Legaltech innovations are now moving beyond document generation solutions towards blockchain application.
When the Ministry of Law, Law Society of Singapore, Enterprise Singapore and the Infocomm Media Development Authority launched a $3.68m funding scheme that allocates funding of up to $130,000 annually for each Singapore law practice, it signified a growing movement to bring the paper-heavy industry into the digital age and help establish Singapore as a legaltech hub.
Globally, legaltech investments skyrocketed 713.7% from only US$233m in 2017 to US$1.66b in 2018, data from Forbes show. Another study from Crunchbase stated that the past year saw US$825m in venture funding directed to legaltech firms, which represents a 170.5% jump from US$305m in 2017.
Singapore legaltech startups have had their fair share of capital injections and managed to raise $681,700 from 2000 to February 2018, according to independent legal strategy consultant Eric Chin cited by Rajah & Tann Technologies.
“Like other countries' governments and bar associations, which have experimented with a variety of carrots (incentive schemes) and sticks (the threat of competition from alternative legal service providers, and support for rise of fixed-fee billing), Singapore's very progressive Ministry of Law is keenly aware of the upside of digital transformation (think iPhone apps) … and the downside of disruption (think Nokia, dethroned)” Meng Weng Wong, cofounder of legaltech startup Legalese, told Singapore Business Review.
In addition, he explained that startups targeting law firms would soon discover that “increased productivity is the enemy of the billable hour” can get the legal work done for a client in less time, although the pay would lessen as well.
But what’s particularly challenging in this sector is how laws differ in every country, thus, making it quite difficult for legaltech startups to offer their services outside Singapore.
“Law is intrinsically tied to a country, and for legal tech providers aiming to cross borders, that can mean significant re-development costs,” Wong continued. “Every month another large legaltech player expands from the US or Europe, where they are well-established, to Singapore; how often does one see a Singapore legaltech startup go the other way? Truly, such successes are rarer than unicorns.”
“[T]hese factors together may make Singapore a more challenging environment for legaltech than for FinTech,” Wong said. However, this issue could be remedied by harmonisation of laws and business conventions in the ASEAN to help overcome multilingual and multi-cultural barriers to ease the export of Singapore’s legaltech services to other markets.
“I remain optimistic that as more young lawyers enter the workforce, an increasing number of legal practitioners can see the value in harnessing technology to innovate the delivery of legal services and solutions for the future business of law,” said Michael Lew, cofounder of legaltech startup LegalComet, founding board member of ASEAN Legaltech and COO of Rajah & Tann Technologies, the tech arm of Singapore-based law firm Rajah & Tann.
Since its inception, Rajah & Tann Technologies has made strategic acquisitions to boost legal services delivery, including e-discovery startup LegalComet in November 2018. LegalComet is an AI-powered, e-discovery startup that specialises in forensic technology services.
Lew noted that there is a rising demand for faster response and a structure that charges clients for an hourly rate up to an agreed limit, making it crucial for Singapore law practices (SLPs) to adopt.
Furthermore, he added that the enthusiasm for legaltech solutions in Singapore has drastically changed since the launch of the city’s Legal Technology Vision in 2017, a five-year roadmap that lifts the implementation of technology in the legal landscape. The government’s Tech-celerate for Law Programme will serve as a catalyst. Last January 2018, The Singapore Academy of Law unveiled the Future Law Innovation Programme (FLIP) which serves as an accelerator for legaltech startups.
“I believe that it is timely for [Singapore Law Practices] of any size to make a conscious effort to adopt legal technology solutions not as a good-to-have but as a must-have strategy to elevate their law practices and to compete in the changing landscape on the business of law,” Lew said.
Evolving legaltech innovations
Wong mentioned that companies such as Contract Express and HotDocs, which offer law firms document generation platforms, have been in the market for quite some time. However, such solutions which come with “heavy, up-front costs” usually meant abandoned deployment efforts and subscriptions that are not renewed after a pilot period.
“Document generation is traditionally the lowest-hanging fruit in legaltech innovation,” Wong stated. “Today, a new generation of cloud-enabled, lighter-weight solutions with transparent, affordable pricing are taking another swing at the market.”
Lam Chung Nian, partner and head for intellectual property, technology & media, telecommunications and data protection practices at WongPartnership, boasted that they were the first company to have AI-powered document automation platforms.
WPGenerate, powered by Contract Express, helps its lawyers and clients to generate documents more efficiently, whilst its WPGrow-VIMA platform focuses on venture capital documentation for startups.
“The VIMA is a pragmatic set of contracts intended to balance the interests of both the investor and company. It narrows the scope of open issues and negotiation by the parties to help them reach common ground quicker,” Lam explained.
As a member of the Singapore Academy of Law’s Venture Capital Investment Model Agreements (VIMA), WongPartnership have also found a way to create automated versions of some of VIMA documents.
Meanwhile, Legalese’s document generation engines can produce signature-ready PDFs for as low as $2 per page, which Wong compared to paying a law firm $5,000 for a 10-page document. Founded by ex-laywers and computer scientists, the platform has its own application programming interface (API) and investment workflow manager which is commonly used to generate and execute paperwork for six-figure financing rounds.
Similarly, solutions provider Zegal offers its cloud-powered document automation software to individuals and small and medium-sized enterprises (SMEs) who can only afford to shell out more than three digits, which contrasts with law firms that traditionally enlist services within the four- or five-digit range.
“Every other profession has undergone a digital transformation,” Wong said. “Similarly, computational law will properly bring digital transformation to law – not just for e-discovery, better case-law search, or document generation, but in ways that make it possible for people to self-source legal services, without a lawyer at all.”
On the other hand, Lew explained that the most critical technologies elevating legaltech capabilities rely on “ABC” – Artificial intelligence, Blockchain and Cloud.
“Presently, blockchain may be seen as the lesser of the three critical technologies,” Lew continued. “However, this couldn’t be further than the truth. The use of blockchain in legal technology applications has far reaching potential as a universal and trusted platform for the authentication of legal documents with unprecedented speed and cost.”
He added that blockchain in legaltech may take three to five more years to mature for its benefits to become visible.
Both Lew and Wong believe that it’ll come to a point where legaltech applications will heavily rely on blockchain.
“The need for escrow is a major obstacle to fractional-reserve finance, which, love it or hate it, is a fundamental assumption of the world's commercial systems. The first blockchain to rediscover hypothecation will be worth keeping an eye on,” said Wong.
“Why hire an expensive lawyer to be a project manager, when you can use software?”
By Nathanielle Punay
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