FT Montage. Male hands with digital tablet on wooden table
Sign of the times: firms are increasing their spending on digitalisation © Getty Images/iStockphoto

A lack of pen and paper may seem like the least of a lawyer’s concerns in the 21st century. But for the Asian firms plunged into the coronavirus pandemic this year, an inability to sign documents in person was one example of the unique kind of headache slowing them down.

The pandemic has exposed persistent inefficiencies in law firms’ traditional ways of working, which look increasingly out of place as digitalisation takes hold, and triggered a rethink on expensive overheads, such as offices, now weighing on cash-strapped firms.

In some cases, the most important innovations for law firms involve a reworking of available technology. Rajah & Tann launched automated digital invoices within weeks of the onset of the pandemic and established a new platform where clients can confidently sign contracts electronically for the first time.

Although e-signing is readily available to lawyers, they have been cautious to trust it for their most vital work and the most important deals are signed in person. That luxury disappeared when executives could no longer meet in rooms to hammer out contracts and signing documents became a hazard.

“When we [all] return to the office, picking up a pen and paper and signing something is going to be the unnatural thing, [as opposed to] signing something on a screen,” says Rajesh Sreenivasan, head of Rajah & Tann Singapore’s technology, media and communications practice.

In the city-state, a range of mundane everyday activities quickly became impossible when firms were given a few weeks at most to prepare for lockdown. Mr Sreenivasan says secretaries were seen hauling desktop computers home in order to be able to continue working because of the difficulty of hooking large printers up to remote systems. Rajah & Tann set up a new online platform to give support staff access to legal matters in order to get around the problem.

Firms also woke up to the unnecessary burden that expensive, glossy offices in central locations place on them. Those buildings, once a lure to clients and staff, have become an albatross round their necks as rents collide with reduced revenue. Now firms are considering more permanent remote arrangements.

Rajah & Tann had sought to shift its staff to a remote working culture before the pandemic through its “open office” initiative, which included scrapping partners’ coveted rooms in favour of open-plan working.

“It meant that we had a fully mobile system, [before the pandemic]”, says Mr Sreenivasan. “At the moment we still allocate some space to partners but over time that will go away too,” he says, acknowledging some of them are “resistant” to the idea.

People wearing protective face masks walk past office buildings in Lujiazui financial district in Pudong, in Shanghai, following the coronavirus disease (COVID-19) outbreak, China June 4, 2020. REUTERS/Aly Song - RC2F2H9XOJG3
Out of office: prestige buildings are now less of a lure © FT montage

Hamilton Locke, a young Australian firm with revenues of about $14m last year and 16 partners, outsourced its back office to law company Elevate and works from just a handful of offices. The majority of its lawyers work from home most days of the week.

Nick Humphrey, managing partner, says “very big back offices on the premises, marble foyers, lots of meeting rooms, every partner having a secretary . . . is a bloated structure.”

Start-up offers single app to ease remote liaison

The experience of working remotely has shone a harsher light on the fragmented way in which lawyers and clients communicate with each other.

Lawyers are receiving at any one time a string of WhatsApp messages, emails, phone calls, texts and Gmail chat notifications, potentially all on the same matter.

Three law firms, including Rajah & Tann Asia, CMS and US firm Cooley have invested $10m in a start-up platform that they say offers answers to the risks and difficulties thrown up by remote working.

The platform, called Lupl, is a cloud-based system designed to synchronise everything connected to one project on a single platform including documents, general information and contact details for lawyers.

US-based Lupl, which is currently in beta-testing and set to launch in 2021, will integrate with legal departments, law firms and app providers in order to smooth communication between them.

The project was designed with general counsel from Skyscanner, the flight search engine, Deutsche Bank, and Unilever, the consumer goods multinational, among others.

It comes as law firms navigate the extra security and data risks attached to employees accessing files from multiple servers and devices, including their personal accounts, which creates the potential for security problems or data loss.

“There are so many different platforms we’re using [that] data is bound to get lost and you forget which lines of communication people are using,” says Rajesh Sreenivasan Rajah & Tann Singapore.

