Transforming with Legal Tech Podcast Episode 1: Hong Kong Innovation

Thomson Reuters is pleased to launch a new podcast series on transforming with legal technologies. For episode one, Polly Poon, Senior Proposition Manager - Legal Tracker, Thomson Reuters Asia and Emerging Markets, spoke with two special guests based in Hong Kong.

Polly welcomed Sebastian Ko and Elizabeth Beattie on the program, who both have demonstrated their passion for innovative legal developments in the region. Sebastian is a ‘legal tech’ entrepreneur and chairs the InnoTech Law Hub of the Law Society of Hong Kong. He is legally qualified in Hong Kong and the U.S, and has practiced in Magic Circle and Am Law 100 firms. 

Meanwhile, Elizabeth is a Hong Kong-based journalist at Thomson Reuters, covering policy changes, legal tech and market developments for Asian Legal Business. Prior to working for Thomson Reuters, Elizabeth reported for the Guardian, Sunday Telegraph, SBS and Al Jazeera.

Podcast show notes

5 critical drivers of innovation

Taking a close look at the local state of Hong Hong in respect of innovation drivers in the legal sector, Sebastian shared some industry insights during the discussion. In September 2019, the Law Society conducted an innovation value chain survey to take the pulse on the innovation priorities of the 11,000 solicitors and registered foreign lawyers in Hong Kong. Sebastian discussed his favourite insights from the survey, including the five critical drivers of innovation experienced by private practitioners.

“There are five critical drivers for innovation. Productivity and operational efficiency, work quality, risk management and cost and budget control in decreasing order of importance. These were shared by in house lawyers. But interestingly, competitive edge, team coordination and management outranked risk management. Plus, cost control factors like client demand, talent retention market growth were identified priorities, but not critical,” said Sebastian. 

Legal landscape in Hong Kong 

Polly invited Sebastian to weigh in on the unique legal industry in Hong Kong, to contextualise it in comparison to other jurisdictions. In response, he said:

“The [Hong Kong] legal profession tends to be a bit conservative and it's quite reserved when it comes to trying out new tech or other innovations. But we are seeing interesting changes among the first movers, which unsurprisingly tend to be the international firms and legal departments and global banks and tech companies. 

“Hong Kong has about 930 law firms. Nearly 89% of them are small, medium-sized firms with five partners or less. These firms generally don't have access to in-house IT professionals and have a very small IT budget. 

A lot of work is yet to be done on basic building block projects such as digital transformation and going paperless campaigns. How to to doc [document] management easier, take the friction out of the file tagging and data reuse. Well, these are key steps for more advanced technologies like machine learning and natural language processing,” said Sebastian. 

What does innovation mean to you?

As this session’s podcast host, Polly had a particular interest in the concept of innovation, in how it is subjective to interpretation. Polly queried Elizabeth on the topic, as well as asking how innovation can play out among firms and organisations. 

“I think this is a really interesting one. For many law firms. Innovation does mean technology, but it can also mean adopting new ways of thinking or working as well. For some law firms, innovation is about new types of hiring, putting greater focus on D&I [diversity and inclusion] changing the physical space of the offices, or perhaps it comes in the form of offering staff new types of training. 

When I think of innovation within law firms, it's often about creating an environment where people can experiment and communicate readily. Sometimes technology is the way law firms are able to do this. Other times it can be as simple as starting an internal conversation or exploring where the pain points are. When you think about it, some technologies really are quite simple, but they serve a purpose.”

Tech integration and change management

One of the key factors in a successful innovation journey is having an environment that is receptive to change and willing to challenge the status quo. Polly asked Sebastian what the commonalities are among teams that have succeeded in integrating technology into their legal work, drawing on their experiences. To this, Sebastian responded with practical insights:

“Now I want to distinguish between an IT exercise to bring in a new tool for incremental improvement, versus an innovation exercise that may involve a new tool, but it's ultimately about competitive growth and doing things a lot differently. 

“There are basic change management principles to follow in both and in working with clients. I see that the problem identification and prioritisation stages of the solutions lifecycle, if done right, would already go a long way to ensure success. 

"Tech today is not magic. It's a tool, the new tool you're adopting needs to address specific issues in your organisation. Have you identified what those issues are? Are those issues appropriate for the type of tech to be adopted? Who are the right stakeholders to involve in the project?"

In the Law Society innovation survey, most respondents noted that they do not regularly review market trends or opportunities for developing new services or solutions, or have periodic reviews with their clients on their service needs. Sebastian identified this as a key area for firms and legal departments to improve on, if they are to prioritise innovation.

Tips on improving your innovation journey 

Once you have identified the problems to address, Sebastian advised firms and legal departments to look for potential roadblocks and make sure they're minimised or dealt with during the innovation journey. 

“I think we can also have a look at the top three barriers identified by respondents to the innovation survey as a starting point for private practitioners sufficient funding of technology and the efforts to identify and adopt new ideas. That's one thing, a second, leadership support. What's the tone from the top? 

“Lawyers are caught up in a lot of ‘firefighting’ day to day, leaving very little bandwidth for ideation and research. On the in-house side, it echoes some of these factors in terms of funding and time constraints, but also notes operational resource constraints, including dealing with legacy IT systems. 

“Having a plan that addresses the above that has been developed with leadership buying is absolutely crucial. And even with the best laid plans, you really need to believe in the value of the innovation, the project has to be given the opportunity to run this course. And a lot of expected and unexpected risks will manifest along the way of your innovation journey. If in fact, of course, the value is not validated in the project, then there is no use to push on. But the best organisations are resilient and will then jump right back to the drawing board and start again.

Why innovation matters: Hong Kong industry perspectives

To conclude episode one of Transforming with Legal Tech, Polly asked her guests why legal innovation remains important in 2020. Elizabeth answered:

"As a journalist, I value technology that makes my work easier or improves my access to information. For example, it's the same with law firms. I would say technology can support firms to be more productive and agile. But it also sends a message to clients, too."

Polly agreed, saying that in her experience she is seeing law departments expect more from the law firms that are working with in terms of driving innovation and the use of technologies.

For Sebastian, there is a very human element to whether or not innovation ‘sticks’ or not.

“I think the old adage still holds true, which is that while everybody wants change, nobody wants to change and innovation is a very difficult thing to do. But with the right commitments, it will pay off and it's very worthwhile. So we'll need to see how legal innovation can be sustained. 

The availability of tech is shaping our attitude towards innovation priorities in the profession. So this is a culturally reinforcing trend, which is a very positive thing based on my own professional experience. 

Corporate innovation projects can be fragile somewhat, and can be put down by complex organisational structures and competent decision making and compliance processes. But as I said, their payoff can be substantial in the long-term, ensuring the company's market leadership even in adverse sales conditions. So understanding this means that your business will truly move the needle in the long term.”

Looking for more corporate counsel insights? Listen to Inside In-House Podcast Episode 1: General Counsel as Trusted Advisers for a conversation with a successful APAC GC.