Regulating tech disruptions in the legal world

Technology will change the future of law, but many issues remain in the balance.

By Janice Lin

While many sectors have steadily adopted technology to help improve efficiency and service delivery, the legal sector has been one of the slowest to do so.

“Software is eating the world, but lawyers just don’t ‘get' disruption,” said Ms Alexis Chun, co-founder of legal tech start-up Legalese, which aims to automate the creation of legal documents – a job traditionally seen as requiring the legal expertise of a practising lawyer.

Many law firms are resistant towards adopting technology, believing that because they have been providing legal services over many years without much of a need for technology, there is thus no real reason to begin doing so, said Mr Edmund Koh, chief of staff and general counsel at legal tech firm INTELLLEX.

The result? There are still a number of issues that remain to be looked at – issues that the “Legal Issues in LegalTech” dialogue session at TechLaw.Fest, held from 4 to 6 April 2018 at the Suntec Singapore Convention and Exhibition Centre, sought to address.  

Regulating the legal tech sector

One thing the panellists at the dialogue came to a consensus on was that there is a need to begin looking at legal technology as part of the legal industry, rather than as a separate segment where legal regulations do not apply.

This means crafting a set of rules that cater to legal tech companies, having in mind the role they play and their ability to supply legal products to a wider range of people.

As an illustration, the panellists looked at how legal information that once came from the fountain pen of a lawyer could now be provided online as a service, and questioned when such information would cross into becoming legal advice.

For clients, especially start-ups, the distinction between the two does not really matter, so long as they are getting what they want, said Mr Koh. Referring to start-ups that use automated tools to craft documents such as non-disclosure agreements (NDAs), he added: “Most aren’t too bothered about it at the current stage … Many would love to get advice from a professional lawyer, but they can't, so they have to look at tools that can tailor an NDA to their situation.”

But from a lawyer’s perspective, the differentiation between legal information and legal advice is crucial, as it may call into question the need for regulation.

“If it were information, then it would be dealt with at a much lower threshold, from a regulatory standpoint. The moment it crosses the line to become advice, that’s when it becomes sensitive, (and raises the question) as to whether or not these legal tech firms are providing a service that ought to be regulated,” said Mr Rajesh Sreenivasan, partner and head of Technology, Media and Telecoms practice at Rajah & Tann.

He added: “People do rely on this advice (and) use it for serious business purposes. We thus can’t say that … in the interest of speediness and to allow growth, let’s provide legal tech firms an environment where there’s no need for any regulation.”

Mr Yeong Zee Kin, the Infocomm Media Development Authority’s assistant chief executive of data innovation and protection, agreed with this. Mr Yeong, who also chaired the dialogue session, said: “There is embedded into the need for regulation a certain degree of necessity to protect the public, … giving them certain assurances that come with the legal profession.”

Citing the regulatory issues surrounding Facebook in recent months as an example, Mr Sreenivasan went on to add: “If we don't look at this issue now, then we'll have to wait for an instance like what happened to Facebook, at which point there will be no sympathy for legal tech companies.”

Who’s liable?

A second issue that was discussed was that of liability, specifically, who can – or should – be held responsible for errors made when technology is being harnessed by lawyers to help them work more efficiently and deliver improved services at better value.

As an example, the panellists discussed the practice of using document review platforms – such as the artificial-intelligence-powered Luminance – to conduct due diligence searches, and raised the question of who can be held liable if errors are made.

One route that Rajah & Tann has taken, said Mr Sreenivasan, is to present three choices to their clients – to have documents reviewed purely by lawyers, with no input from due diligence platforms; to let Luminance conduct the review, but have someone conduct a sample validation to verify the documents as well; or to have the due diligence process conducted entirely by Luminance.

“It comes as no surprise that the middle option is the popular choice. Clearly, people want to see technology used, so we've calibrated the risk by … informing them that these are fallible systems, and by allowing us to use them, they are accepting that there is some risk, but that we’d try and mitigate it with some manual input as well. That seems to be one practical way of dealing with this issue of managing liability,” said Mr Sreenivasan.

It’s all about balancing the risk-versus-productivity-gain equation, added Mr Wan Kwong Weng, head of group corporate services and group general counsel at MapleTree Investments. "Clients should have to decide how much risk they are able to take, and if the gains in productivity is worth it.”

Repositioning the legal profession

It is vital that lawyers and law firms begin looking at how technology is changing and shaping the industry, said the panellists.

“There are an increasing number of start-ups that are coming in and offering technology solutions that democratise the kind of information that used to come from the lawyer’s hand,” said Ms Chun.

“It’s fundamentally questioning what it means to be a lawyer and what it means to give legal advice.”

Mr Sreenivasan encouraged more lawyers to think about what they can do for the legal tech industry.

“(There has been) an expansion in the number of stakeholders in the legal fraternity who now clearly embrace legal tech companies. That's why I strongly encourage any lawyer, including those in our firm to take that route … Move out of the (traditional legal) environment to one where you feel you are able to package legal services in a different way and speak to a different audience.” 

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