Lex; in Breve
The online supplement to our eponymous journal features concise and insightful articles penned by law students from the University of Malaya, as well as guest writers.
11/25/2017 0 Comments
LexTech Conference 2017 is a regional legal conference gathering Southeast Asia's leading legal technology futurists.
News about the rise of revolutionary and industry-changing legal technologies (“Lextech”) have swept the globe and rightfully caused a great deal of unease among members of the legal profession in Malaysia. On the 4th and 5th of November, current and future members of the legal profession and regional leaders in the Lextech industry converged in Cyberjaya for the Lextech Conference 2017, titled ‘The Future of Law’, co-organised by CanLaw and Brickfield Asia College.
Many came to the conference looking for answers, which the panel of esteemed, experienced, and accomplished speakers tried their best to provide. A broad array of topics, ranging from Lextech, Blockchain, Smart Contracts, Artificial Intelligence, and the future of the legal industry were discussed in depth.
This article aims to give a detailed overview of the 5 key areas of discussion during the event.
Information Technology and the Legal Profession has became increasingly intertwined. According to Paul Neo, from the Singapore Academy of Law, the legal industry is experiencing what is known as ‘Legal Technology 3.0’.
A. Different Waves of Lextech
According to Paul Neo, Legal Technology 1.0 was the 1st generation of Lextech, which aimed to empower people within the system, such as computer-assisted legal research and e-discovery.
Legal Technology 2.0, on the other hand, was disruptive, such as contract document assembly tools, and technology that allowed businesses to obtain cheap legal advice. This wave frightened incumbent providers and cheered consumers.
He then claims that the next wave, Legal Technology 3.0, is coming. These are systems which will result in a radical redesign or full replacement of the current system, such as using the power of computational technology for communication, modelling, and execution, where laws will be built in codes and processed by AI. He gave the example of a technology start-up in Singapore, Legalese, which is already working to turn the law into computer codes to automate legal services.
B. New Innovations in the Field of Lextech
Gaythri Raman, LexisNexis's Managing Director of South East Asia, shared with the audience a few Lextech innovations which LexisNexis has been cultivating. She stated that as a company with a rich and long history, LexisNexis is always striving to remain relevant. For example, they are trying to revolutionize the method of presenting evidence before the court through platforms such as Eyewitness to Atrocities, which enables civilian eyewitnesses to upload photos and video footage to be stored in a virtual evidence locker for use in court trials and investigations.
Furthermore, through their ‘LexisNexis Legal Tech Accelerator’ program, which aims to help early-stage start-ups in the Lextech industry develop and maintain sustainable trajectory for growth, LexisNexis has picked 7 start-ups from a large number of applicants to be offered mentoring programs led by LexisNexis leaders.
Some examples of the exemplary companies they picked were, Visabot, a messenger bot-based system aiming to enhance visa processing, where a legal bot powered by AI helps customers complete complicated visa applications, Ping, an automated timekeeping application running in a computer’s background that collects all of a lawyer’s billable hours and uses AI and machine learning to mine data and learn user behaviour, vTestify, which allows for remote deposition to be done with an option to purchase an automated, digital transcription, and last but not least, Separate.us, a controversial program which has the potential to replace lawyers in divorce cases, as it is able to separate legal document preparation for divorces, such as providing legal advice for domicile disputes, analysing the impact that domestic violence would have on a divorce proceeding, and through questionnaires, the program is able to complete all the forms for divorcees, come up with cost, and serve documents by email.
Gaythri stressed that rather than being disruptive, these technologies could be used to help lawyers speed up their work. To drive this point home, she gave the example of typewriters, which, back in the day, people used to pay for courses to learn how to type, and courts were full of typewriters. She reminded the audience that although its use was widespread, nobody feared the typewriter, the same way we should not fear Legal Technology 3.0, as legal practitioners will always be relevant.
C. Incorporation of Lextech into Legal Practice
Steven Thiru, the immediate past president of the Malaysian Bar Council and moderator for the first panel, advised that instead of using words like ‘replace’, lawyers should use terms such as ‘augment, support, and enhance’, to change our outlook on the impact of Lextech.
