As startups disrupt Southeast Asia’s legacy business models, the region’s legal profession undergoes its soul-searching mission over how its service is delivered and how to attract and retain top talent.
Last year, Southeast Asia’s startup ecosystem saw a record US$25 billion investment. Today, the region’s digital companies alone are worth around US$340 billion, a number that is expected to grow to US$1 trillion by 2025.
With companies and startups around the region riding on the digital wave, almost every industry has experienced some form of digital disruption and upheaval of traditional commercial models.
Yet, until recent years, one sector has remained absent from this revolution: law.
However, thanks to the flourishing startup ecosystem and the demands of startups and their founders, that is starting to change.
For the uninitiated, legal technology, known as legaltech, is the convergence of legal services and technology designed to improve legal services (typically centring around making lawyers’ costly manual processes cheaper and more efficient).
Legaltech emerged to provide technology solutions and innovations to law firms, and while the first case management tools emerged as far back as the 1980s, the industry has been slow to adopt them.
Despite the plethora of very interesting use cases for the legal profession, including automating the creation of legal documents, special tools to help in discovery (the process of sifting through large volumes of evidence during litigation), due diligence and many more, the adoption of such tools within the legal industry has been slow-moving.
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However, the legal profession might not be able to drag its heels as the explosion of startups seeking legal services with more cost transparency, flexibility and efficiency have seen legaltech pivot towards the end-users needs.
Startups, especially those in the early stages, tend to be cautious in resourcing. Everything from getting their business up and running to securing investment costs money they would have traditionally spent with law firms but often can not spare.
This problem is at the heart of legaltech solutions that aim to service startups and small businesses by removing the need to engage lawyers. Many new and cutting edge startups, especially high-growth technology companies, will also be looking for digitally-enabled solutions to power their backend, including their legal.
In the last few years, legaltech companies have emerged that aim to serve the end-users rather than law firms (sometimes referred to as lawtech). Leveraging technology, these companies can aid early-to-mid stage startups by automating paperwork, speeding up research and drawing up smart contracts.
Early-stage startups benefit from having access to automated legal docs to help them start, raise and grow. Platforms like SeedLegals allow startups and investors to generate employment agreements, and NDAs raise traditional funding rounds or agile fundraising between rounds and even incentivise teams through option schemes.
The idea is not to put lawyers out of work but rather to give startups an alternative option when they’re at the earliest stages so they don’t have to spend money they don’t have on bloated legal services.
Startups these days are also nimble, agile and global, so having a fully digital solution such as SeedLegals means they can continue to move just as quickly and efficiently when it comes to their legal.
Also Read: How to protect your early stage startup from unnecessary legal hassles
In 2021, the legaltech industry drew in more than US$1 billion in funding through 85 funding rounds. Regionally, Singapore and Hong Kong are showing high demand for legaltech, while industry innovation continues to sweep the wider Asia Pacific market. Amid this rise in customer and investor demand, the eyes of talented legal professionals are quickly taking notice.
A new alternative
Last year, 538 burnt-out, disillusioned lawyers in Singapore left the profession for good, citing overwork and toxic behaviour. Despite being one of the most coveted professions, the legal industry suffers from a talent churn.
Every year, Southeast Asia’s law firms and in-house legal teams draw a healthy supply of new entrants, but they need to retain talent has become ever-pressing.
The startup ecosystem presents an increasingly appealing route for lawyers rethinking their traditional career journeys. Of all traditional sectors, the law has been one of the slowest to transform and adapt itself.
The result is smart, educated, well-trained lawyers are leaving the profession entirely in search of more “commercial” roles that offer different types of opportunities. Many have opted to move into product management, business development, strategy and pure technology roles that allow them to leverage the skills they built through traditional legal practice.
Although moving towards commercial roles isn’t a new phenomenon, nine per cent of global CEOs have a legal background; there are signs the golden handcuffs that law firms once commanded over their lawyers are not quite so golden in the new world we operate in.
For lawyers seeking to bridge the gap between their pedigree and technology, legaltech offers a new world of possibilities powered by digital disruption. Digitally-savvy law students, in particular, are most primed to seek career paths outside traditional legal practice and reshape the industry for years to come.
Armed with legal training and technological understanding, this new wave of lawyers is positioned to drive the growth of the Southeast Asian ecosystem. They are the ones to offer founders and entrepreneurs a seamless way to understand the legal obligations required for their fundraising goals.
Once relegated to back-office support services, legaltech is now entwined with Southeast Asia’s digital revolution. The rise of legaltech is a win-win for both startups and law firms. As legaltech continues to accelerate, both the ecosystem and the legal industry can transform, thrive, and benefit each other.
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This article was first published on April 6, 2022
The post Why SEA’s startup ecosystem is making a strong case for legaltech appeared first on e27.