Malaysia has long been a hub of innovation and entrepreneurship in the legal services sector in the Asia-Pacific region. In this wide-ranging interview with Asia Law Portal, Daniel Lui, Co-Founder of LawTech Malaysia, explains the state of legal innovation in Malaysia in 2020.
What is LawTech Malaysia and what inspired its’ founding?
Lawtech Malaysia (LTM) is an ecosystem builder based in Kuala Lumpur that trailblazes the converged verticals of fintech, lawtech and regtech, with aims to cultivate innovation, upskill communities and provide a hub for communities in the converged verticals to connect, engage and grow together.
Founded as an independent grassroot movement with the vision to create a more dynamic legal technology ecosystem in Malaysia, LTM has been incorporated to strengthen the network of affiliations with the legal, finance, regulatory, technology and business verticals across the Asia-Pacific region.
LTM is the creator behind Malaysia’s first ever LawTech Hackathon, and the producer of the SUPERNOVA Hackathon and Summit, innovation and knowledge sharing platforms that gather enthusiasts, movers and shakers of the fintech, lawtech and regtech industries from across the region.
Who are the members of LawTech Malaysia?
LTM consists of 3 co-founders. Namely, Adeline Chin, Daniel Lui and Jenna Beh.
Adeline Chin is a knowledge management (KM) consultant specializing in KM for legal practice. In her capacity, she has designed, spearheaded and implemented innovative knowledge projects that humanizes the law through the infusion of technology.
Daniel Lui specializes in management consulting for scale-ups and SMEs. He is currently a Partner and Legal Advisor to a private equity firm. Daniel is a qualified barrister and solicitor in the Malaysian and UK courts, and was a former capital markets lawyer.
Jenna Beh, one of the Top 100 Women in Fintech Global specialises in regulated tech, building ecosystems like Fintech and Lawtech, and is a Fintech and Innovation expert. She was previously a Partner in a Malaysian law firm.
Other than our co-founders, LTM consists of a lean team of 6 and 20+ Fellows who align and volunteer to our cause as a business in building, bridging and verticals between lawyers, professionals and technologists.
LawTech Malaysia is a group of lawyers focused on being a bridge between technological advancement in law between legal technologists and lawyers. Why is this focus important?
The focus for LTM to bridge tech and law practitioners remains a part of our DNA following our inception in 2018.
As a former practicing lawyer, I saw the need for technology to play a part to support current legal service providers rather than ignore it entirely. Conversation about technology and innovation within a firm itself is limited, and the lack of a platform to speak about it is also absent. LTM strives to remedy that by increasing awareness, education and dialogue for lawyers amongst lawyers and to other industries.
I believe, under LTM, we can strive to build an ecosystem focused on allowing lawyers to grow their knowledge laterally without losing their vertical specialization in their practice. Once equipped, the lawyer can understand and weigh the need to innovate internally as a profession.
As a former practicing lawyer, myself, I acknowledge the reliance of the market (SMEs and MNCs) onto lawyers in general for certainty in law and therefore in business. Impact from a lawyer’s mouth weighs heavier than any investor or accelerator, and growth of a startup requires lawyers who understand digital business models instead of the usual brick and mortar.
Why is technological disruption of law a challenge in Malaysia?
A. Price point of legal techs available are too expensive and redundant in solutions
As most mature legal tech solutions are foreign entities, it is a huge barrier in currency exchange when it comes to RM and USD for law firms of all sizes. Further, most solutions offered by these legal tech providers are far too immense and mature for law firms to consider implementing in their firms. Such as the lack of digitalised infrastructure and documents hindering any tech from fully improving the lawyer’s work.
It must be known that 80% of the market are dominated by small firms (1 – 5 person) which do not have the luxury of cash flow or capital to sustain any tech which may only provide marginal benefit to them.
B. Insufficient incentive to drive behavioural changes
Unlike Singapore’s government incentive of SGD 1.5 mil is allocated to allow law firms to digitalise, Malaysia does not have any benefit of incentive. Beyond monetary incentives, it is not something partners want to embark on a journey to revamp, reflect and change the workflow in which they have inherited and sustained since their early day in practice.
Few law firms have adopted basic techs such as Google, Office 365 and productivity tools but even fewer are using more innovative legal tech like contract management tools, automation and machine learning for research and contract analysis.
C. Lack of awareness in available technology for law firms
On a local level, lawyers do not have a place to source and explore legal tech providers and their products. Any legal tech provider in Malaysia will still need to conduct the traditional way of doing sales to a law firm by setting an appointment, provide training to use the tech and eventually the law firm may start using it.