It seems like some lawyers have already been taking this advice to heart, as can be seen from the practice of Fareez Shah from Fareez Shah & Partners, who has been using Lextech prominently in his medium-sized law firm. He cited significant improvements to his legal practice, as with the help of technology such as Corematters, G-Suite, Trello, and Kakitangan.com, he found that it’s more convenient to collaborate amongst team members and clients, productivity and billable hours easier to keep track of, and the increased efficiency has provided his firm with the option of working flexible hours, which has drastically improved their quality of life.
Noemie Alintissar Mooney, from the Singapore Academy of Law, stated that in both Singapore and Malaysia, there are people trying to bury their head in the sand hoping that legal innovation will go away, but it’s not going to. She is of the opinion that the ‘reluctance and fear’ that most lawyers have towards Lextech results from the misunderstanding that robots are going to replace lawyers. However, in actuality, Lextech will be able to help lawyers deliver better legal solutions.
II. Blockchain & Smart Contracts
In light of Dubai and Sweden’s widespread adoption of Blockchain technology for administrative matters, its usage in Bitcoin, and applicability in the automatic enforcement of contracts, known as Smart Contracts, it seems like Blockchain is here to stay, and is about to become a central facet of our daily lives. It is thus vital to understand its concept, applicability, and impact onto the world and the legal industry.
A. What is Blockchain & Smart-Contract?
Rene F. Bernard, from Luxtag, gave a brief explanation of what Blockchain is. A trusted entity like a bank usually runs a secured central database, but Blockchain removes the trust factor from a provider and puts it in the system, Blockchain allows consumers and suppliers to connect directly, removing the need for a third party. Using cryptography to keep exchanges secure, Blockchain provides a decentralized database, or “digital ledger”, of transactions that everyone on the network can see. This network is essentially a chain of computers that must all approve an exchange before it can be verified and recorded. Elements inherent in Blockchain, such as digital fingerprints, the ability to cross-reference, and rectify discrepancies, makes it hard to be tempered with.
Blockchain is nowadays applied in Crypto-currencies, such as Bitcoin, but it can also be used for other purposes, such as to secure voting, and since Blockchain can use fingerprints to rectify temperance, it can be used as a safe and secure way to enforce contracts. This method is known as Smart Contracts, a term coined by Nick Szabo, which refers to ‘self-automated computer programs that can carry out terms of any contract’.
Aaron Ting, from Access Malaysia, explained that Smart Contracts are contracts in the public domain, where everyone can see and rectify errors. He further clarified that Smart Contracts lie on a spectrum, and there are multiple variations. They may range from contract entirely in code, contract in code with separate natural language version, “split” natural language contract and encoded performance, and natural language contracts with encoded payment mechanism.
B. What is the Potential of this Technology?
Aaron Ting also provided a few use cases where Smart Contracts can be utilized. First, identity, Smart Contracts enable people to own and control their digital identity, determining which to disclose.
Second, securities, Smart Contracts can facilitate the trading of cryptocurrencies, and they’re much more secure than stocks because it is fast, convenient, and there are decentralized exchanges.
Third, trade finance, Smart Contracts can facilitate the stream-lined international transfer of goods through speedier Letter of Credits and trade payment initiation, while enabling higher liquidity of financial assets.
Fourth, financial data recording, as Blockchain allows for accurate, transparent recording of financial data, Smart Contracts will be able to ensure consistent financial data across organizations, improved financial reporting, and reduced auditing and assurance costs.
Fifth, mortgages, Smart Contracts can automate the complicated process of buying a house.
Sixth, land title recording, as is practised in Sweden.
Last but not least, Smart Contracts can simplify the process of claiming auto insurance. He explained that currently, in order to claim for auto insurance, information is diversified across multiple actors such as the police, hospitals, and the insurance agency, resulting in a lot of legwork and overlaps. Smart Contracts, due to its automated nature, would allow for the execution of initial claims shortly after an accident.
Aaron stated that while all these possibilities may sound idealistic, if the entire government is powered by Blockchain, which Dubai has planned to do by 2020, almost everything can be automated.
