REUTERS | People gather at a popular viewpoint in front of the Moscow International Business Center also known as "Moskva-City" during sunset in Moscow, Russia, May 30, 2016. REUTERS/Maxim Shemetov - RTX2EY0L

LegalTech in the most advanced digital society in the world

I grew up in the old Soviet Union and for me, as for many other Soviet citizens, the three Baltic republics (Estonia, Latvia and Lithuania) were a strange island of relative liberalism in the USSR. They had medieval towns, signs in Latin alphabet letters, cosy cafes serving real coffee, glossy magazines and far greater numbers of young people wearing jeans. Locally manufactured magnetic tape-recorders and cassette-players, though highly desirable, were often unattainable for most Soviet households as they were regarded as items of “non first-necessity”.

However, even in regions considered advanced by Soviet standards, the handicap of operating within the command and control economy meant that they struggled to compete with companies based in free market economies. Yet in less than 30 years since re-gaining their independence, these three countries have made huge progress in developing their industries to become highly competitive on the world stage. In particular, Estonia is famous for building its digital economy and is recognised as the most advanced digital society in the world with locally bred $1billion unicorns like Skype, Taxify, TransferWise and Playtech.


Branding itself as e-Estonia, the country has embraced the digital way of life with:

  • 99% of state services now online.
  • 99% of local residents using electronic ID-cards.
  • Almost half of the population voting via the internet in state and EU elections.

Estonia is expanding its digital agenda beyond its borders and now offers e-Residency to foreign entrepreneurs wishing to benefit from the government e-services platform and has also established the first data embassy in Luxembourg. The government continues to make investments in developing an efficient, secure and transparent digital ecosystem, connecting citizens and businesses with state-provided services via X-Road, an integrated data-exchange platform. This ambitious project includes e-Law, e-Justice and e-Police systems built on locally designed KSI blockchain technology. Bringing AI into the administration of justice, with robot-judges deciding simple contract disputes, is next on the agenda.

This is a truly impressive track record for a country of 1.3 million citizens, with GDP of EUR11 billion and half its territory covered by forest. So how has this approach changed the way local businesses deal with their legal issues and what impact has it had on the way in-house legal functions operate in Estonia? I discussed this with Mariana Hagström, the Founder and CEO of Avokaado, a leading local LegalTech provider. Avokaado provides contract automation and management solutions to law firms and enterprises in the Baltics and beyond on its DIY platform.

The challenges faced by Estonian in-house lawyers are the same as those encountered by the in-house legal community worldwide, namely:

  • Limited resources.
  • Budget constraints.
  • Constant and growing demand for speed and operational efficiency.
  • An ever-increasing compliance burden.

However, with digital becoming part of Estonian society’s DNA, finding solutions to these challenges through smart adoption and the use of modern technologies seems to come more naturally in this part of the world.

Automating a contract precedent library

I doubt there is a single in-house lawyer who has escaped being drawn into a project to create new contract templates or update existing precedents. This is typically a painstaking and time-consuming exercise, which is prone to human error. It often forms part of legal departments’ and GC’s annual performance objectives, which brings extra pressure to complete the project by a certain date, while continuing with the day job. In-house lawyers rarely enjoy the experience, particularly as the whole process often needs repeating every few years or sooner if there are changes in the law or to corporate policies.

When the two-person strong in-house legal team of the Estonian subsidiary of Tele2, a major telecoms operator in Scandinavia and Baltics, faced this problem they thought there must be a better way of doing things. Their approach was to upload all the templates and precedent clauses to an externally managed, specialised contract IT platform and automate them so that internal clients could populate the documents by filling in an online questionnaire. The platform was configured so that all the templates are kept up to date, avoiding the need for any future manual updates.

Although this sounds a relatively simple step, how many of us would have taken it before launching into updating contract templates? The IT solution that helped Tele2 lawyers is not unique and similar contract management tools are available in the UK, but their approach does provide a lesson for UK-based in-house lawyers. If we want to continue to meet our clients’ expectations, and remain fast and efficient, we need to change our mindset and think “digital” more often. If undertaking an existing task is a hassle, before doing it again, have a look at what technology exists that may be able to help you. There are often cost-effective technologies on the market and typically they won’t be some earthshattering AI-driven, blockchain-developed, machine-learning based system but something much more straightforward.

Allocating requests for legal support

Consider how in-house functions receive and allocate requests for legal support. If there was a survey among in-house lawyers of the most detested ways of receiving a request for legal support, I think the following methods would be near the top:

  • An email sent to you and one or more of your colleagues with a copy to your boss, reading something like: “Hi Guys, could you please review and mark-up the attached for me. Thanks.” A real team-spirit killer!
  • A phone call with the voice at the other end saying: “I have just sent you an email”, followed by a dramatic pause.
  • A matryoschka email, with multiple attachments, each containing further attachments, which in turn have more attachments.

Now consider the last time that you needed to contact your IT department, for example to gain access to a shared drive. Did you send an email or call IT? Most likely you had to access your corporate IT-support website and file your request there. Other corporate services, from HR and Procurement to Facilities Management and Finance, are starting to use similar portals.

IT tools exist that automate the process of submission, allocation and tracking of legal requests efficiently, so when it comes to legal services why do emails and phone calls remain the most used forms of request? Anecdotal evidence suggests that the main problem is our mindset. Despite feeling overwhelmed by overflowing email boxes, constantly ringing phones and the irritating sounds of incoming instant messages, in-house lawyers often think that adopting such tools might somehow “commoditise” their services and make them less valuable.

He who seeks shall find

Estonians have an old saying,”kes otsib, see leiab“, which means “he who seeks shall find”, and they tend not to accept an inconvenience as an inevitable state of affairs that should be endured. I read an interview with a former CEO of a leading Estonian software company who was asked to give an example of the Estonian “digital mindset”. He recounted queuing 45 minutes in JFK to pass through immigration control with his children. Their response to the delay was: “why do they not have some kind of app for this?” Perhaps it’s that mindset which allows this small and proud nation to punch way above its weight when it comes to the digital economy and gives us all an example to follow.

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