LegalTech has truly found its niche in Europe and America, where a number of tools have been in use for roughly 20 years already, and in the last few years has begun to develop actively in the CIS. Nevertheless, Kazakhstan is still in the early stages of implementing the technology into legal processes.
Despite LegalTech’s relatively popularity across the world, it’s clear to see that automation in the legal function is still somewhat lacking. For example, if the majority of businesses have successfully managed to automate their HR, financial IT and other functions either in full or in part, legal department automation is realistically zero. What is hindering the mass automation of legal processes in Kazakhstan? Before answering that question, we need to look at what it businesses are looking to achieve when implementing the technology. There seems to be three main goals, which are to reduce business costs and operating risks, and increase production through streamlining. At the same time, businesses tend to treat the latter as the most important when considering legal processes.

The legal profession involves working with a large volume of documents, which, of course, requires high levels of concentration and attention. And then, the smallest error may be critical and lead to disputes, lawsuits and potential accountability. Thus, removing the human factor in the drafting of certain standard documents may help a company to improve performance, as a whole. Document developers, which can be tailored to specific client needs, currently perform this function perfectly.

As for the question of increasing production, legal departments tend to be assessed on the performance of its members, which is improved by delegating simple tasks to technology, and allowing specialists to concentrate on jobs requiring more complex analysis. The technology in question includes checklists and chat-bots that have been adapted to company requirements, factoring in current legal provisions and company policy, and which frequently replace legal specialists.

Based on the specific nature of the legal function and the goals of implementing technology solutions, we can see the barriers LegalTech will face in Kazakhstan.

One of the main problem areas faced by the technology is legislative instability. For example, the Labour Code was amended six times in 2018 and twice in 2019, while the Entrepreneurial Code only last year was amended 10 times. Thus, LegalTech’s accuracy depends not only on its software processes, but also on a guarantee that legislative amendments are tracked, and algorithms subsequently updated. The lack of uniform court practices has proved to be a major risk, and currently means that processes related to disputes or potentially disputable relations cannot be automated with any real accuracy.

The second problem area is that only a limited number of processes can realistically be automated. As legal analysis is to a greater or lesser degree based on text analysis and differing interpretations, exact algorithms may be difficult to create, which is not the case for HR or financial business processes, because they are based on digital variables. Moreover, as the LegalTech market is ruled by language barriers rather than jurisdictional, tailoring a complete solution for each specific language is time consuming. These restrictions explain the local popularity of document developers and chat-bots due to their simple implementation and significant positive impact.

The lack of planning during LegalTech tool implementation can also be an issue. If the above issues can be treated as objective that can be resolved gradually as technology develops, then a subjective barrier to easy implementation and use is the lack of suitable product selection and implementation planning. In other words, companies planning to implement complete solutions need to not only formulate a clear implementation goal for each specific solution, but also prepare for the implementation process correctly.
Specifically, in some cases purchasing a specific LegalTech tool without the proper legal function training will not have the required effect, which it is why it is important to ensure comprehensive testing of the legal department operating model, i.e. determine its readiness to implement technology.

For example, if a company’s legal department operates in an “ad-hoc” manner, i.e. according to the situation, reacting in a random manner to each separate issue, without delimiting authority and processes, then the automation of each separate legal department function will more than likely not generate any palpable results with respect to simplifying the team’s work. Generally speaking, clearly delimited authority, a well-organised process for interacting with other company departments and a package of standard documents are the minimum required to ensure correct and quality LegalTech tools are implemented. Testing can be done in-house, but we believe that engaging an external specialist is far more effective.

Despite the above barriers and difficulties associated with implementing legal process technology, the appropriate training and correct choice of tailored and easy-to-use solutions will help achieve corporate goals to improve legal department performance, which, in turn, will improve company performance as a whole.

Rinata Zhulayeva, Senior Lawyer, Deloitte Legal Caspian Region