C. How to Utilize this Technology?
TM Lee, from CoinGecko, gave some pro tips on how to get started with Smart Contracts. First, he stated that prospective users should learn Blockchain and how it works in general. Second, they should understand Smart Contracts. Third, ideally, they should learn basic coding, this skill can be learned online, or by attending boot camps, such as the one provided by Next Academy. Fourth, after some practice, by using developer tools, they may learn how to write Smart Contracts by visiting websites such as Zastrin.com, which teach users how to code Smart Contracts. Or alternatively, a lawyer who wants to utilize the benefit of Smart Contracts without going through all the hassle can contract others to write Smart Contracts for their firm.
D. What are the Challenges in the Adoption of Smart Contracts?
During the questions & answers session with members of the audience, it became evident that Blockchain, like any technology, is not without its flaws, and Smart Contracts, like any disruptive technology, is not without challenges in implementation.
In response to a question by a member of the audience on whether Blockchain would be susceptible to large-scale cyber-attacks, such as the devastation caused by Wannacry in June 2017 to Ukraine and the United Kingdom, Rene Bernard answered that Blockchain is akin to email and online banking, information about it is saved in hardware all over the world. TM Lee, on the other hand, stated that Blockchain could be stored on a satellite, so that even if the world explodes, we can have access to some data.
Aaron Ting gave a more detailed and sophisticated answer. He saw that the question was asking about the propensity for information on the Blockchain to be tempered with, and answered that Blockchain does have a weakness, called the 51% weakness. Given how Blockchain uses information from others to cross-refer and rectify temperance, if a hacker can manipulate 51% of the digital ledgers issued, they can then manipulate data on the Blockchain as they wish.
However, Aaron reassures the audience that although it is possible, this can be very hard to do. Aaron gave the example of the Blockchain used to power Bitcoin. In order to manipulate information using the 51% weakness theory on Bitcoin’s Blockchain, a hacker would need to have computing power which is equal to the power consumption of the country of Iceland. Aaron stated that the beauty of Blockchain is that everyone may know how to hack it, but it very uneconomical to do so.
A question on privacy was also raised by a member of the audience. The query was that if Smart Contracts utilize the public nature of Blockchain to rectify temperance or errors, does that mean random third parties would have information about the Smart Contracts on the Blockchain, which would not be ideal for contracts of a private and confidential nature?
Aaron Ting stated if the Smart Contract is on Ethereum, which is currently the largest open-source, public, Blockchain-based distributed computing platform featuring Smart Contract functionality, then the fear is founded, as anyone will be able to access the information because it is a public Blockchain. This would obviously not be ideal for sensitive information.
However, both Aaron Ting and Rene Bernard offered solutions to this conundrum. Aaron stated that he only foresees Smart Contracts for sensitive contracts happening in Malaysia when the Government is on board and have their own private Blockchains, which is only accessible when permission is granted to users. Rene, on the other hand, recommended that if users want to use a public Blockchain nonetheless, perhaps the Smart-Contract can be encrypted so that the data is only comprehensible to selected parties, and to those without the encryption key, the data will just appear to be gibberish.
3. Laws and Regulation
The panellists agreed that there are challenges and future discussions needed before Smart Contracts can be adopted. For example, who should be sued, if something wrong happens, as it is a decentralized system? And how do we adopt a version of Smart Contract that is in compliance with local laws? Or if money was stolen from the automated system by exploiting loopholes, such as when approximately 55 million USD was stolen from the Decentralised Autonomous Organisation (DAO) , is it theft if technically, no rules are broken?
However, Aaron Ting believes that the flaws of Blockchain notwithstanding, its potential shall not be disregarded. Blockchain can change the world by making it more transparent and efficient, and the legal industry and the IT industry can, and should, work together to grow.
III. Artificial Intelligence
Sharon Wong from ZICO Holdings started the session on Artificial Intelligence with a case study - a contest in the UK pitched over 100 lawyers from London's firms against an artificial intelligence program called ‘Case Cruncher Alpha’ made by some Cambridge law students. Both the humans and the AI were given the basic facts of hundreds of cases and asked to predict whether a claim would be allowed. In all, they submitted 775 predictions, and the computer won hands down, with Case Cruncher getting an accuracy rate of 86.6%, compared with 66.3% for the lawyers. In light of this, can lawyers keep up with AI and technology?
