

A double-edged sword

For sure, lawyers appreciate the value of technology - the Law Society's 2018 survey showed that 88 per cent of the decision-making respondents believed technology helps to improve the delivery of legal services.

And 82 per cent saw technology adoption as crucial for their firms to stay competitive. Some 72 per cent of decision-makers in law firms see the need to increase adoption of legaltech and 42 per cent indicated that they will invest more in 2019-20. This is driven by increase in productivity, time-saving, reductions seen in administrative workload - ultimately translating into better service and faster turnaround for clients.

The Law Society's chief executive officer Delphine Loo Tan, who used to practise law, points out that technology offers opportunities and advantages, including freeing up lawyers for higher value legal work that requires skills including in negotiations, managing cross-border transactions and drawing up merger & acquisition contracts.

In addition, non-traditional income streams have opened up for firms. For example, Rajah & Tann Asia established an independent subsidiary last year that acquired a legaltech startup to up the ante on its offerings. These include data breach readiness and response, cybersecurity, e-discovery and other legaltech solutions to other legal practitioners including in-house counsel as well as non-legal corporations.

Others, like law lecturer Jerrold Soh, saw the window early on - he established a legal analytics startup with college classmates in 2016 even before he graduated from law school.

Yet legaltech is also viewed with some suspicion.

Enabled by technology, alternative legal service providers (ALSPs) - especially the Big Four accounting firms - are giving lawyers a run for their money.

According to a Thomson Reuters Legal Executive Institute report in January, 23 per cent of the large law firms surveyed said they had lost to one of the Big Four accounting firms business that the law firm had expected to win. The survey, sent to law firms and corporate legal departments in countries including Canada, the United Kingdom and the United States, drew 517 responses.

It found that the ALSP market grew from about US$8.4 billion in 2015 to nearly US$10.7 billion in 2017, with US$1.2 billion going to the Big Four accounting firms. One of the Big Four, Ernst & Young, acquired a well-known ALSP in the UK last year, as it seeks to establish itself as a leading disruptor of legal services.

ALSPs operate on different business models, resulting in commoditisation of legal services to some extent. One example could be a platform for simple and low-value consumer disputes to be resolved between the parties, without involving lawyers. Some ALSPs offer document preparation services such as simple employment contracts or other agreements at considerably lower costs, cutting out lawyers.

Apart from enabling competition from ALSPs, technology is also threatening to upend junior lawyers' work as well as law firm structures and fee models.

Boston Consulting Group predicted that legaltech solutions could eventually perform as much as 30-50 per cent of the tasks carried out by junior lawyers today.

The ecosystem's in place

A raft of initiatives is already in place, from industry bodies and the government, to help Singapore lawyers get on board the technology bandwagon. Schemes to help defray adoption costs, workshops and articles to bring them up to speed with the latest developments, roadshows for vendors to showcase IT products and services as well as negotiations with vendors for bulk purchase discount. You name it, they have it.

In 2017, the Singapore Academy of Law (SAL) unveiled the Legal Technology Vision, a developmental roadmap to be rolled out over five years to encourage lawyers to become part of the disruption that faces the legal industry.

The same year saw the birth of the Future Law Innovation Programme (Flip) - also by SAL.

As SAL chief operating officer Paul Neo tells The Business Times, Flip is the vehicle to execute the Legal Technology Vision. Its role is to assist law firms in integrating baseline technology into their processes to streamline their backend processes as much as possible, encourage an exchange of ideas between the tech and legal sectors, and to organise and develop Singapore's legaltech ecosystem.

SAL has also partnered with the Singapore Management University (SMU) for issues relating to legal innovation and the future business of law, including developing thought leadership through case studies and researching on future law topics.

Another industry body, the Law Society, launched subsidy schemes Tech Start for Law in conjunction with the Ministry of Law (MinLaw) and Spring Singapore (now known as Enterprise Singapore), as well as SmartLaw Assist to help defray costs of adopting productivity and capability development solutions in 2017.

