What apps, software and websites are proving indispensable for China’s lawyers and in-house counsel? And how will legaltech reshape the landscape with AI now joining the race? Kevin Cheng reports
“If a craftsman is to create a beautiful object, he must first sharpen his tools,” said Confucius, according to The Analects. Some make the mistake of attributing authorship of these sayings and ideas to the revered philosopher himself, when in fact they were remembered by his disciples, who painstakingly compiled the teachings after his death.
Imagine how much more wisdom would have been passed down if they had Microsoft OneNote.
Today, roughly 2,500 years later, the dilemma faced by legal communities in respect of using legal tools and technologies, or legaltech, in their daily practice is not one of “if”, but “how extensively”.
What software, applications or websites are they using to keep up, or stand out? In which areas is legaltech most frequently utilised? And what are the biggest benefits – or, if any, downsides – to the unmistakable trend of tech-reliance?
China Business Law Journal recently posed these questions and more to hundreds of lawyers and in-house counsel, including many of our A-List, Rising Stars and In-house Counsel Award winners. The survey appears to have resonated with the community, as we received a flattering volume of responses, ranging from the positive to the cautious, to the utterly unexpected.
More than 81% of survey respondents picked “legal research” as an area where legaltech is regularly applied, highlighting the ubiquity of databases in a data-dominated era. Other top choices include: case management (75%); data analysis (62.5%); and contract & document management (61.8%). Please refer to the chart here for a complete picture of legaltech usage.
In terms of the importance of legaltech in daily work, survey respondents provided an average rating of 4.5/5, indicating near indispensability. The level of legaltech prevalence in the survey takers’ law firm or in-house legal team amounted to 4/5, indicating high coverage in most scenarios.
When it comes to prospects for the legaltech industry, the rating is 4.5/5, showcasing universal confidence in its future, highlighted especially by the recent explosion of artificial intelligence (AI) around the world.
As Coli Zhang, the Shanghai-based head of legaltech at Yingke Law Firm, says: “If I were to go back to a pre-legaltech world, it would be as if I were blinded, deafened and trapped in a bog.”
In the next few sections, we break down some highly recommended legal tools that came up in our survey. For a complete list of these legal tools and technologies, please refer to the table here.
An extension of mind
If most legal tools and technologies can be described as helping hands or welcome boosts for lawyers and in-house counsel, then legal databases are regarded by many as their bread and butter, which is unsurprising considering the overwhelming amount and complexity of laws, regulations, policies and legal precedents they deal with on a daily basis.
“As a legal practitioner, I always find a legal database indispensable in my practice, and I always use Wolters Kluwer for this purpose,” says Zhu Xiaoyang, a partner at the Shanghai head office of Llinks Law Offices.
Wolters Kluwer, or more specifically its Chinese localised branch, is one of the most popular choices for day-to-day legal research. Other top candidates include PKU Law, iCourt’s Alpha, and Faxin.
Bao Jingming, general manager at the legal and risk control department of General Technology Venture Capital, highlights PKU Law as an impressive efficiency booster, capable of providing not just an encyclopaedic collection of laws and regulations, but also accurate English translations, and comparisons with older versions.
In many cases, legal databases do not dwell alone in their own corner of cyberspace, but serve as one of the many functions, albeit often the core function, of ambitious one-stop service platforms that seek to digitise a lawyer’s entire work routine. There is, however, no shortage of market-tested tools dedicated to one or two specific steps in the legal practice.
Long Jintao, a Guangzhou-based senior partner at Yingke Law Firm in Guangzhou, recommends Fatianshi (legal angel) for its massive collection of contract templates and guidelines on key review points. “Fatianshi helped us significantly reduce both costs and repetitive labour, allowing paralegals to quickly gain a footing in the profession and make rapid improvements,” he says.
Daphne Dai, the Shanghai-based vice president and APAC general counsel at Garrett Advanced Motion, says her team introduced Coupa into their global supplier management system, which has since proved helpful. It streamlines processes by automatically generating a list of pending matters, the approval process of various contracts, integrating electronic signature modules, and arranging for automated signing and archiving of approvals when obtained.