A. What is AI?
Professor Ray Campbell of Peking University gave a brief run-down to the audience on the nature of AI. We were told that AI is “any device that perceives its environment and takes actions that maximize its chances of success at some goal.”, or put differently, a technological device that receives inputs, analyzes those, and can take action in response to those inputs without human intervention. He went on to explain that AI is a subset of machine learning, and therefore different from human-style intelligence - even if machines were to develop general intelligence, it wouldn’t be human-style general intelligence. For example, it is unlikely to hold human values. He clarified that AI is not like the human brain, as it is closer to a thermostat, a machine which is able to sense and regulate temperature on its own.
According to Professor Raymond, AI has been a goal since the dawn of computers, and in the early years of AI, this took the form of a rules-based system. For example, if A, then B, resulting in a huge logic tree, a method which never took off, as it only works best in closed or defined systems, whereas most problems we face are open.
However, the modern AI is made more like how the human brain works - humans don’t operate by applying rules, but the information comes in through our senses and is constructed in our brains, forming associations along the way. Realising the limitations of the previous approach in AI development, researchers began looking at ways to reproduce the above-mentioned neural networks through software, and recent results show that they have all but succeeded. Therefore, before the creation of neural networks in AI, it was fair to ask whether AI would ever be any good at answering open questions. However, this is no longer an issue.
He gave the example of IBM’s Watson which could answer Jeopardy and win week after week against human players, and even defeated the best players the show has ever produced - Ken Jennings, who had 74 winning appearances, and Brad Rutter Watson, who earned the biggest prize pot with a total of $3.25 million. IBM’s Watson played those humans in a game of Jeopardy and won. It is interesting to note that Watson did not know that it has won - it just made associations as to what is probable. Google's ‘Go’ AI, performed similarly, beating top world players at the board game ‘Go’. Players who played against it said it felt like playing against someone from another planet.
B. What are the Real Worlds Applications of Current AI technology?
Professor Campbell gave a few examples of when AI has already been incorporated in the real world, such as warfare, where South Korea has an AI-powered gun that can blow people away in the Demilitarized Zone. IBM’s Watson, the aforementioned Jeopardy prodigy, is already being used in the field of Medicine. Various forms of AI has also been used in securities trading, language recognition, translation, image recognition and anomaly detection, such as identifying and flagging foreign language used in company emails. He reminds us that these applications are merely the tip of the iceberg.
In the legal industry, IBM’s AI Ross and Ravel Law, recently acquired by LexisNexis, are the leading pioneers. Given the facts of a case, the programs will come up with a solution, the degree of probability that they have it right, complete with citations in mere minutes. Back when he was practising, Professor Campbell said that he would think that a 1st-year associate who took a day to do the same was pretty good. Besides Ross and Ravel, Prof Campbell stated that AI can also be used for AI-powered legal research, AI-powered e-discovery or document review, and AI-powered outcome prediction.
C. Will AI replace lawyers?
1. AI as Disruptors
Professor Campbell stated that in order to answer this question, it is essential first to ask, what do lawyers do? He explained that lawyers are custodians of specialized knowledge. However, we have moved into a new era of knowledge management. In the past, we shared knowledge orally, then through handwritten documents, then the printing press. In all of those eras, humans remain the critical component to manage knowledge, but now we have AI who can do it much faster and on a much grander scale. Machines can now handle specialized knowledge.
What does this mean? Prof Campbell gave an anecdote of a consultant who asked a room consisting of executives of a drill-manufacturing company on what is it that their clients desire. The answer was “A good drill”. The consultant told them that they were wrong. Their clients do not want a drill; they want a hole in the wall. The means is less important to the clients than the ends.
He then continued to tell the audience that if 'the hole in the wall' that they can deliver is one dimensional, then there is no need to ask if AI will take their job because it already has. AI is already doing tasks once done by lawyers, and it increasingly will. Humans are as smart as we are going to get whereas AI’s intelligence is on an upward curve. No matter what the regulatory regime, AI will replace some lawyers, as even in the most corroborative arrangement, fewer lawyers will suffice to get the job done, with AI.
However, the speed at which this happens will depend somewhat on what kind of lawyer the incumbents are. To avoid being replaced, lawyers need to be a T shaped professional, which will be analysed in Part V of this article. Professor Campbell said that one thing is for sure, AI does not exist to give humans employment. Like it or not, AI is here to stay, in the legal sector and elsewhere, legal practitioners will have to figure out how to live in a world where AI is both a tool and a competitor.
