3 July 2006
Every day in Mumbai, India, a team of 5,000 couriers deliver, collect and return 200,000 lunch boxes. This massive logistics operation is undertaken with an error rate of less than one in eight-million deliveries and without using any IT. Enormous labour cost disparities enable this manual operation to be undertaken cost-effectively. Similar disparities also exist in law firms across Asia and clerical staff may in some cases be paid less than 1 per cent of the salaries of their professional colleagues.
Against a backdrop of refined manual systems and cheap labour, local languages that do not use Roman letters and a relatively short history of local software development, it may seem remarkable that many law firms in Asia are not only heavily reliant on IT, but are also involved in some highly innovative technological developments.
Governmental technology initiatives
The governments of both Hong Kong and Singapore have both officially embraced the broadest possible official use of online technology across a wide range of fields. Some of these government technology initiatives provide opportunities for technology-conscious firms and in turn create competitive threats for late adopters. The Hong Kong government, for example, has introduced the world's most comprehensive IP interactive e-filing facilities, which allow registered users to access and update online government records upon payment of the requisite official fees. The jewel in Singapore's crown is the electronic filing system that was introduced in 2000 for court documents. More than 400 Singaporean law firms now routinely file court documents electronically using this web-based system. More than 2.5-million court documents have been filed electronically with this system, which is available 24 hours a day, seven days a week. Documents filed electronically are also officially served by the same means.
Electronically filed documents tend to be processed more quickly, either as deliberate policy or simply because e-filing is more efficient. This provides a competitive advantage to technologically proficient firms.
The People's Republic of China
As Asia's new focus of opportunities for law firms, China deserves a special mention, although its technological development has not yet advanced to the same stage as other Asian countries'. One problem particular to legal practice in China is the sheer volume of potentially conflicting legislation issued at county, provincial and national levels. Some law firms profit from this confusion by providing subscription-based online update and legislative translation services to their clients. It seems likely that opportunities of this type will continue to exist for many years to come, although the Chinese government now makes some significant pieces of national legislation available online (in some cases accompanied by English translations).
Significant technological progress is now being made by the Chinese government across a range of law-related fields and law firms would be well advised to keep a close eye on developments in this area. For example, during 2005, in the IP field alone, the Chinese government introduced online trademark searching facilities and placed official trademark gazettes on the internet. In addition, for the first time ever, official trademark examination guidelines were published and an online consultation facility was also provided prior to introducing certain regulatory changes.
Opportunities for law firms
Broadly speaking, the opportunities afforded by technology may be split into two categories: client-facing and back office.
It is now relatively commonplace for law firms in the more developed Asian jurisdictions to offer virtual deal rooms and extranet facilities. While in many cases local clients may follow traditional business models and may be loath to actually use such facilities, their existence can still be attractive from a marketing perspective. More sophisticated clients are increasingly aware of the benefits of CaseNets (matter-specific extranets), online expenditure tracking and in particular the cost savings to be obtained by requesting service providers to submit invoices through proprietary electronic billing systems.
An increasing number of multinational companies are now excluding law firms from their appointment processes if they cannot submit bills through proprietary billing systems, which may be technologically complex and require web-based billing facilities in order to function. Aside from the competitive advantage that can be obtained from an investment in ensuring that invoices can be issued through the client-specified means, participating law firms benefit from guaranteed payment timeframes that eliminate the need to apply credit control resources to that particular client.
Another area of opportunity for law firms is the possibility of providing data verification and information audits for clients using the online facilities provided by some Asian governments in the fields of IP registration, real estate and corporate services. Some more sophisticated clients are also providing instructions on standard or routine matters by way of templates that they require their service providers to complete, thus economising on data entry costs. Although these initiatives are still in their seminal stages in Asia, it seems inevitable that they will ultimately lead to the sharing of a single unified database by law firms and their clients, which is in turn synchronised regularly against relevant official databases. Such facilities will clearly provide competitive advantages in such areas as due diligence projects, IP audits and corporate services filing reviews.
The international law firms present in Asian jurisdictions tend to focus on individual high-value transactions, so technological developments relating to high-volume services seem more likely to benefit diversified local law firms, but international firms still maintain a clear advantage in terms of the level of resources that they are able to dedicate to their technology.
Other areas where technology can improve operational efficiency are conflict checking (an area in which third party services are starting to become available in some jurisdictions) and electronic overview of workflows and processes.
A significant part of the role of Asian law firms in international transactions may derive from language or cultural issues. There have been some government initiatives aimed at reducing the problems caused by language barriers, although there is still considerable scope for imaginative law firms to employ technology to profit from language issues that may arise for their clients.
Because of the massive investment in management time and skilled labour required for IT development (not simply in terms of infrastructure, but also in programming and system integration), the best opportunities seem likely to be limited to larger firms that are able to devote sufficient resources to such projects. Nevertheless, significant opportunities may still exist for smaller firms practising in niche areas, if they are prepared to devote sufficient time and commitment to developing their technology strategies.
Lindsay Esler is managing partner of Deacons for Hong Kong and China