“These functions undoubtedly facilitate our work, which is why we are recommending it to our clientele and our staff in charge of contract review and management,” says Dai.
For case management and billing-related issues, Ulrike Glueck, managing partner at the Shanghai office of CMS China, turns to Maconomy, an enterprise resource planning (ERP) software owned by Deltek that boasts project and finance integration.
In confrontational cases, timely and proper securing of evidence can make the ultimate difference. Rights protection apps Zhenxiang Quzheng (truth evidence collection) and Quanli Weishi (rights defender) stood out for enabling lawyers to take photos and video/audio recordings to use as evidence in court.
James Yuan, legal director at MSD in Shanghai, uses Relativity for e-discovery, a form of common law legal proceeding where information sought exists in an electronic format.
When engaging with international trade partners, Huang Huina, general manager of legal and risk management at China Power International Holding in Beijing, uses MemberCheck for sanctions screening. “As soon as an investment is proposed, we use MemberCheck to conduct compliance review on potential trade partners to avoid any disruptive risks later on,” she says.
Some services aim to benefit players in specific practice areas. Mozlen is the go-to app for many IP practitioners for trademark searches, comparisons and risk assessment. “Without adding onto our human labour, we were able to achieve clear and effective closed-loop management of our trademarks, from design, registration, licensing and maintenance to filing,” says Liu Li, Beijing-based director of the legal compliance and IP department of Thunder Software Technology.
Treasures in unlikely places
Not all technologies proving their worth to legal communities are labelled as legaltech, or were developed specifically with legal demands in mind. After all, lawyers and in-house counsel cannot thrive solely on legal expertise, but also require a keen understanding of the market and industries.
For capital market players, a reliable provider of securities updates – such as prospectuses and regulator enquiries and replies – makes for constant companionship. Li Xinwei, a partner at the Beijing office of Grandall Law Firm, relies on Jianwei Data and CNINFO for such information, and he is not the only one.
Sun Hualing, legal director at the Shenzhen-listed Feilo Acoustics, also recommends Jianwei for “easy searching of announcements and other information on domestic and overseas stock exchanges, which helps me keep up with industry updates and better serve the company’s businesses”.
Huang Hui, Guangzhou-based managing partner at maritime specialists Huang & Huang Co Law Firm, uses shipxy to monitor ship positions, historical tracks and marine meteorological conditions, and Equasis for ship information such as the owner, year of construction and management company.
With a regular need to review approval documents and certificates for financing projects, which are important sources of subsequent legal opinions that often come in PDF or image formats, Qi Zhanyong, a senior partner at the Beijing head office of DOCVIT Law Firm, finds a great helper in the Baimiao app. “The functions in this app that I use the most are text extraction, identification of formulae and forms, and PDF-Word conversion,” he says.
In an era of information overload, apps and software that help ease the mental burden seem to have struck a chord with many lawyers and in-house counsel. Zhang Yaxing, a Beijing-based partner at Han Kun Law Offices, cites Dida as his tool to synchronise schedules and to-do lists across multiple platforms. “It’s in the nature of the legal profession to multi-task, but a person does not have infinite memory or energy,” he explains.
Ma Mingwei, a partner at the Shanghai head office of Zhenghan Law Firm, uses Mindjet, a mind mapping and innovation management software, to unravel layers of legal logic. Similarly, Wang Yuwei, a Shanghai-based partner at Guantao Law Firm, prefers Xmind for mind mapping and brainstorming.
It would seem that for every item on a lawyer or counsel’s to-do list, there is an app, software or website out there to help them do it (including making that to-do list).
But one unexpected “legaltech” that came up a few times in our survey sets out to help people do ostensibly nothing. Dong Liyang, a partner at the Beijing headquarters of DeHeng Law Offices, uses Tide, an app that provides the soothing sounds of nature to help with relaxation, sleep and meditation, as well as, where needed, concentration of the mind. “The white noise induces deep and uninterrupted thinking, which helps me maintain focus and efficiency amid the usual hustle and bustle,” he says.