Most lawyers and law firms will receive emails embarking on such a journey for sales, but it is the absence of options in public which places a fog in the market for legal tech in Malaysia.
Is there a desire by Malaysia to emulate Hong Kong or Singapore as a legal innovation hubs?
There is currently no desire for Malaysia to strive to become a legal innovation hub within the near future from the stakeholders of the legal industry. However, through our efforts in LTM we are beginning to build an appetite in the legal market for innovation through our hackathon and summit for lawyers.
What’s your interaction with other legal innovation innovations in other jurisdictions?
Currently LTM is striving to build more dialogue with other ecosystem builders from Hong Kong, Singapore, Thailand, and Indonesia. We work on an update basis whilst sharing our challenges and solutions to our respective markets through our Legal tech Roundtable Update held in Jan 2020. Other than that, we generally visit each other during our respective flagship events in support of legal tech’s growth in the region as a whole.
How is your policy driven approach working to help Malaysia move toward acceptance of legal innovation?
LTM works in both spheres of grassroot and policy, which means we always maintain an inclusive stance with the respective stakeholders such as the Bar Council, AIAC (Asian International Arbitration Centre) and private law firms.
We have recently collaborated with AIAC (Asian International Arbitration Center) to build a Technology Expert Committee (TEC Committee) where we are striving to develop a template agreement for Software Developers aimed at assisting the freelancers and companies in tech.
Further in 2019, we were invited on several occasions by the Ministry of International Trade and Industry and Ministry of Finance to provide input on shaping professionals as a whole in Malaysia specifically from a legal innovation POV. We were also part of the Legal Tech Roundtable in Hong Kong together with Bar Council Malaysia to discuss and share about legal innovation in Malaysia to various other juridictions’ Bar Council Presidents.
What is the role of the Bar Council, the Asian International Arbitration Center and the Malaysian Judiciary in this process?
The Bar council Malaysia has formed the Future in Technology (FIT) Committee which oversees the framework and governance of legal tech in the profession. The FIT committee has submitted an amendment to the Legal Profession Act 1976 to include the said framework and definition of legal tech in hopes of encouraging legal tech innovation in the legal profession both internally and externally.
AIAC has already introduced case management software, platforms to hold template documents for standard building contracts and allow conference calls for hearings in their alternate dispute resolutions. Leading on this front, AIAC has begun to work with LTM in order to bring the spotlight to the tech industry in hopes of standardizing the contracts used in this industry.
The judiciary in Malaysia I believe is the key driver of innovation for the legal industry. Since the introduction of e-filing for court matters whereby lawyers slowly transitioned away from physical filing, to e-review (virtual case managements) rolled out last year. Both tech introduced by the judiciary has massively changed the way things are done by litigation lawyers whilst improving the efficiency of court matters. This can be attributed to the forward-thinking Chief Justice and systematic implementation of this tech from the courts to the lawyers. In the latest news, east Malaysian courts have recently rolled out phase 1 of AI-sentencing for certain types of cases in collaboration with lawyers and court staff.
Malaysia does not boast a strong adoption of tech within the operations of private practices but the innovation from institutions are evident and progressive. LTM is proud to be part of the ecosystem in boosting greater exposure to current lawyers to innovations stemming from Fintech and Regtech.
Is there a future for NewLaw secondment model companies like Axiom in Malaysia?
Not in the near future as their policies currently hinder innovative business models for law firms. However, I believe the current business climate and pressure applied by other verticals are beginning to push lawyers to rethink their versatility in the market.
Why did some legal technology companies not succeed in Malaysia?
Timing and approach. Malaysia, as mentioned, is not a country like Singapore and Hong Kong who readily adopt new tech on a “see how it goes” basis. Stakeholders in Malaysia have a duty to protect the welfare, status quo and risk levels of lawyers and the public of which they ultimately serve.
Further, most legal tech entering the Malaysia market may already be too mature or pricey for the appetite of any lawyer or law firm in the market. Without proper localisation of both solution and pricing, legal tech providers will find it difficult to penetrate if not demonstrate empathy to the concerns of stakeholders in Malaysia’s legal industry.
What are some of the technologies most needed in the Malaysian legal community?
In my opinion, the key technology which should be pushed now is the adoption of digital signatures by key stakeholders involved in conveyancing, banking, tax offices and litigation focused documents.