2. AI as Enhancers
However, not all is doom and gloom. Gaythri Raman from LexisNexis and Daniel Yeo, from Linklaters, both provide examples as to how the adoption of AI technology can help enhance the competitiveness of legal practitioners.
According to Gaythri, LexisNexis has been making efforts to incorporate AI into Legal Research. The essence of natural language processing is disambiguation. A key challenge for LexisNexis has always been to understand what exactly their customers intend to do when using their search engine. Customers often look for different key features in different search domains. For example, for legal searches, the key feature is the validity of the result, for news, the key feature is the freshness of the news, and for job searches, often, the key feature is the salary offered. To add to this complication, different individuals have different personalized priorities. The question then becomes, how do we teach this to the machine?
According to Gaythri, LexisNexis has been marking milestones with Lexis Advance, where the AI breaks a search down into semantically expanded query right away to find the most relevant case law. Furthermore, with LexisAnswers, a feature that brings artificial intelligence to the Lexis Advance legal research platform, a researcher can ask a natural-language question and get back the single-most accurate answer for their query.
Gaythri further explains that LexisNexis’s ultimate end goal for AI prediction search is to achieve a process where an action which a user takes after seeing the results of a search is used by the AI to inform system improvements so that the machine would be able to self-learn according to previous user behaviour, allowing the user to get better results the more the search engine is used. She stressed that the scope of possibilities for AI is so big, and this example is just on a subset of how it is able to empower search engines to help humans in data management.
When asked about the South East Asian market for AI technology and whether Lexis Answers, which is available in the United States, will be available in Malaysia, Gaythri answered that firstly, Lexis Answers would definitely translate into the local product, and secondly, the SEA market has a lot of potential. She gave the example of Myanmar, where in 3 years, Myanmar went from having little to no mobile network to an 85% penetration rate - an amazing feat. She attributes this success to the fact that users and lawyers in SEA do not have many prohibitions because the current technology is their status quo. Therefore, they have no legacy issues to deal with, which can sometimes be a barrier towards progress.
Similarly, Daniel Yeo, a Management Associate at Linklaters, a multinational law firm which has adopted Artificial Intelligence, Nakhoda, into their legal practice, stated that the adoption of Nakhoda has allowed them to engage in more creative problem solving, a task which is lot more high level than transaction management and other mundane tasks that has been allocated to Nakhoda. However, he points out that there may be challenges towards the adoption of AI in the form of the mindset and inertia of people on the ground. He spoke about a Corporation which had a very impressive AI management system for their in-house counsel, where, while setting up only took them 3 months, it took over 2 years to convince people to get used to it and adopt it.
D. Can AI replace judges?
An interesting issue which propped up during the conference was on the possibility of AI judges. Daniel Yeo pointed out that China is already introducing AI judges to a certain extent, when dealing with minor offences, such as traffic offences. However, he notes that Law can be a very emotive profession, which requires personal emotions, a factor which cannot be so easily replaced.
Gaythri Rahman stated that AI judges may be feasible to replace lower level judicial officers like magistrates, but she notes that even at the higher courts, AI can play a supporting role, such as auto transcription of court proceedings so that Judges do not need to take notes anymore, or even the adoption of other technology in court, such as having virtual courtrooms for someone halfway around the world, will definitely help the cause of justice.
Professor Campbell is of the opinion that AI judges may play a more prominent role outside the courtroom. For example, if an AI analyses a case and states that a party stands a 90% chance of losing, that person might choose to pay or settle, thus avoiding litigation entirely. Although he does acknowledge that if implemented within our judicial system, AI judges might come with their own set of benefits, such as eradicating corruption as AI judges do not take bribes.
Noemi Mooney does not think that AI will replace judges but notes that there are currently a lot of different initiatives to explore online dispute resolution like divorce proceedings. She also notes that AI may complement a judge’s role, questioning whether a judge really needs to be involved at every single point of a case. She is of the opinion that AI can supercharge judges as well as lawyers.
Lastly, Paul Neo echoes Noemi in the sense that he thinks “supercharge” is indeed the term to use. He believes that although China is already automating low-level disputes like traffic fines, ultimately, people still need the catharsis of a courtroom. People might not be that happy if they have only been heard by a software and not a real judge. And since judges are placed by politicians who want to ensure that people are happy, AI judges would not be used widely anytime soon, but maybe in the future when people are more used to the idea.