This sentiment is echoed by Mu Fei, a Beijing-based partner at Hylands Law Firm. “Whenever I feel under pressure, or can’t think clearly, I relax my mind with some meditation, which helps me come up with new ideas,” she says.
All eyes on AI
While the legal community almost universally agrees that legaltech, as an industry, will continue to grow and thrive – leading to greater reliance on these tools and accessories, especially in light of the alarmingly swift growth of artificial intelligence – they are not without reservations as to what that might entail.
“The rapid development of AI, such as GPT4, will greatly improve efficiency of the legal industry, freeing legal practitioners from basic tasks and allowing them to focus more on the analysis and judgment of core issues,” says Wu Yuyang, senior manager at China Railway Group in Beijing.
Repetitive and mechanical tasks such as contract drafting, updates and review, database searching, data analysis and simple legal consulting see the greatest market needs, and likelihood, of holistic automatisation and an AI makeover.
Indeed, plenty of legaltech developers such as PKU Law and Metasota, a popular machine translator among legal professionals, began incorporating AI into their products and services long before the ChatGPT craze. Casetext, recommended by Shanghai-based Sun Hualing of Feilo Acoustics, currently boasts a GPT4-powered legal assistant able to fast-track legal research and contract revision.
Is the future already here? Well, perhaps not quite yet, according to our survey. While plenty of fancy tools are now able to serve credible-looking information on a silver platter in a matter of seconds, these offerings are met with suspicion and mistrust ‒ with good reason.
In one of the first major incidents caused by AI “hallucinations”, and potentially a sign of what to expect, a US lawyer recently submitted case documents provided by ChatGPT to the court, only to be told that these cases had no grounds in reality whatsoever. The lawyer apparently did not understand that ChatGPT was not a reliable search engine and made the fatal mistake of taking its content at face value.
Accuracy is perhaps the greatest concern among legal circles in terms of tech-assisted research at this stage, but it is not the only one.
“Confidentiality is one of the top principles of a lawyer,” says Jet Deng, a Beijing-based partner at Dentons China. “Legaltech processes a lot of data, potentially including clients’ personal information and trade secrets, which makes it a priority to take necessary measures to ensure security and compliance in these areas.”
Despite these qualms, law firms and companies remain undeterred in eventually embracing AI and relevant technologies into their current practice or future strategies, as long as they are used in a responsible manner.
“With AI making strides, it is now high time to promote legaltech enhancement with AI, in order to help law firms refine management and lawyers step up in efficiency,” says Wang Yuwei, of Guantao, emphasising an urgency in investing in legaltech. “To turn back from new technologies is to be left behind by them.”
How best to integrate AI and next-gen technologies into existing practice is perhaps the million-dollar question that will dominate the legaltech discourse in the immediate future.
Across the board, there is general unease as to what the tech upheaval will mean for the human labour behind work that will soon be achievable by machines, and the legal industry is no exception.
“If the boring bits of the job are so easily replaced by AI, can junior lawyers be trained to work on top of it and still professionally grow?” asks Yang Yuhua, a London-based partner at Llinks Law Offices. She questions if overreliance on legaltech will cause legal skills of even senior lawyers to cease improving.
While the consensus is that legaltech, especially with AI enhancements, will bring about a structural change in the responsibilities of junior lawyers and staff, many also point out that the impact on the whole industry will likely be contained, and the danger of machine replacement may not be so dire.
Daphne Dai, of Garrett, is optimistic that AI will not replace humans in the communicative, strategic and creative sides of legal work, but can serve as effective tools for risk identification, which is but the first step of the process. “Now that risks have been identified, how do we resolve them? Is there a common response for this scenario? How do we communicate with the other parties and convince them to accept or share the risks? These questions require a human mind to answer,” she says.
