Dispatch From Russia: Legal Tech Startups Emerge, But Adoption Lags
Cyrillic doesn't do AI any favors.
On a visit to Moscow last week, I was surprised by what I discovered — a healthy legal technology industry, including an emerging ecosystem of legal tech startups. When I’d last been there 10 years ago, I found no sign of a legal technology market. But while there is now a developing array of legal tech products, their adoption is not keeping pace. By all accounts, Russian law firms, for the most part, remain legal tech luddites.
I was there to speak at Skolkovo LegalTech, a two-day conference held in the Skolkovo Innovation Center, a massive, futuristic building on the outskirts of Moscow, run by the government-funded Skolkovo Foundation and set in the Skolkovo Technopark, a 1,000-acre complex described as the Silicon Alley of Moscow. Housing some 1,500 startups, the Innovation Center is devoted to incubating innovative companies in IT, biomedicine, nuclear technology, energy efficiency, and space technology.
The Technopark seems a world unto itself. Besides the Innovation Center, within it are the Skolkovo Institute of Technology (Skoltech), a graduate research university established in partnership with the Massachusetts Institute of Technology, and a small city, complete with schools and entertainment, that provides housing for the people and their families who work or study within the Technopark. Within the Technopark, I was told, drone taxis often hover overhead and self-driving cars provide ride services on the ground.
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Skolkovo LegalTech
Amid this hubbub of innovation is an arm devoted to incubating legal technology startups. It was this arm and its director, Anton Pronin, that organized this conference. It was the second Skolkovo LegalTech, and just one of several legal technology conferences now filling the calendar in Russia since the first one was held in 2016.
Some 300 people attended this conference — mostly lawyers, I was told. An exhibit area featured some 20 vendors. Agenda topics were not much different than those you’d find at any U.S. or UK legal technology conference — blockchain, cybersecurity, practice management, court modernization, IP protection, and more.
Organizers and attendees alike shared a particular preoccupation with artificial intelligence and its implications for law. In fact, I may have heard the word “robots” more in the two days of this conference than I had in the prior six months.
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An opening panel (on which I sat) was devoted to a debate over whether robots would someday replace lawyers. The discussion was fueled by a lawyer-vs.-robot trial-advocacy faceoff held during a legal conference last May in which, although the judges gave the win to the human lawyer, they had high praise for the robot lawyer’s skills. On this program, panelists seemed less concerned about robot lawyers than the prospect of robot judges.
Surge of Startups
Legal technology is not new to Russia. The country’s leading legal research companies — Garant, ConsultantPlus, and Kodeks — have been in business since the early 1990s. Another company, Pravo.ru, which started as a legal media outlet in 2008, now runs the case law database for Russia’s entire system of commercial arbitrazh courts and markets a suite of cloud-based software tools for lawyers. It sells several of these software tools in the U.S. under the Case.one brand and is negotiating with court systems in other countries to adopt its database system.
But lately, Russia, like much of the rest of the world, is seeing a surge in smaller legal tech startups. One of the leading experts on legal technology in Russia, Holger Zscheyge, managing director of the publishing company Infotropic Media and organizer of his own legal tech conferences, including Moscow Legal Tech, told me that there are about 150 home-grown legal tech startups operating in Russia.
Among the startups at Skolkovo LegalTech were TurboContract, a cloud-based document automation program; Online Patent, for registering trademarks; Jeffit, a matter-management platform; Legal.ru, a legal information portal; Legium, a blockchain-based deal platform; Deponent, a blockchain-based IP registration platform; Privacy Audit, a tool for identity protection; and Simplawyer, a product for automating contracts and developing smart contracts (and that is developing a contracts product for the U.S. market, Contract.one).
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In a February 2018 op-ed in The Moscow Times on Russia’s emerging digital economy, Nikolai Suetin, vice president on science and education at the Skolkovo Foundation, noted this trend:
One of the most interesting trends here is the development of automation in the legal sphere. There is even a special term, LegalTech, which includes the automatic generation of legal documents, but also the automation and increased availability of legal services, and even the digitization of judicial proceedings.
For Russia, where the legal culture is generally not advanced and attitudes toward the judiciary are generally mistrustful, this technology could radically change — and, in fact, is already changing — the entire image of legal services.
Still at A Nascent Stage
Yet for all this, legal technology in Russia remains in a nascent stage. For all the talk about robots and AI, for example, there are only two or three Russian companies just starting to develop legal AI products. Ironically, at the Skolkovo conference, the sole demonstration of machine-learning technology was given by a representative of Canada-based Kira Systems. But when interested members of the audience asked how they could get Kira, the representative had to explain that it does not work with Russia’s Cyrillic alphabet. Russian engineers who spoke at the conference agreed that the Russian language presents difficult hurdles for machine learning.
Further limiting the development of legal technology in Russia is its lack of adoption. Everyone I spoke to agreed that, broadly speaking, law firms have shown little interest in adopting new technologies and feel little pressure to do so. Similarly, although some Moscow courts are experimenting with new technologies, courts generally have made little headway in modernizing. The one group that has shown a more active interest in technology is in-house counsel.
The reason law firms are not adopting technology is that they do not feel pressured to do so, Zscheyge told me. “It’s a lack of pressure. They think, ‘Yes, we should do something,’ but the pressure is not at that level where they feel it as a pain. They’re still making money — it’s less and less, and they are anxious about converging that trend — but they don’t see the immediate benefit of using technology…. Mainly it’s in their heads.”
One constraint on innovation not present in Russia is professional regulation. In fact, outside of criminal cases, there is no regulation or licensing of lawyers. Anyone can deliver civil legal services without training or licensing of any kind. That means that restraints on fee sharing, private investment and unauthorized practice, such as we have in the U.S., do not exist in Russia.
Still, the overall sense of this conference was that technology is gradually gaining greater traction within the Russian legal industry. It is no small matter that legal departments in Russia are embracing technology because legal departments there handle far more work in-house than do legal departments in the U.S. A couple of law firms are not only using technology, but developing their own. (Although one of these is PwC Russia.) And I saw a prototype of an online system being tested by one court that would put any U.S. court system to shame.
Among those at the conference, there was strong interest in and awareness of legal technology developments outside Russia. In fact, to my surprise, several attendees told me that they are loyal readers of my LawSites blog, and some said they even had to use a VPN to circumvent Russian blocking to reach it. Several of the startups I spoke to had hopes to eventually expand their products beyond Russia into the United States and other countries.
“You got their attention,” said Zscheyge. “In 2016, they are going to the conference, listening, and going away, nothing happens. Now, one or two or three lawyers are very interested. They will say, ‘Yeah we understand we have to do something, but we don’t know where to start.’ That’s already a progress, in my understanding.”
As I left Moscow Saturday, my takeaway was that legal technology in Russia is at a turning point. Two years ago, it began to emerge with the first Moscow Legal Tech conference. Now, there is a small but thriving culture of enthusiasts and developers. Give it another two or three years, and legal tech is likely to have taken firmer root across a broad swath of Russian’s legal industry.
Robert Ambrogi is a Massachusetts lawyer and journalist who has been covering legal technology and the web for more than 20 years, primarily through his blog LawSites.com. Former editor-in-chief of several legal newspapers, he is a fellow of the College of Law Practice Management and an inaugural Fastcase 50 honoree. He can be reached by email at [email protected], and you can follow him on Twitter (@BobAmbrogi).
