Updated: Feb 17
In association with Law in Order.
Hong Kong is one of the world’s leading international finance centres and the Asia-Pacific headquarters of many global corporations.
As a result, it is a region of particular interest for dispute resolution. In fact, its position at the heart of Asia-Pacific’s economy and as the connection point for commercial activity between the East and the West made it one of the first cross-border dispute resolution hubs.
International trade has many well-known benefits that need no real introduction—from increased profits to higher levels of foreign direct investment to fostering a global reputation for reliability—but it also invites the possibility of complex legal battles involving claimants from all over the world.
Hong Kong’s unique role in the global economy means that from the early days of cross-border litigation, it’s been home to world-leading expertise and innovation.
Widespread adoption and effective use of eDiscovery technology has become an increasingly important part of establishing and maintaining a reputation as a cross-border dispute resolution hub. The global eDiscovery market could be worth as much as US$11.6 billion by next year, with Asia-Pacific a key driver of that growth.
As the volume of international trade continues to grow and higher amounts of information are being stored digitally, eDiscovery can be a game-changer for legal teams in Hong Kong.
But is the special administrative region doing enough to drive eDiscovery adoption and equip its legal sector with the right tools for dispute resolution in the modern commercial world?
Conventus Law surveyed 181 legal professionals working in private practices, in-house legal teams, government or public services, alternative legal services in Hong Kong to find out more about their use of eDiscovery technology.
New data challenges
Law firms have always faced challenges around managing sensitive and confidential client information, even before the rise of digital data storage and organisations going paperless.
“There have always been issues around secure information management,” comments Sarah Bell, Director of Law In Order Hong Kong. “Countless organisations maintain archive rooms and warehouses full of hard copy folders and documents to this day, which presents significant concerns around the security and management of that information.
Now, data management and data security tools provide organisations with trackable, and granular insights in to how data is dealt with, when it is accessed, manipulated, or changed, and human interaction with that data – information that was previously unavailable, or at least difficult to ascertain, for hard copy records.”
However, several high-profile data security breaches taking place in recent years, coupled with the unprecedented volume of digital information being created each year, have made information security and data management a priority for legal teams.
49% of respondents across both private practice and in-house teams cited data security as the most important element of their organisation’s technology strategy, with ownership and control of the data being the most common second-place choice.
“Although there is a global trend toward data protection regimes having some teeth in terms of enforcement, regulatory penalties are not the main concern in this space,” posits Jeremy Birch, senior associate at Herbert Smith Freehills. “The fall out, in terms of damage to the client or to the firm, is what would be driving this focus.”
Despite understandable anxiety about dealing with highly sensitive client data digitally, the right eDiscovery software is actually the solution to this perceived lack of control, as opposed to an aggravating factor.
“The more an organization is willing to engage with this technology the more control of the data and costs will be possible,” notes Michael Thillaivasan, legal project manager for disputes at Herbert Smith Freehills.
Legal firms appear to recognise the enormous potential of eDiscovery to put them back in control of data protection and limit the danger to both themselves and their clients, with 62% overall respondents to our survey saying that eDiscovery technology had significant potential to improve transparency and give organisations better control of data and costs.
“Countless organisations maintain archive rooms and warehouses full of hard copy folders and documents to this day, which presents significant concerns around the security and management of that information."
Sarah Bell Director, Law In Order Hong Kong
Hong Kong is behind
However, Hong Kong—as the original arbitration hub of Asia-Pacific—has failed to move with the times when it comes to driving adoption of eDiscovery technology. Demand for eDiscovery software and services is actually highest in mainland China, while fellow commercial metropolis Singapore has surpassed Hong Kong in recent years as the preferred dispute resolution centre in Asia-Pacific following aggressive measures aimed at advancing eDiscovery.
“Asian clients, I think, are very risk averse and generally very cautious in their approach and as a result we were not really seeing the same sort of big scale cross border type disputes/investigations as we do in the US and Europe,” says Thillaivasan. “However, that is all changing. There is far more inbound and outbound investment, and trade and wealth generation in the region, which in turn is resulting in more dispute work across Asia.”