“There is a real need for a unified response — and even more so when people are also using their personal devices and accounts to get the job done,” he says. “It is incumbent on firms to deal with that.”

The partnership model at the heart of many global law firms, which pays out the bulk of profits to partners with a stake in the business, may also prove a strain in the crisis. Hamilton Locke is not a partnership but a legal company, with benefits that include being able to raise capital from third parties or to offer a suite of brands within one group.

The tendency for partnerships at the end of every year to pay out all the profit is “short-term thinking”, Mr Humphrey says, “because the partners at that time want to max out the profit for that time. We can take a longer view of things and allocate profits towards training, for example, and not just legal stuff but [training in strategy].”

Partnerships can raise money from partners in order to invest in new projects. However, a buffer created by lower lease obligations and the ability to reallocate capital easily to training and technology has been useful at Hamilton Locke during the crisis.

Like its much bigger rivals, the firm has been allocating cash to training its senior lawyers in different practice areas in order to be able to pivot towards busy areas of work in a downturn.

It is not an uncommon move among successful law firms. Large firms including Linklaters shift lawyers towards practice areas such as restructuring, as they have become busy while transactional lawyers have seen work decline. Rajah & Tann is considering training for its secretarial employees, after realising that widespread automation of its support staff could soon lead to job losses.

“Secretaries were a must-have in the past,” says Mr Sreenivasan, “and they still are a large part of [what we need].” But digitalisation is reducing the workload, he says, adding that the same is true of the accounting departments, which are “like mini accounting firms”.

Mr Sreenivasan says the firm does not expect its business support headcount to change, but with training, the secretaries may eventually take on new roles including specialised word processing and managing automation services. He adds that the firm is considering retraining support staff to become legal engineers, a role that is now critical to law firm operations.

“The technology that we implemented before has allowed us to pivot into the new way of doing business [post-coronavirus],” he says.

The tables below rank law firms for the FT Innovative Lawyers Asia-Pacific awards

