Legal technology and in-house counsels today
Technology continues to transform many facets of our life at a breakneck speed and, even before the Coronavirus forced it upon us, the workplace is no exception. There are countless studies, articles and news pieces about how technology is rapidly being deployed in a whole host of sectors from the factory floor to the surgical ward. But one conspicuous laggard is the legal sector.
While we have not been entirely immune, we have been putting up a fairly good fight! In this first article in our series on lawyers and technology written by by our General Counsel, Davyd Wong, and Researcher, Rasminna Roslin, we look at how in-house lawyers have approached technology and why they might not be racing to adopt it as expected. In following pieces, we will look at how technology is (or isn’t) entering other facets of the law, such as managing legal practices and during the litigation process.
1. WHAT IS TECHNOLOGY FOR IN-HOUSE LAWYERS?
Before looking into what the in-house counsel’s views are on the use of technology, we need to define what “legal technology” is in this context. Broadly speaking “legal technology” is profession-specific technological development that aids the legal profession and can include various technologies that are changing the daily lives of every lawyer (or support staff) who makes use of them to complete legal tasks or create legal work product successfully. In this article, we will focus on the type of technology that would assist in-house teams and leave litigation case management and practice management software, which is more relevant for private practice, for future pieces.
Currently, the most prevalent legal technologies are those that deal with repetitive work and manage large volumes of documents more efficiently, while minimizing the risk of legal errors. In this way, senior lawyers can also delegate more tasks to juniors – or even non-legal – staff. This frees up their time to focus on more complex matters, saves time and money in the long run, and should result in competitive advantages for the organization as a whole.
What is clear, however, is that these technologies do not (yet) replace the need for professional expertise, skills and judgment of lawyers. According to Elsa Ho (Legal Operations Manager from KorumLegal), this clarification most particularly applies to AI, which presents more opportunities than threats for the legal sector as it tends to learn what has been fed to them. But used effectively, with a level of trust from the legal team, it could result in a need for fewer lawyers overall, particularly junior lawyers, which saves money but this has long term ramifications for the profession as a whole.
2. WHY ARE WE STILL WAITING?
So why haven’t we seen a massive adoption of these technologies in in-house legal departments? During the discussion at the IFLR Asia Capital Markets Forum panel on “the evolving role of the legal department” in Hong Kong late last year (14 November 2019), the panelists considered this question directly. The conclusion among the panelists was that the primary problem was a lack of budget. They were firmly of the view that given the high and often upfront cost of these services, in-house legal teams (at least in Asia) were generally too small to afford such big investments. They thought that law firms were more likely to be able to afford it as part of their business models.
The counterpoint to this argument is that when the potential benefits of the utilization of legal technology is taken into consideration, it is not an expense but a saving. Technology can provide far more value to the legal team, and also be a source of a competitive advantage for the organisation. In a previously published article, Cliff Yung (Legal Tech Advisor at Clifford Chance)  states that every in-house legal department should keep an open mind when it comes to legal tech even with a limited budget as this could lead to an attractive return on investment. There may also be other pricing options to be explored (such as by joining with their overseas offices to seek global licenses for the software, so as to leverage off their larger teams elsewhere, or negotiating alternative forms of licensing – for example, project based instead of annual subscriptions). Thus, General Counsels would be well advised to start mapping out a digital strategy to better understand and identify where technology could result in cost savings and organizational advantages, before tackling budgetary issues.
3. TRENDS AND SURPRISES
One in-house division that has been growing in its adoption of legal technology is the Legal Operations department.
We have seen in the United States and Europe, where organisations have much larger in-house legal teams, separate legal operations teams have been formed specifically ‘to optimize the legal department’s ability to grow and maximize the efficient delivery of legal services.’ This is still overseen by the General Counsel, but can be staffed predominantly by non-lawyers or former lawyers with technical expertise. This often involves workflow and automation of processes and data analytics, and rather than doing it manually, they will adopt well-chosen technology solutions in order to track automated processes, analyse and deliver key information and track legal spend.
In recent months, another reason has arisen for adopting technology. Thanks to the global COVID-19 pandemic, remote and flexible working has become necessary in Hong Kong and around the world. This has unquestionably pushed the issue of technology to the forefront of many organisations, and in-house legal departments are no exception. Elsa Ho also says that there has already been a spike in interest in investment from within legal teams to deploy new technologies as a result of the COVID-19 pandemic.
Despite the promises in productivity, removal of repetitive work, and improved accuracy that technology brings to the lives of in-house counsel and all the attendant hype that has been brewing for years, the reality is that there is yet to be widespread adoption of technology among in-house counsels due to the age old problem of budget. Whether the recent COVID-19 situation will finally help overcome that barrier to investing in new technology, and allow in-house teams to fully reap the rewards they promise, is yet to be seen.
Davyd Wong is the General Counsel at Star Anise. He is also the Co-founder of the Hong Kong Centre for Pro Bono Service Ltd, is a current member of the Law Society of Hong Kong’s Pro Bono Committee, and a director of the Hong Kong Association of Corporate Counsel.
Rasminna Roslin is the Recruitment Researcher at Star Anise.
Footnotes (for further reading)