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Transforming Hong Kong into Asia’s Legal Tech Hub

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Chloe Chan is the co-founder and C.E.O. of Litex Limited, a NLP legal tech startup on data extraction and intelligent analysis in Hong Kong. Like Kayson Hui and Iverson Wong, she is currently a postgraduate law student at the University of Hong Kong.

Introduction

Legaltech has been increasingly identified as the next chapter for the legal profession around the world. Hong Kong (“H.K.”), with its well-respected legal system and diversity of law firms in the city, should have witnessed the same trend. Regrettably, this is not the reality. Adopting an interjurisdictional and interdisciplinary approach, this article seeks to dissect the success formula behind the growth of legaltech hubs in the United States (“U.S.”), China and Singapore before  proposing a legaltech hub development model suitable for H.K., which essentially takes the Singaporean model of state-led public-private collaboration but refitted into H.K.’s specific socio-political context.

U.S. Model: Market-driven Approach

The U.S. has had an early and continuing success in adopting  legaltech, which largely originates and is catalysed by its society and legal market. The success of the U.S.’s bottom-up approach  is mainly attributable to 

  • the increasing demand for cheaper legal services;
  • the active role technology plays in legal academia; and
  • its favourable legal market landscape where opportunities and support are everywhere. 

Lack of Feasibility in Transplanting the U.S.-based market model to H.K.

It is currently impractical for H.K. to popularise legaltech by solely relying on society and the legal profession. First, the H.K. legal profession is not equipped with sufficient technological awareness and competence – lawyers do not view legaltech as a weapon in their armoury. The possible adaptation process in future is also expected to be hindered by their low technological competence. Second, the traditional partnership model commonly adopted by H.K. law firms, which puts decision making powers in the hands of partners, hinders the pace of adoption as it usually fails to identify the operational difficulties faced by the frontline legal personnel and may antagonise radical workflow changes that reduce billable hours. 

Brief introduction for the Chinese Model

The Chinese government has committed significant resources to digital transformation within its Judiciary. Under the state-led LegalTech Agenda, huge public demand and favourable market landscape, Chinese high-tech initiatives grew rapidly, especially smart-court strategies and A.I. technology private legal practice in terms of systemization, standardization and commodification of legal services.

Lack of feasibility in transplanting state model to H.K. 

It is infeasible for H.K. to popularise legaltech by directly applying the China Model due to the implementational difficulties in H.K.. In China, the incentive to implement pro-tech policies in courts is very strong, as the Chinese government focuses primarily on the top-down approach to  innovation. By contrast,  in H.K., Chief Justice Geoffrey Ma indicated in a Judiciary notification in February 2020 that: “the Judiciary is advised that under the existing law, use of legaltech in court proceedings may not be permissible”. The technological capacity of H.K. courts is unable to facilitate the introduction of Smart Courts which is strongly advocated under the Chinese government agenda.

Justification for transplanting Singapore’s model in H.K.

Singapore, a country with the largest and third largest legaltech ecosystem in South-East Asia and  Asia-Pacific respectively,  is currently home to more than 49 legaltech companies. Its success indicates  its government’s strong commitment to develop and consolidate Singapore as Asia’s leading legaltech hub, mostly evidenced by the vibrant public-private collaboration (“PPC”) facilitated by the government, with main actors such as the Ministry of Law, Singapore Academy of Law (“SAL”) and the Singapore Courts. These PPCs include Future Legal Innovation Program (comprised of a legal innovation lab, virtual collaboration program LawNet Community and legaltech accelerator GLIDE), [email protected] Courts (co-working place to bring together the public, private practitioners and tech start-ups to co-create A2J and legal service delivery solutions), and industrial collaborations to build a sustainable legaltech ecosystem within the Singapore community (such as Singapore Management University’s collaboration with Clifford Chance to develop legaltech thought leadership). As such, Singapore indeed postulates a transition from government-driven innovation to government facilitated and incentivised innovation. 

The major justification for transplanting the Singapore model to H.K. is with regards to the substance and form of government intervention. Although both PRC and Singapore share state-led characteristics, the Singapore model is less top-down as seen from its role of laying out the general legaltech development roadmap (such as the Legal Technology Vision in 2017) and providing favorable platforms for public and private to co-create legaltech solutions and exchange legaltech knowledge. The Singapore government acts as a medium without direct intervention into their collaboration. In contrast, the Chinese government focuses on primarily government-driven innovation, as exemplified by the visible gap between the national agenda and practical implementation. With a more inclusive and less intrusive approach, the Singapore government is able to achieve its legaltech vision alongside participation of all interested parties. Hence, with the socio-political resemblance between H.K. and Singapore, arguably the Singapore model is the best blueprint for H.K.’s legaltech development model.

Suggestions on transitioning H.K. into a legaltech hub 

With Singapore’s Model as the backbone, and in combination with features from the U.S. and China, some implications for the H.K. model can be drawn.

To maximise legaltech adoption, one must first identify the problem landscape. A whitepaper that aggregates most of the pressing issues faced by legal professionals and users of legal services in H.K. can facilitate legaltech innovators to uncover the right pain points and tailor the appropriate solutions, such as the 101 Problem Statements consolidated by SAL in 2018. Nonetheless, the real challenge lies in encouraging legaltech adoption by users of different sectors in H.K.. To boost adoption, Singapore’s Tech-Start/Tech-celerate funds up to 70% of legaltech adoption costs. The introduction of the LegalTech Fund in H.K. is no doubt a promising start, yet one should be mindful of directly marketing legaltech products when publishing the approved reimbursement cases. 

One-off call to legaltech adoption may only be effective to a certain extent, it is crucial to encourage and sustain adoption in the long run. To do so, legaltech education should be open to all. For future lawyers, lessons can be learned from Singapore’s legal education, where technology components are fused with the law subjects in a cross-disciplinary curriculum. One of the authors has lately commented on how legal education can aid legaltech adoption. As for current lawyers, H.K. may learn from the U.S.’ codification of lawyers’ duty to be technologically competent, thus ensuring that H.K. lawyers are driven to continuously gain exposure to legaltech. To the general public, “legaltech” is frequently associated with helping lawyers to streamline legal service delivery. A change of perception can be achieved if institutions can brand legaltech as inclusive lawtech, such as #lawtech4good and “Roles beyond Lawyers”, portraying the possibility of legaltech in helping clients or laymen to access legal services more efficiently. Ultimately, the H.K. legaltech community can be initiated by the civil society through putting together legaltech enthusiasts into a platform or even forming a union of legaltech providers. Platforms, as such, can facilitate exchange of use cases and knowledge sharing sessions, thereby prompting demand for legaltech and building a legaltech community in the long run. 

Concluding remarks

Developing H.K. into Asia’s legaltech hub is not a fanciful goal if legaltech stakeholders are willing to go outside their  comfort zone and unearth the value of legaltech. With a more technologically and culturally ready society, H.K. can surpass its role framed under One Country, Two Systems, transitioning into Asia’s legaltech hub.

Chloe Chan

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