Law firm strategy
STANDOUTRajah & Tann Singapore — The firm’s IT DNA project has improved the technology used in devices, networks and applications across its network of law firms in 10 Asean countries. Every firm in the network now has the same standard of devices, shared cyber security and data privacy policies and access to the same legal technology. It allows the firm to integrate tech solutions across the network, increase collaboration and roll out new tools.79824
HIGHLY COMMENDEDAlgo Legal — Sandeep Kapoor, ex-general counsel for south-east Asia at US VC firm Sequoia, founded Algo Legal in 2019 as a legal-technology-driven law firm. It has designed more efficient ways to deliver legal services to Indian start-ups and investors using a range of technology tools and products, some of which it has built in-house.88723
HIGHLY COMMENDEDHamilton Locke — A new law firm established in 2018 with a different business model to traditional firms. Support work is outsourced to law company Elevate, allowing the lawyers to focus on client relationships. All lawyers in the firm own equity. Teams are structured to mix together lawyers from different practice areas.88723
COMMENDEDCorrs Chambers Westgarth — A programme to change behaviours and culture at the firm included an overhaul of its partner compensation system. Partners have less visibility of individual and practice financial performance to encourage greater collaboration and reward different types of skills and contribution.68721
COMMENDEDMinterEllison — In a drive to become a purpose-led business, 85 per cent of the firm's staff participated in “purpose immersion rooms” to reflect and contribute to the development of a purpose and values statement. The firm has also created an environmental sustainability framework, which includes commitments to achieve net zero carbon emissions and send no waste to landfill.78621
Innovative practice of law
RankLaw firm and descriptionOriginalityLeadershipImpactTOTAL
STANDOUTCorrs Chambers Westgarth — Designed a “total return swap” structure for Asia-focused logistics company ESR Cayman, which involved an investment bank acquiring a portion of shares in real estate group Propertylink while ESR awaited regulatory approval for its acquisition. After approval, the shares were transferred to ESR, paving the way for ESR's hostile takeover of Propertylink.88824
STANDOUTMayer Brown — Despite gambling contracts not being recognised in Malaysia, the firm enabled the recovery of debt worth HK$33m to casino company Wynn Macau. It argued that the debt was a line of credit from the casino operator, rather than a gambling debt. 88723
STANDOUTPaul Hastings — In order to give its Beijing, Hong Kong and Shanghai offices an advantage in the crowded market for legal advice on Hong Kong initial public offerings, the firm has created an online repository of automated documents, in English and Chinese. This has increased the efficiency and accuracy of the firm's services and cut costs. 78823
HIGHLY COMMENDEDAshurst — Advised ING Bank on the first sustainability linked fund financing deal, in which a borrower's interest rate goes up or down according to the sustainability performance of the fund, measured against sustainability targets in line with the UN Principles for Responsible Investment. The firm advised on the step-up step-down mechanism for interest rates and the methodology for scoring on sustainability.77822
HIGHLY COMMENDEDDechert — When a client was a victim of wire fraud, Dechert lawyer Maria Sit started a criminal investigation, buying time to put an injunction in place on the recipient account and alert the recipient banks before the majority of the money was deposited. The funds were returned to the client, and the injunction was lifted within four days. 88622
HIGHLY COMMENDEDShearman & Sterling — Using legal automation software provided by Contract Express, a Thomson Reuters-owned automation service, and Legatics, a transaction management platform, the firm executed the negotiations for the International Finance Corporation's investment in a project in Pakistan to build six new wind farms, saving an estimated 75 per cent of the costs that would have accrued had it processed the transaction using manual methods.68822
COMMENDEDAllen & Overy — The firm created a syndicated loan structure where onshore and offshore lenders agree to share proceeds from security arrangements, in order to allow its client, the mandated lead arranger, along with an onshore lender and the lending syndicate to lend money to property developer Novaland Group. The structure enabled the client to access security in its real estate investment despite restrictions on foreign lenders in Vietnam.77721
COMMENDEDLC Lawyers — Represented Hanergy Mobile Energy Holding Group in the delisting of its subsidiary Hanergy Thin Film Power Group (HTF) from the Hong Kong stock exchange, offering shareholders shares in a special purpose vehicle company that had been set up as a shareholder of HTF (as opposed to the usual cash offering). This enabled HTF to apply for a listing in mainland China.87621
COMMENDEDMinterEllison — Helped insurance company Insurance Australia Group (IAG) by using artificial intelligence software Luminance to pick up unfair terms in product disclosure statements and assign a risk value in accordance with IAG's position on risk. This saves lawyers time and helps them to perform more thorough analysis on problematic provisions.76720
COMMENDEDYulchon — The firm enabled asset manager Hanwha Investment & Securities to work around regulations in South Korea prohibiting investment in cryptocurrency companies. This allowed Hanwha to invest in Lightnet, a financial technology company that uses blockchain, in January 2019. 76720
Strategic and risk advice
RankIn-house legal teamsOriginalityLeadershipImpactTotal
STANDOUTBain Capital — A proactive approach to helping more than 800 of the investment firm's companies manage risk better allows it to invest more broadly and in higher risk jurisdictions knowing that its legal team can help address any problems. The approach includes: a risk maturity assessment; workshops conducted with the Ethisphere Institute, a consultancy, on compliance and risk management training; and specific improvement projects.79824
STANDOUTRio Tinto — The legal team developed a new approach to procurement contracts for heavy mobile equipment, covering billions in annual spend. The new contracts allow the miner to take advantage of advances in autonomous mining technologies, such as self-driving trucks, without having to renegotiate with suppliers. The new agreements also allow the company to pay suppliers based on performance of the equipment.78824
HIGHLY COMMENDEDLazada — Implemented an online platform to process intellectual property infringement claims, and navigated different laws and regulations across six jurisdictions in which the ecommerce company operates. Developed by parent company Alibaba, the ecommerce group, the platform allows brands to request the removal of infringing products from Lazada's sites directly, without needing to instruct lawyers.78722
COMMENDEDArcadis — Created a new review process for the consultancy’s construction bids, simplifying the legal approvals process and allowing more time to be spent analysing commercial and strategic concerns. It has helped the business improve its profit margins on recent projects.66820
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