Lawyering 2.0

Technology adoption among established law firms has for ages been a slow ascent, but things are different in China. Legal tech companies here are leading innovation and are taking a more direct and homegrown approach than their global peers, writes Mithun Varkey

The legal industry, finally, seems to be embracing technology. While the change was a long time coming, the pandemic has left little choice for legal practitioners but to accept it, even if grudgingly. The need for collaboration in times of social distancing has forced even the courts, those bastions of traditionalism, to allow themselves some tech disruption, which then meant lawyers had to follow.

It is not that the legal industry is led by luddites. The importance of conventions and the nature of the profession mean they are trained to adhere to time-honoured protocols. Also, because their business models remain unchanged, where clients are charged for billable hours, clocked in six-minute increments, there are few incentives to bring in massive efficiencies.

For the past couple of decades or so, globally, when law firms started investing in technology, it was primarily around e-discovery, contract management, billing management, and some online collaboration tools. While these were necessary steps, the core of a lawyer’s job remained relatively untouched by technology. In the past few years technology startups have tried to disrupt the way lawyers work and how law firms operate, which has led to a profusion of tech tools and solutions, and an explosion of legal tech companies.

However, things are a little different in China. While there is a lot of activity globally among legal companies, some of the biggest players haven’t really entered the China market because the needs here are different.

“To start with, the nature of legal work and legal systems is quite different in China, and the way the legal services market works,” observes Robert Lewis, co-founder and chief expert at docQbot, a China-based legal tech company.

“The US, Europe and other jurisdictions are litigation-heavy, and everyone’s charging by the hour, and they had to adopt legal tech like e-discovery in the early stages of tech adoption, which was not necessary for Chinese firms.”

As in other areas of technology, China is building and evolving homegrown technology companies’ solutions to cater to the local market. According to Thomson Reuters data, Chinese companies have been leading legal tech patents globally in 2018 and 2019, with as much as 51% of patents filed in 2018 coming from the country.

“A lot of legal tech solutions globally are focused on how to reduce the time cost, on an hourly rate basis, of expensive lawyers who are sorting through documents in discovery or in due diligence,” says Lewis. “In China, you just don’t have discovery in the same way, you’re not going to be able to go through reams of documents.”

Therefore, a lot of China’s legal tech innovation is more customer-focused and less about reducing inefficiencies, as is in many other markets.

“China is completely in love with AI [artificial intelligence], completely enamoured with the whole concept of how AI can apply in different sectors,” says Lewis, “but when you look at it in terms of what AI can do, it is a big data play. And if you look at the Chinese legal services market, there are some big data plays but no one’s so far been able to crack it.

“The big data plays were on all the published court decisions. They were going through this whole database. It’s all searchable and predictive, and that’s a pretty cool thing. I think it’s got value but I just don’t think it’s been done right yet.”

The growth in the Chinese legal technology sector is also driven by encouragement from the government, which has been driving court innovation, while AI maintains a significant role in legal tech software.

However, from law firms’ perspectives on technology, Chinese and international firms aren’t very different and are driven by similar challenges and needs.