Legaltech Industry Growth Projection in Indonesia

The legal services industry is known to be quite conventional with the need for legal services paper work and strict regulations. This has led to a stagnation of innovation in the industry. The competition that occurs only revolves around the battle of price and quality, but lacks creativity because it is comfortable with traditional work patterns.

This creates new opportunities for innovation in this sector. This product of technological innovation in the legal services industry is widely known as legaltech. Legaltech itself is closely related to Regtech, smart legal tool that uses innovative technology to help society and businesses in general understand and comply with applicable regulations.

In 2017, legaltech and regtech activists in Indonesia have initiated the formation of an association called the Indonesian Regtech and Legaltech Association (Indonesian Regtech and Legaltech Association / IRLA). At that time, IRLA still consisted of 10 legal startups. This association aims to enable collaboration between any institution pursuing technological innovations in regulation and legal business. During the two years of its existence, this association has not yet reaped a significant impact, allegedly because of the small number of members and their respective business activities.

Then in 2019, the first association in Southeast Asia that connects the legaltech ecosystem or digital startups engaged in law throughout the region, ASEAN LegalTech was officially introduced in Indonesia. There are 88 legaltech startups throughout Southeast Asia, 21 of which are from Indonesia.

Challenges and opportunities

Talking about challenges, legal cases cannot be completely done digitally. Although there are many startups that offer digital services, in some aspects they still have to use traditional methods. In addition, market conditions that are not ready to accept technological developments have also become a burden in itself.

In the Global Legal Tech Report compiled by the Australian Legal Technology Association and Alpha Creates, the COVID-19 pandemic is a top challenge for legaltech companies worldwide.

Legaltech for MSMEs

The law is inherent in every phase of people's lives and entities, including SMEs. Stigma against expensive legal services and lack of understanding of legal documents are strong reasons for SMEs to put aside legal matters. This is an interesting market for legaltech startups to crack.

The founder of Lexar.id Ivan Lalamentik said, "In our opinion, the biggest challenge for SMEs is related to legal issues is to raise awareness of the importance of the legality of the company which started from the beginning of the company's establishment. [..] Many SMEs consider trademark registration a cost, even though trademarks are intangible assets (intangible assets) and if the marks have not been registered, it can pose a greater risk."

Other support was also provided by Justika, the Legal section of Online that focuses on working on the SME segment, by conducting a strategic collaboration with the Ministry of Cooperatives and Small and Medium Enterprises (Kemenkop UKM) for the Free Legal Consultation Program, which involved 100 advocates from 40 well-known law firm offices from various cities and towns. skill.

The future of legaltech in Indonesia

The COVID-19 pandemic has demonstrated the need for law firms and internal teams to innovate further and find the right method to provide the best service.

Ivan, who also serves as First Deputy Chairman at IRLA said, "In general, Legaltech will definitely grow even more rapidly and in my opinion, SMEs will be one of the parties who will benefit the most from this progress because they continue to experience ups and downs in the midst of the Covid-19 pandemic. 2020. [..] Moreover, since the end of XNUMX yesterday, the government has issued the Job Creation Law, which we feel will have a positive impact on SMEs, so that potential market getting bigger."

In addition to being supported by changes in consumer behavior, which causes technological disruption to occur more quickly, the Covid-19 pandemic has also had a major impact on technological developments, especially in the legal field. Working from home is a challenge in supervising and updating every regulation issued by the Government during the pandemic.

"This market potential that is still hidden is SMEs, so we hope that with friends in the legaltech industry and by Legal Contracts in particular, we can help and reach national SME economic actors, raise their business class through legality and increase access and capability. they are in this digital era," concluded the Founding CEO of Contract Law, Rieke Caroline.