The Law Society's Ms Tan says: "Bigger firms will have more resources to channel to legaltech adoption and will enjoy certain economies of scale. However, in the case of smaller to medium-sized firms, the Law Society can, and will, step in to play a critical role to support these firms in the identification and promotion of suitable products, provision of training and counsel, as well as grant administration."

What's holding them back?

Yet many law firms remain "old school" in practice. Indranee Rajah, then Senior Minister of State for Law, in one of her regular notes to the profession, wrote that "fairly or unfairly, lawyers all round the world have a reputation for being Luddites when it comes to tech".

But as a former lawyer, she believed that legal practitioners are not anti-tech. They are simply too busy to have the time to understand, analyse and figure out what the various technology solutions have to offer, especially when the vendors speak a different kind of jargon.

As SAL's Mr Neo puts it, small law firms are bogged down with fighting fires every day: "Lawyers are so busy in practice that they don't have time to think about their practice..."

From an industry review conducted in 2016, the Law Society found "tech-related innovation to be lacking with constraints in time and other resources cited as barriers". Further, there was "little business acumen in wanting to leverage technology as an enabler to further improve competitiveness".

Law Society's Ms Tan tells BT that one of the constraints lawyers face in embracing technology is also the lack of suitable solutions.

She says: "Our surveys show that off-the-shelf solutions currently fall short of the needs of lawyers, and Singapore law firms prefer multipurpose and scalable legaltech solutions that provide value and ease of use. Given that our market size is quite small, some tech vendors may not be motivated to customise their products for Singapore users."

Cost is an issue as well. A Law Society survey in 2018 found that a limited budget was a key challenge in technology adoption as cited by 66 per cent of the respondents, and this was followed by another monetary issue - maintenance costs.

Chief Justice Sundaresh Menon, who has made repeated clarion calls for lawyers to embrace technology, noted in one of his speeches last year that technology may not come cheap but it is necessary. He said: "While investment may be expensive... it will be integral to future-proofing our profession..."

A change in mindset could help too.

CJ Menon in that same speech gave anecdotes of how new technology was received by the legal fraternity in the past. In 1997, when the e-filing system was launched, the academy members gathered to await the transmission of the very first document.

"Champagne was on hand to await the moment of arrival. However, growing impatient at the lack of activity, the team decided to start on the champagne first. After two hours, they'd seen the bottom of the bottle but no sign of the document," CJ recounted.

SAL's Mr Neo agrees: "The help is all there, not only from SAL, from (the) Law Society, from MinLaw, all the stakeholders. It is really whether or not the individual lawyer wants to avail himself of the help. That really is about mindset, he has to make the time to do this."

CJ Menon has warned in one of his speeches about the impact of greater efficiency brought about by technology.

"The upshot is that law firms can expect to feel the pressure to operate on a leaner basis and they should start rethinking their traditional billing and cost structures as technology obviates certain forms of legal work, and in many other ways alters the face of legal practice," he said.

Instead of having technology hanging over like the sword of Damocles, lawyers could turn it to their advantage.

Survey results have shown that they understand the importance of harnessing technology and how it can work for them. It comes down to the cut and thrust of costs and benefits.

Ultimately, lawyers must have the conviction to help themselves. CJ Menon has sounded the alert on the potential destruction wrought by the tech tsunami including competition from ALSPs. Only those who are prepared will be the last men standing when the tsunami waves pull back.

PROFILES & PERSPECTIVES

BT talked to three legal practitioners to find out how they use technology at work.

THE SMALL FIRM

Veteran lawyer Vijay Kumar spent two days at a training programme recently to learn how to file court documents through the Integrated Electronic Litigation System (eLitigation).

"A year ago, I couldn't even file a writ," the 67-year-old tells BT. He proudly shows BT his Google Calendar, which he only recently took up after being introduced to it by a young paralegal. So apprehensive was he at the start that when he first started using the digital calendar, he held on to a physical diary as backup. Mr Kumar has heard of the capabilities of artificial intelligence (AI) and is raring to give it a try.

