Nagashima Ohno & Tsunematsu, one of the four largest Japanese law firms, has formed an alliance with a legal technology company – a rare move for a major firm in Japan.

Nagashima Ohno formed an alliance with MNTSQ Ltd., an 11-month-old Tokyo-based legaltech startup and an affiliate of Tokyo-listed machine-learning technology company PKSHA Technology Inc. As part of the agreement, Nagashima Ohno will invest about $7 million in MNTSQ during the next several years. And MNTSQ will help the firm conduct due diligence using its natural language processing technology.

Since February, the startup has worked with Nagashima Ohno on analysing contract text and is now able to automatically produce summaries of basic terms and detect clauses that pose risks or require further review by lawyers, according to a joint statement by Nagashima Ohno and PKSHA. "This helps double-check and refine the work product of law firms and also reduces the time spent by lawyers and staff," they said in the statement.

The alliance will aim at making law firms and in-house legal departments in Japan more efficient through natural language processing and deep-learning technologies. "We believe it is important to actively utilise technologies such as natural language processing in the field of legal services in Japan, which is entering a period of change," Fumihide Sugimoto, managing partner of Nagashima Ohno, said. "We strongly hope that this alliance will lead to the development of higher-quality legaltech."

Outside Japan, other major firms in Asia have been investing in legaltech in recent years. South Korea's Yulchon has been developing its own legaltech programmes since 2014, including digital compliance system AlgoCompliance; Singapore's Rajah & Tann has a legaltech arm, which acquired an e-discovery startup last year; Clifford Chance launched its global innovation lab in Singapore in December last year, and in May it selected a Singapore-based artificial intelligence company as its first member; and India's Cyril Amarchand Mangaldas launched the first legaltech startup incubator in India in February, which selected three startups as its first cohort earlier this month.

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