While acknowledging AI’s extraordinary capacity for big data analysis, Shang Dongning, Foshan-based director of legal management at Midea Real Estate Group, is less than confident in its ability to go much further. “Legal professionals can adjust their understanding and application of laws to each unique scenario, where even the tiniest details can lead to wildly different conclusions,” he says.
“ChatGPT, on the other hand, relies solely on data analysis and filtering to perceive and respond to everything, lacking the in-depth reasoning and thinking behind legal theories.”
The question, however, does not stop at whether AI can take on legal duties at a deeper level, but extends to whether it should.
“Law is not only the rational science dealing with human-social relations, but also a reflection of human sensibility, values and conscience,” says Geng Fan, Beijing-based vice president of Yonyou Network Technology. “Let us not allow technologies to completely replace human thinking and judgement, nor let them define what is legally right or wrong.”
Reshuffling the deck
With technologies continuing to facilitate basic legal tasks, Karl Gao, global general counsel at the Shanghai headquarters of NIO, hopes it can make legal services more accessible and affordable to marginalised and low-income communities. “By doing so, legaltech has the potential to level the playing field and make a positive impact on society,” he says.
However, levelling the playing field almost always means stripping away someone’s existing advantages. Now that many labour-intensive tasks can be handled with less manpower and more efficiency, what does it mean to lawyers, and their firms, that traditionally offer these services?
Yang Yuhua, of Llinks, believes that lawyers’ fees will be impacted. Generic, commoditised and “housekeeping” types of legal work are first in line to be converted in-house, leading law firms capable of developing legaltech of their own to gain an edge in the market. “They can license their tech applications to clients by charging lower royalties or licence fees, without bearing the same level of liability as providing traditional legal advice,” she says.
Even without proprietary technologies, bigger firms are more likely to reserve the complex legal work that comes with higher profit margins, leaving small and medium-sized firms to compete on a more homogeneous basis, says Yang.
On the other hand, Deng Furong, a Shenzhen-based partner at Zhong Lun Law Firm, holds that while services like simple legal enquiries will lose some of their financial value, the improved efficiency will free lawyers to develop other sources of income, meaning that overall revenue will not be lower.
Overall, opinions on this matter are fairly evenly divided, and the matter may clear up as legaltech becomes smarter, more reliable and more capable in coming years. As far as legaltech has come, there is still much room for improvement, and more ground to be covered.
While acknowledging that legal databases in China are improving by the day, Zhang Xiaotong, Beijing-based legal manager at Sinopec Capital, calls for stronger statistical functions. For example, in a matter where judicial opinions differ, he wants to see a database capable of telling him how many courts went with opinion A, and how many with opinion B.
Li Yanhong, Shenzhen-based legal director at Towngas Energy Investment, is on the lookout for AI-enabled legaltech to “analyse possible judgment results of cases, based on the database and precedents, and provide reference opinions for litigators to formulate strategies”.
Observing a surge in privacy tech providers such as TrustArc or OneTrust for privacy review, data mapping and other such services, Sylvia Zhang, senior legal counsel (APAC privacy) at Align Technology in Shanghai, sees unfulfilled market demand. “While most multinational companies use global vendors, I expect to see more Chinese companies that can provide similar services subject to local laws,” she says.
It should not be ignored that most, if not all, of these fancy services come with a price tag, which means budgets need to be considered. Zhang Siqi, general counsel at EEO Group’s Beijing head office, points out that legaltech will have a better chance of charming the CEOs if attached to a larger digital product such as an ERP or office automation (OA) platform.
“Another way is to play to the initiatives of the in-house counsel themselves and break down a company-level digitisation product to something more accessible to individual team members,” she says.
A product that effectively connects the legal team with the rest of the company will be music to the ears of Thomas Zhao, Shanghai-based vice president of legal and compliance at SKF China. “In my opinion, a truly powerful legaltech for in-house counsel should be able to cover the value chain, rather than just legal issues,” he says. “After all, legal is part of the business and cannot be isolated.”