He is even toying with the idea of doing away with a physical office in four to five years' time. But he says some clients might be concerned about the credibility of a lawyer without a brick-and-mortar office. At the insistence of his clients, he is looking at giving the firm a presence in the virtual world though. And if it could serve as a marketing tool as well, he certainly welcomes it. He admits that younger lawyers probably have it easier than someone his age, in adopting technology. Notably, his firm has not gone digital in the management of client files. He says that "it's difficult to switch" and "old habits die hard".

He adds that a small firm like his does not enjoy the economies of scale that tech solutions might bring. There are about 1,000 law firms in Singapore, nearly 70 per cent being small firms with five or fewer lawyers. "Invest? Not in every aspect, basic administration doesn't justify but e-filing and AI (powered) legal research do. I certainly hope there are subsidies for these," says Mr Kumar.

THE EARLY ADOPTER

Seeing analytics being applied to law in the US while he was in university, Jerrold Soh and his then classmates realised it could affect their future careers.

That peek down the road coupled with a glut of lawyers locally drove them to start a legal analytics startup Lex Quanta in 2016.

Join them if you can't beat them. As Mr Soh tells BT: "My personal 'coping' strategy was to join the technology movement, as I had been tinkering with code even before joining law school.

"I also wanted to see how I could apply the data analysis skills I was learning from my economics training to the legal industry. So there, both market and personal reasons for legal analytics specifically."

On whether his startup would put fellow lawyers out of work, Mr Soh, 26, who is lecturing at Singapore Management University School of Law, says it did cross their mind.

He points out that the present state of analytics technology is quite far from being able to jeopardise lawyers' livelihood. But there are larger trends affecting the legal industry, such as alternative legal services providers - that, coupled with analytics, could upend lawyers' careers. "Simply put, lawyers who adeptly use technology could put lawyers who don't adapt out of work. It's been this way even for older technologies like the word processor."

He sees the promise of legaltech primarily in lowering the transaction costs of justice. Lower costs lead not only to more efficiency in existing transactions but, more importantly, allows more people to access legal and court services.

"So it is not simply about people substituting from one lawyer to a more tech-enabled one... Like fintech, as legal technology matures, we may see more and more legal services being made accessible electronically and through smartphones. This is already quite common in China."

THE TECH-SAVVY BUSINESS

KEL LLC stores its documents on a cloud server, and automatically bills its clients via email when the time comes.

In fact, the first question founder Kelly Ho asked when hiring a secretary was: "Are you comfortable with a machine or computer?"

From day one, since the firm was established in 2014, Ms Ho has focused on solutions that would afford her the flexibility of working anywhere and save costs.

Hence, she opted to use a cloud server, for which she pays subscription fees to store documents without having to maintain her own server. The auto-billing function that she employs, an addition to an existing system, was partly paid for out of a grant from Enterprise Singapore and spares her staff the hassle of preparing and sending out bills. However, the use of technology is not without drawbacks. The auto-billing system is not very reliable yet, and she has to keep an eye on it. Further, she says that users that subscribe to tech solutions are at the mercy of the providers when the fees go up, as it is a hassle to migrate to another provider.

As with many law firms today, KEL LLC has a presence online. "For law firms to maintain credibility, it's good to have a website," says Ms Ho. And while she would love to leverage AI in her legal work, she is also limited by budget. The 39-year-old says: "We are a small law firm, we don't have resources to invest in AI or legaltech. I think about it a lot. Hopefully one day, small law firms can get AI."

She says that lawyers know that machines can do it much faster than a human being. "Lawyers will face challenges in competing with the machine."

Amendment Note: An earlier version of the article had Paul Neo as Singapore Academy of Law (SAL) chief executive officer (CEO) and Delphine Loo Tan as the Law Society's chief operating officer (COO). These are incorrect as Mr Neo is SAL's COO while Ms Tan is the Law Society's CEO. We apologise for the error.

Participants at a workshop organised by Future Law Innovation Programme (Flip), which aims to assist law firms in integrating baseline technology into their processes, encourage exchange of ideas between the tech and legal sectors, and develop Singapore's legaltech ecosystem. PHOTO: SINGAPORE ACADEMY OF LAW

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

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