There are exciting “lawtech” or “legaltech” developments in China today, which are motivated by government initiatives, the state of the legal system and legal profession, and social and consumer trends. Essentially, there are five driving factors behind these developments.[i]
- Government support – The Chinese government leads the world onthe scale of adoption of online dispute resolution. There are internet courts in Beijing, Guangzhou and Hangzhou to try e-commerce, consumer credit, copyright, domain names and other disputes. Online judicial processes include initial filing, evidence exchange, and live-streaming of judgment. The Hangzhou internet court is also safeguarding digital evidence with blockchains. The Supreme People’s Court has rolled out legal research and sentencing recommendation systems to assist judicial personnel. In Beijing, there are self-service portals for court users to understand and assess their litigation risks. Portals are established in Shenzhen, Shandong and Zhejiang to receive filings and handle minor court procedures around the clock.
- Public demand – The public need for low-cost and easily accessible legal services is enormous. China has over 360,000 lawyers (lawyer-to-permanent resident ratio of 1:4,500; the ratio in the US is 1:300). Nearly 23 million court cases were registered nationwide in 2017 (about 5.6 million cases in 2007). Public demand has well-exceeded resources available, exerting great pressures on courtroom efficiency and judicial personnel turnover.
- Proliferation of new laws and informational resources – The Chinese legal system is evolving quickly with regular promulgation of new laws, regulations and guidelines. The government website “Legal Services of China” and hundreds other online services have helped the public to find legal information and lawyers. The growth in digitization legal resources provides foundation for further lawtech innovations.
- The “blank-slate” effect – The modern Chinese legal profession is about 30 years old. Many Chinese attorneys are quite entrepreneurial and willing to adopt technology to remain commercially competitive. There are homegrown lawtech vendors, developing A.I. powered products to enhance transactional, regulatory and contentious practices.
- Smartphone culture – Chinese people expect to conduct virtually all aspects of their daily lives on smartphones, including the seeking of legal services. In the app stores of Apple and WeChat, there are many mobile app services for download, which connect Chinese users with lawyers from different provinces, specializing in various common practice areas.
MARKET GROWTH CHALLENGES
Despite the ubiquity of digital transformation, linguistic, legal and regulatory differences still present strong barriers. Without significant and strategic localization efforts, lawtech products customized for enhancing jurisdiction specific processes could struggle to move into other markets where differences in laws and regulations impact massively on the business and operational models. These are difficulties faced by Chinese vendors considering outbound expansion and overseas vendors entering China. Western vendors have been generally slow to adapt natural language processing technologies for Chinese, Japanese or Korean languages.
This article covered supply and demand-side drivers impacting the Chinese lawtech market. Practitioners in Hong Kong increasingly work with Mainland law firms, many of which utilize Chinese lawtech. As such, in spite of the lack of international coverage of Chinese lawtech, the Hong Kong legal profession should be well aware of innovations transforming legal services in China.
[i] For research details, see S Ko, “5 factors driving the Chinese lawtech boom,” Agenda (April 1, 2019) https://www.weforum.org/agenda/2019/04/5-factors-driving-the-chinese-la….