Why Hong Kong Needs to Step Up Its Legaltech Adoption

Legaltech, Litex

Litex Co-founder and CEO Chloe Chan talks to Jumpstart about legal education – why it needs to adapt to the evolving technology landscape, and how to equip future lawyers for the booming legaltech market.

The legal technology, or legaltech, market is expected to be the future of the legal industry. Emerging technologies and improving data analytics capabilities are driving a transformation within the legal industry, making room for tech to play a more central role.

For an industry that deals heavily with information extraction, which means acquiring and processing of information, artificial intelligence and machine learning (AI/ML) offer enormous possibilities.

For instance, law firms and organizations manage tens of thousands of cases. Each of these cases come with an assortment of legal documents such as contracts, licenses, invoices, and blueprints, among others. This makes looking up specific information almost impossible.

Where lawyers spend countless hours analyzing and sifting through documents, AI tools can perform these tasks in seconds. This helps to reduce legal costs, improve legal process management, and help gain a competitive edge in the industry.

And this transformation is happening swiftly across the globe. In 2019 alone, the global legaltech market generated US$17.32 billion in revenues. For an industry that was already poised for growth in the coming years, the global pandemic further accelerated legaltech’s adoption, with many legal firms and organizations forced to work remotely.

However, despite the strides legaltech is taking globally, especially in North America and Europe, Hong Kong is yet to catch up.

One of the main problems with legaltech adoption in Hong Kong is with the content of legal education itself, says Chloe Chan. Legal education in the city is not multidisciplinary enough, providing students with only essential skills to become legal practitioners, she notes.

Chan is the Co-founder and CEO of Litex, a student-initiated legaltech natural language processing (NLP) startup in Hong Kong. She is currently a final-year law and social science student at the University of Hong Kong.

Chan adds that for many junior-level solicitors, even if they may not lose their jobs, as the legaltech landscape evolves, some of their skills may become redundant. This is because legal education in Hong Kong, Chan says, doesn’t encourage law students to be tech-savvy and adaptive.

Secondly, the development of legaltech tools is not as vibrant and rampant in Hong Kong, Chan says, pointing out that countries like the U.S. are already using AI to help with legal analytics, including argument drafting and case outcome prediction.

“In Hong Kong, we’re still focusing legaltech [tools] on internal corporate measurements, such as project management, process management, or customer relationship management,” Chan tells Jumpstart. “… It’s more on administrative tasks, I would say, instead of something that’s more advanced, that can really help with some sort of argumentative task.”

The third roadblock to legaltech adoption is accessibility. In Hong Kong especially, Chan says, the focus is still on providing legal aid assistance, instead of developing legal tools, such as apps or chatbots, to enhance the common public’s access to justice. Such tools, she notes, “might at least help them to gain some kind of basic legal knowledge.”

Traditional lawyers and law firms in Hong Kong thus have many challenges ahead of them when it comes to legaltech adoption. Banking on the opportunity, Chan started Litex in Hong Kong.

Setting up Litex

Litex was initially started as a university project to develop technology that could help local NGOs. With a focus on labor organizations, Litex’s team developed a legal search engine that could help NGOs effectively advise laborers on cases related to employment compensation on account of work-related injuries.

However, Chan soon noticed that there was a wider problem at hand. Having interned at a number of law firms, and worked alongside several barristers and solicitors, Chan realized that legal research was a “time-consuming” process. Current legal search engines in the industry, she says, are less effective than they could be.

For instance, they only provide Boolean search (combining words and phrases using the operators AND, OR, and NOT, to sift through searches) and keyword search.

“Using Boolean searches and keywords, one cannot easily specify locations within a contract structure or deal with a wide variety of languages with which certain kinds of terms may be expressed. For instance, consider the variety of ways in which a mental illness can be expressed,” Chan explains.

Litex Co-founder and CEO Chloe Chan

Subsequently, Chan and her team decided to scale Litex into a legaltech NLP startup in Hong Kong.