According to our survey, confidence in an organisation’s eDiscovery capabilities is particularly low among smaller legal practices, with only 1% of respondents at firms with 1-5 partners and 5% of respondents at firms with 6-20 partners rating their organisation’s experience of using eDiscovery technology in preservation and collection of data in a legal matter as “optimised”.
Although confidence was significantly higher among practices with 25 or more people, only 54% of firms of this size rated their experience as optimised in the highest-ranking areas: case management and document review and analysis.
However, the reasons behind this lack of confidence may not be as dire as the numbers make it seem. Kevin Bowers, a consultant at Hong Kong-based independent law firm Tanner De Witt Solicitors lists potential causes for this inexperience and hesitance to adopt eDiscovery software as:
The perception that eDiscovery is disproportionately expensive.
The perception that eDiscovery is only for “heavy” litigation (big document-heavy court cases or arbitrations) which are predominantly handled by the larger domestic or international firms.
The perception that outsourcing eDiscovery involves increased risk with respect to confidentiality and a “loss of control” of the conduct of the litigation.
Limited knowledge and use of sophisticated e-discovery software/technology more generally
A general mistrust of data input
Increased risk averseness
Mixed or confusing messages from eDiscovery service providers with multiple e-platforms
These are all fairly easy to address and resolve, as they are rooted in beliefs as opposed to a lack of financial, legal or technical capability. Stuart Hall of leading eDiscovery solutions provider Relativity is also optimistic, describing Hong Kong as “catching up” to “more mature markets”, such as the US.
Popularising the use of eDiscovery technology in law firms of all sizes is clearly a matter of huge importance as the world continues to digitise. Hong Kong’s legal sector is one of several in the Asia-Pacific region that stands to benefit from mainland China’s massive Belt and Road Initiative, the largest economic development in the world, by positioning itself as the prime arbitration hub for complex cross-border disputes.
However, Hong Kong has so far been less proactive than its rivals in establishing tech-friendly regulatory frameworks for dispute resolution. Comparatively, Singapore has introduced two initiatives in recent years aimed at making eDiscovery standard procedure in dispute resolution: the Protocol for the Discovery and Inspection of Electronically Stored Documents and a new eLitigation system for filings made with the city-state’s Supreme Court.
As well as regulatory measures, eDiscovery providers themselves have a crucial role to play in boosting technical expertise and infrastructure in Hong Kong by providing training and certifications, both in-office and at universities, law schools and other academic institutions.
“Providers can add value with their expertise and subject matter as they are more than likely to have already assisted with projects that add value in infrastructure support and expertise,” says Law In Order, a world-leading eDiscovery technology company, noting that vendors are already making moves in this area.
“One change we are starting to see as the market continues to develop is the increase in collaboration between organisations and providers taking a more strategic approach in strategically working together to address their eDiscovery needs in an efficient and cost effective manner.”
Stuart Hall of Relativity echoes this point, describing vendors as “essential” in what he the “cycle of innovation”, which goes as follows:
The introduction of in-house capabilities at law firms, setting themselves apart from the competition
Corporations begin to expect eDiscovery in-house at law firms as standard
They begin to consider potential benefits around having this capability internally
Law firms will need to reinvent themselves—both in terms of cost models and value adds—in order to be selected as panel firms for corporations.
“The role of vendors is essential in this innovation cycle, so instead of focusing energy on infrastructure and IT deployments, vendors will now become more focused on helping provide improved consulting and technical expertise to organisations,” he says. “The services industry continues to grow year on year towards 10 billion and the requirements for expertise in this space only continues to increase.”
Hong Kong’s status as a dispute resolution centre has so far been established largely off the back of its reputation as an international trading hub. As companies process more and more data digitally and regional competitors gear up to benefit from major initiatives, Hong Kong needs to take a more proactive role in pushing eDiscovery adoption. If eDiscovery providers and Hong Kong’s executive authorities can work together to this end, it is a prime candidate to grab the lion’s share of Belt and Road Initiative dispute resolution.
This article was written by Conventus Law in association with Law in Order.
For further information ediscovery services in Asia, please contact:
Sarah Bell Director, Law In Order Hong Kong