E. Other Challenges
Professor Campbell notes that AI brings threats as well as promises, and the challenge for legislators is to create an environment where we can avoid the worst downsides of AI, such as the creation of a surveillance state, the displacement of workers, the loss of employment tax revenue for governments, and most importantly, the question of who would serve the public benefit when law is run by AI?
He also believes that AI will lead to the growth of new legal issues, such as issues of Intellectual Property (who own works created by AI?), priviledge and confidentiality matters (would AI be bound by confidentiality rules?), and possibly open up new areas of malpractice, such as who should have the duty to train, monitor, and supervise self-programming AI, lest they become like Microsoft’s Tay, an AI which was forcibly unplugged after it began churning out racist, sexist, and genocidal tweets after being exposed to, and learning from, other users on Twitter.
IV. Role of Regulators
A. Bar Council and the Legal Profession Act 1976 (LPA)
During the conference, Hafez, a representative from Cradle Fund Sdn Bhd (Cradle), an agency under the Ministry of Finance, Malaysia, directed a question about the Malaysian Bar’s attitude towards Lextech to Steven Thiru, who moderated the first panel, in his capacity as the former Malaysian Bar Council President. Steven Thiru was asked about legal actions which the Malaysian Bar has taken against legal start-ups, where one case even went to the Federal Court. Steven was told that such actions do not send a good message to investors. Hafez later clarified that he was referring specifically to the Bar’s action against ‘Answers at Law’ and ‘Dragon Law’.
For the uninitiated, Answers-in-Law is an interactive legal and public services directory that helps facilitate access to law firms by helping a user identify legal service providers who meet certain criteria set by the user, and also indemnifies the cost of the initial legal services offered by the selected law firm.
The Malaysian Bar brought a legal action against the service in July 2011 for a declaration that the company is an “unauthorised person” under section 37 of the LPA, and the matter was in court until 2015, where the Federal Court decided that the Malaysian Bar had locus standi to commence an action against the respondent for infringement of section 37 of the LPA. Since that judgment, it is understood that the matter has been settled, and Answers-in-Law has agreed not to proceed with the proposed service.
On the other hand, Dragon Law is a company which offers cheaper and quicker alternatives to hiring a traditional law firm by selling subscriptions to templates for routine contracts software that guides clients through the process of creating their own legal documents. Dragon Law announced its entry into the Malaysian market in 2016.
The Bar Council reviewed Dragon Law’s entry into the local market and released a report concluding that the service is clearly in breach of section 37(2) of the LPA, as they are undertaking work that is customarily carried out by an advocate and solicitor. As a result, until today, the service is not available in Malaysia.
Steven Thiru acknowledged that those disputes happened during his tenure. However, he attributes the adverse decisions against the legal start-ups to the laws that govern the legal profession, such as s.37 of the LPA, and the Practice and Etiquette rules. He stated that although the profession has evolved, the rules that govern the legal profession were made only to regulate the work of barristers, and not barristers and solicitors as a fused profession, as practised in Malaysia.
However, he points out that there might be a light at the end of the tunnel, as the Bar Council is currently working with the Government to modernize the LPA, so the final word on this issue has not been said. However, he explained that as of right now, there are laws that bind the legal profession, and the Bar Council, as the regulatory body, are duty bound, if not obliged, to enforce those rules.
B. Other Laws and the Likelihood of Change
Besides the need to relax the insular nature of the LPA, it soon became clear during the conference that other actions by the Government are required in order to facilitate the introduction of innovation such as Smart Contracts, such as Aaron Ting’s suggestion that the government set up their own private Blockchain in order to ensure that Smart Contracts have a certain degree of privacy and confidentiality, and the need for legislation in order to confer legal validity to Smart Contracts, before consumers are willing to opt into the system.
On reform to the LPA, Chew Seng Kok, the Managing Director of ZICO holdings, is not so optimistic about the prospects of the regulatory bodies relaxing regulations on their own. He lamented that Malaysia’s regulatory environment often do not accommodate what is relevant today, as lawyers are quite resistant to change. He cited his experience battling the Bar Council since 1991, which resulted in little change, as why he is of the opinion that left to their own devices, adoption of innovation such as Smart Contracts will take a while.