They also decided to focus on personal injury, which has more reported judgments, and therefore, more data sources for the machine to train from, compared to employment compensation

How Litex’s ML platform helps the legal industry

The Litex Search Engine is an online case repository. It automates large-scale information extraction, thus minimizing manpower required, and advancing from the current system of manual extraction and sifting.

In a nutshell, the product enables clients to search through reported judgments, and view key facts at a glance. The search engine determines all possible cases related to the scenarios that are fed in. For instance, on receiving relevant details of an injured person – such as age, injured area, or job – the search engine can ascertain approximate damages.

For automated extraction of court cases, Litex uses a deep-learning NLP model. It pays attention to the most relevant elements or ‘key factors’ of the data from court cases. This means that the model can easily extract factors of cases such as the age of the victim, cause of injury, and nature of injury or occupation. It thus minimizes the need for manual sifting and selection, Chan says.

Once the NLP platform extracts the key factors from the available data, users can then input these factors into the search engine to easily find relevant cases. For example, if the client is a construction worker with a leg burn, and aged between 33-35 years, the lawyer can input these in the search engine. The search engine would then show the list of cases which corresponds to a construction worker’s leg burn.

“So it helps to enhance the efficiency and also has a much higher accuracy,” Chan says.

Litex search engine

While NLP has already been applied in financial arenas, such as in predicting stock prices, Chan says it is not that commonly used within the Hong Kong legal industry.

“The problem is that some of these ML systems are not really able to digest legal information, they do not have a legal corpus,” Chan says. “So that’s the difficulty when it comes to applying NLP into the legal arena.”

As most of the existing language data is irrelevant to law, Litex plans to train their ML model on data from court cases.

She adds that while the team is currently focusing on extracting information, they are but a “step behind predicting an outcome of cases,” as well as doing some kind of sentimental analysis, such as, the injured person’s credibility, or the judge’s opinion of the concerned medical expert.

How legal education can aid legaltech adoption

While the present legal education system is one of the main impediments to legaltech, it is also the means to alleviate the problem and advocate tech adoption, Chan says.

Advocating legaltech in legal education doesn’t necessarily involve teaching students computer programming. Rather, universities can start by introducing computational thinking and legal design thinking, Chan suggests.

“It’s actually more about how we can use computational thinking for problem-solving, how we [can] use coding or programming method solutions to solve the current problem,” she says. “That is the kind of problem-solving framework that should be taught.”

Computational thinking involves breaking down a problem into smaller sections, analyzing these sections to recognize patterns, evaluating what information is needed, and developing a step-by-step solution. This process, Chan says, is similar to legal reasoning, making computational thinking all the more relevant to law students.

Another measure that universities can take, Chan says, is to introduce a course on the basic concepts of technology, such as blockchain and AI/ML. From a legal compliance or legal regulatory point of view, she says, it’s crucial to have a grasp on at least these fundamental technologies.

“So when there are certain legal issues coming across, at least you will know what a blockchain is, or at least you’ll be able to know what decentralized finances or decentralized economy is. Because that is clearly going to be the trend in the next 10 or 15 years,” Chan notes.

In the coming years, Chan says that legaltech is likely to focus on commodifying the latest technology, making legaltech accessible to members of the public.

“Such a niche specialization will be [made] widely available to people who don’t even have any legal knowledge,” she adds, noting that legaltech can become a “sort of legal application that is downloadable by everyone and accessible by everyone.”

As the legaltech market continues to evolve, law firms can no longer shy away from embracing technology and what it offers to the industry.

For this to happen, law schools have to step up and adapt to the technology landscape, and equip future lawyers to offer effective tech-enabled legal solutions. Moreover, practicing barristers and solicitors also have to grasp all that technology entails. These steps, in turn, can help Hong Kong get closer to its counterparts in the legaltech industry.

Images courtesy of Chloe Chan

Header image courtesy of Karolina Grabowska from Pixabay


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