含羞草社区

In the second instalment of a two-part series on the adoption of legal technology, Brian Yap looks at how AI is generating new gains – and fresh doubts

As private practice and in-house lawyers in Asia increasingly leverage artificial intelligence (AI) technology, divergent views about disclosure are taking place along with gradual changes in the ways corporate legal teams work with their external counsel under the billable-hour system.

In Singapore, where both the legal industry and the government have been investing in AI adoption, some in-house lawyers have made it clear that they expect their external counsel to disclose AI use in producing clients’ work. They also want law firms to give assurances that they have verified whatever they have found in AI.

“Data security, transparency, and disclosure and verification are what companies expect their external counsel to perform, at the very least,” says Jasmine Karimi, general counsel for APAC based in the Singapore office of US-headquartered agricultural chemical manufacturing company FMC Corporation.

Karimi’s views are echoed by in-house lawyers in India, where law firms are not actively using AI but have realised the need to catch up with technology since the Bar Council of 含羞草社区 (BCI) market-opening announcement in March last year, which stated that foreign lawyers and law firms can open offices in the country and engage as well as procure legal expertise from Indian advocates.

Karan Kalia, founder and CEO of LegitQuest in New Delhi who previously practised at Ram Jethmalani Law Chambers, told Asia Business Law Journal that the active use of AI by many foreign law firms was giving their Indian counterparts the pressure that they needed to embrace the technology.

Vardaan Ahluwalia, general counsel of billionaire Azim Premji-owned private equity firm Premji Invest in Bangalore, stresses the importance of ensuring that his company’s documents or data are not accessible to anyone else. He points out that, if a business client or external legal adviser is using a common piece of technology involving the handling of his company’s information, such data could show up somewhere else in a different way.

“I would very much like to understand the safety standards and safeguards that they have put in to ensure that our data remains private and secure,” says Ahluwalia, who is a former partner at Cyril Amarchand Mangaldas. He adds that his company would want to ideally understand which AI model is being used so that his data science team could clear it based on safety and accuracy standards.

By contrast, some in-house lawyers in Japan, which has seen multiple partnerships between law firms and legal technology companies in recent years, don’t consider it necessary for law firms to disclose any leveraging of AI technology in executing clients’ work.

“I am not aware of the ethical requirement for law firms to disclose their use of such [AI] technology to clients in Japan,” notes Hideyuki Sakamoto, chief legal officer and executive director of Gibraltar Life Insurance in Tokyo.

Sakamoto, who is also president of the Japan In-House Lawyers Association, points to the fact that law firms in Japan have been utilising technology like legal research tools for many years without any disclosure. He expects law firms, which are ultimately responsible for their legal advice to clients, to verify the results generated by legal technology.

Law firm representatives who spoke to Asia Business Law Journal emphasised the absolute necessity to verify AI-generated output and to limit AI use to legal work involving no confidential information, or to use secured, strictly internal technology platforms when handling client data.

Many did not see the need – from a regulatory standpoint – to disclose the use of AI or any forms of technology to their clients, citing the fact that they were already bound by a duty of confidentiality to their clients.

Rajesh Sreenivasan, partner and head of technology, media and telecoms law practice at Rajah & Tann Asia in Singapore, says: “The appropriate approach is to inform clients that a firm uses AI solutions and to share how their data is protected from being assimilated by the AI vendors’ platform.

“When we started using AI, our firm did a significant amount of due diligence on tools such as Microsoft Copilot and Harvey.”

Sreenivasan says that his firm had, among other things, obtained specific contractual remedies, such as indemnities and warranties, from AI technology service providers that they would ensure that client data would not be used for training their large language models.

South Korea currently does not have any explicit regulations requiring law firms or lawyers to disclose AI use to clients – a situation similar to that of many other Asian countries including Japan. But Hee Woong Yoon, co-managing partner at Yulchon in Seoul, sees being transparent about the use of AI technology as an “important matter of ethical consideration”, considering the crucial nature of trust from clients.

“If [law] firms decide to implement AI technology more broadly, it would be advisable to properly inform clients about its use,” says Yoon.

Hiroo Atsumi, managing partner of Atsumi & Sakai in Tokyo, tells Asia Business Law Journal that his firm has been asked by clients to provide reassurance in the form of written agreements that full confidentiality is maintained when using AI legal technology for due diligence work.

Atsumi explains that these clients asking for confidentiality reassurance have required the firm to have AI legaltech, especially for due diligence work for M&A, and that they are mainly big foreign companies looking to acquire other businesses and having to conduct due diligence.