He also pointed out that the legal industry in Malaysia and India are the last two most illiberal in the world. The regulators are slow to relax rules. According to him, this is because unfortunately, regulatory bodies have a lot of vested interests, and answer to people who pay the fees.
Chew believes that in order to affect change, proponents of Lextech would need to push for it like what Uber and Airbnb did, not to depend on the goodwill of the regulatory bodies, but to create the change by appealing to consumers. He pointed to the modus operandi of successful disruptions such as Uber and recommended that it be adopted, as Uber did not ask the regulators what they want, but went from the bottom and succeeded because they gave their customers what they wanted, who then pushed for change on their behalf. He then applied the example to a hypothetical scenario involving Smart Contracts, and stated that if the SMEs want it, and lawyers can't provide it, customers will start looking for other providers, which increases pressure on regulators to adapt. As such, he believes that eventually, change will not come from inside, but from the outside.
This view was reiterated by Rajesh Sreenivasan from Rajjah & Tan 2.0, who stated that in order to achieve a change in regulation, proponents of Lextech would have to get consumers riled up about the potential for this technology, as he thinks that the possibility of low-cost legal services is a cause everyone can get behind. Proponents will have to look at the pressure points of regulators, and if it's political, riling up the masses behind this technology would be the right path forward.
Chew and Rajesh both believe that when it comes to convincing lawyers to adopt this technology, they have to be convinced that the change will be forced onto them anyway, and if they don't innovate, they will fall behind. In the words of Chew, “Some lawyers tell me, “But we will lose our fees!”, my response is that it will happen anyway, and it is better to get 10$ from 10,000 clients than having your 1000$ reduced to 10$ by the industry.”.
V. The Way Forward: Future of the Legal Profession
A. Firms and Legal Practitioners
Professor Campbell outlined 3 questions which Legal Practitioners should ask themselves in the wake of AI. First, how do we use AI to be better T shaped professionals? Second, how do we use AI to be better, faster & cheaper? Third, how do we use AI to solve problems that our vertical skills previously could not reach?
He believes that lawyers should branch into developing particular skillsets that AI cannot do in order to stay ahead of the curve. He stated that skills such as the ability to litigate across jurisdictions with different types of legal systems, such as civil and common law, cultural competence, language skills, and the ability to understand social context, is still beyond the reach of AI. Furthermore, he also believes that clients would hesitate to make public or upload online a lot of the things they say or do, such as matters that involve rules of privilege and confidentiality, it will take some time before people will trust AI with those things.
Chew assures lawyers that the future of law is not dead. However, lawyers have to embrace the future and evolve into something that their clients need. He referred to the 'Alt Weil Law Firms in Transition Report 2017' where it was revealed that over half (54.6%) of firms with 1000+ lawyers on their payroll are already using tools involving AI and 0% of them identified themselves as being unaware of legal technology developments, and many are keeping a watchful eye on competitors and technology companies that are investing in legal AI solutions. He cited this an example to show that AI is not a substitute, but is there to help lawyers, but lawyers will have to either do it or perish.
Chew further echoes Professor Richard Susskind’s recommendation that lawyers should learn a whole bunch of new skills in order to remain relevant in the future, and that law firms must future-proof their legal services by changing their culture of resistance to change, integrating technology such as AI tools and virtual platforms into their services, expanding the scope of their talent model, and revamping their strategy to reflect the continuous expansion of the legal services spectrum by adopting operational models and structures that can accommodate diversity. However, sadly, he pointed out that many law firms are not equipped for this, and don’t have the incentive to invest large amounts of money for the future because of the reluctance of partners to invest in long-term investments that they might not benefit from.
Chew also advises legal practitioners to look at emerging technology such as Blockchain and try to make it work for them. He encourages lawyers to not compete on price alone but value-add services with elements of trust, experience, and project management, stating that legal practitioners must focus on aspects of legal services which cannot be easily commoditized and robots cannot do, such as becoming a trusted advisor, taking on roles where experience and judgment is required, move into services with a focus on management of relationships, origination, or structuring of solutions, and legal services which requires extensive personal involvement.