As mentioned above, most technologies out there by other legal tech providers are already available with their respective challenges. However, until key stakeholders affirm fundamental technologies like digital signatures, we will not see a large adoption of legal tech in Malaysia by private lawyers.
You were a practicing lawyer – what was your practice focus? And how did you transition into legal tech? What inspired this change in your professional focus?
My practice previously involved banking litigation, M&A transactions and general corporate work for clients. The experiences I have from both litigation and corporate work provided me a surface exposure to how lawyers work in private practice and in the judiciary where ultimately I realised the work I do could has been optimised by simple technologies (e.g. usage of dropbox to handle files).
From an internal point of view, it was difficult to even implement simple productivity tools without disrupting workflows of our partners. Further, I began to realise and accept that it was not a battle I could ever win without opening my own firm.
Moving away from practice into a new job with a private equity firm, I wanted to uncover the market of technology and startups for the legal industry: which is almost zero to none. This was during late 2018 where I so happened to chance upon a legal hackers KL project to launch Malaysia’s first Legal tech hackathon. From there, I met my co-founders and the event propelled us into building LTM to what it is today.
How did Hackathon’s play a role in the growth of LawTech Malaysia?
2018’s hackathon was a litmus test. My co-founders and myself did not know how it would turn out because we were worried that lawyers are in fact closed to innovation, and even more so which of the tech community would want to know about lawtech?
To our surprise, our event garnered up to 200 attendees with over 21 teams competing for lawtech related solutions. A few private law firms supported us, and stakeholders acknowledged the success from our event. The winners of the hackathon subsequently obtained funding but alas could not carry forward.
However, it was an impetus to many who joined to begin their journey into legal tech as they followed our subsequent events to raise dialogue about lawtech, fintech and regtech. This movement provided us the momentum to once again host our 2019 SUPERNOVA Lawtech Hackathon and our new Summit conference.
What’s your involvement in RegTech, Fintech and other technological innovations and their intersection with law? Which do you see as most important for development and why?
Law and technology cannot exist in a vacuum, like how legal services are influenced heavily by commercial decisions of the client. It is well known that the driving tech in APAC and the world is Fintech, especially the race to becoming a digital bank. Because of such rise of digitalisation in the global economy, and central bank’s aggressive stance in producing new regulations for new technology impacting the financial sectors, the demand of lawyers to provide updated and creative legal services are on the rise.
ICOs, Crypto Exchange, e-Wallet compliance, AML, eKYC and many more are becoming the talk of the banking and financial sectors. Going beyond this, Regtech is being developed and used by regulators to handle the influx of digitalised information of customers, businesses and transactions processed by the Fintech industry.
With growth such as these coming into play, the lawyer of today is being tasked to absorb new regulations to advise on compliance and to understand new digital business models which are being produced by startups. The legal industry has always been known as the safety net for all other industries when it comes to certainty, but if it cannot be relied on because of their lack of understanding, the legal fraternity then will run the risk of losing out on market share to the big four accounting firms who’ve are already entered the space of providing legal services in Singapore and Hong Kong.
How are law students and practicing lawyers getting involved in legal innovation in Malaysia?
Law students and practicing lawyers now have the opportunity to attend our events whereby we cater content related to fintech, lawtech and regtech (FLR), legal operations, and our flagship events.
I would also note that some academic institutions are beginning to roll out legal tech courses, forums on AI discussions and master’s course in innovation for the legal industry. LTM is one of the many options the legal fraternity can participate in.
What’s next in 2020 and beyond LawTech Malaysia?
LTM in 2020 will focus more on becoming a platform for content and dialogue as our original purpose for lawyers and now other professionals and will include a more diverse content like Intellectual Property in the new economy, and Disruption to the accounting industry.
It is imperative that the current generation of professionals have a platform to expose, discuss and learn about other professions and the new digital economy.
What do you see as the future for legal innovation in Malaysia?
The lack of micro-solutions with the right price points are causing those who have an appetite for tech to begin their journey internally by developing their own legal tech solutions catered specifically for their own practice and department. I have seen great strides taken by local firms and in-house legal departments to source tech talents or engage solution providers to build for them but also see them face hurdles of maintenance and scalability.
Lastly, Legal innovation in Malaysia may never have the same adoption or growth rate that we can now observe in the US, UK and Singapore. This is because legal innovation is being guided by institutions such as the judiciary, companies commission Malaysia and even the inland revenue board. Lawyers will eventually adopt tech as a means to complete their legal services to their clients, rather than focus on adopting new techs to increase competitiveness of their practice.
Connect with LawTech Malaysia at lawtechmalaysia.com