Last but not least, Chew reminds us that we are only on the cusp of the beginning of a revolution. Everything has been transformed, and the legal industry, through its inertia, is creating opportunities for everyone, which should be embraced.
B. Tapping into New Legal Markets
According to Professor Campbell, currently, due to the high expenses associated, a lot of people cannot afford legal services, as such, there is a huge under-served market. He believes that now, with the volume of cases that AI can process, we can drive prices of legal services down and serve those under-served market. The question to ask for future practitioners is whether we can serve lots of people at low prices and still make a good living.
Raja Singham, the Managing Director of Brickfields Asia College, stated that while some people may see doom, he sees a whole new environment for lawyers. Due to the increasing use and integration of technology into our everyday lives, new markets are being created every day. He gave the example of litigation for accidents and damages caused by self-driving cars and rogues robots – all potential sources of income, provided that lawyers are equipped with the right skills and depth.
C. Reforming Legal Education
During the conference, there was a consensus that current legal education is failing to keep up with the rise of legal technology. When asked about this concern, each of the panelists has their own advice and suggestion. Professor Campbell lamented that unfortunately, law schools are often 10 years behind the curve. He cautioned that law schools need to stop thinking that their only role is to teach the law and start training students to become good lawyers - in his experience, a lot of exceptional students are substantially self-taught.
He also stated that lawyers need to understand their client’s needs, emotions, and other needs to be a true T shaped profession. As such, students need to know how to develop soft skills and be able to solve their clients' and societal problems.
Rajesh agrees that legal education in Singapore and Malaysia is indeed too slow to adapt, based on his meetings with the Deans of law schools. He advises that students have to have depth to remain relevant nowadays. He pointed out that a member of the audience, a law lecturer from Taylor’s University, asked about using augmented reality to teach conveyancing. He stated that while it might sound strange, but it's part of an important normalisation process, as students need to know how to use the technology of tomorrow.
Chew pointed out that the Bar Council may be able to help in this regard. They have a compulsory one-year course where foreign law graduates must go through before becoming a lawyer. He recommended that the CLP course could be used to teach prospective lawyers how to use up-and-coming technology.
Raja Singham foresees that in the future, people are no longer going to be in one profession for the long term, they would have to be multidisciplinary, as the digital world, physical world, and biological world are converging. He also revealed that Brickfields Asia College has tried to innovate in this regard, such as the establishment of Academy 4.0, so that law students can go for coding classes over the weekends, with certificates being awarded upon completion.
However, he lamented that the mentality of regulatory bodies and students are slow to keep up. His proposal to allow law students to do masters in Information Technology was not accepted by regulatory bodies, who insisted that those students must have an IT degree to do so, and even among students, the reception for extra coding classes is less than ideal because people don't see the need.
He warned that Malaysians have to get rid of the old mentality that we're just going to study to become one profession in the future, because the Status Quo is about to undergo a drastic change. One of his biggest fears is Malaysia becoming irrelevant as a nation.
From recent developments and input received from the conference, it can be concluded that we are on the cusp of the next industrial revolution. It seems like some legislators, regulators, and members of the legal profession think that they can insulate themselves from change by relying on an illiberal and archaic regulatory environment which is slow to respond to innovation. However, this is a fallacy. In an increasingly interconnected and globalized world, competition does not merely come from within a country’s borders – it comes from without.
As legal firms all over the world embrace and adopt disruption, they become more efficient, proficient, and is able to offer more attractive rates to their clients and investors – and if Malaysia's legal providers are unable to offer the same, clients will just look elsewhere, as the barrier between countries are low.
Members of the legal profession in Malaysia must learn to evolve, adapt, and place themselves at the steering wheel of change, as adapting to innovation in the age of disruption is no longer merely a matter of getting ahead, soon it’ll be a matter of survival.
Leeroy Ting (center) with other LexisNexis Student Ambassadors at the LexTech Conference 2017
This article was written by Leeroy Ting Kah Sing, whose participation at the event was financially supported by the Industry-Academia Collaborative Research Project undertaken by the Faculty of Law and University of Malaya Center of Regulatory Studies in relation to the Blockchain-based Regulatory Framework in Malaysia which received funding under Grant No. IF031-2017 from QRC PLC. (Edited by Illianie Taib)
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