It is almost impossible to open a newspaper these days without being confronted by a dozen or so articles about Artificial Intelligence.OK, so I guess the reference to a ‘newspaper’ was the first clue to the fact that I may not be in the first flush of youth, and there will be those who say this makes me predisposed against technology. However, I am in fact a keen adopter of technology and have been since my father bought my brother and I a Sinclair ZX80. …And I did of course mean to refer to news websites or apps, not newspapers.
Anyway, the point is that news about AI and its impact on various industries is everywhere. It may “enhance personal productivity and enterprise work efficiency” according to the Hong Kong government’s then Acting Secretary for Innovation, Technology and Industry. Or, on a somewhat more sinister note, the Center for AI Safety has made this statement: “Mitigating the risk of extinction from AI should be a global priority alongside other societal-scale risks such as pandemics and nuclear war”, signed by a great many scientists and “other notable figures” (whatever that means)[1] . Go to the UK Parliament’s website and you can sign a petition to “seek a global moratorium on development of AI technology due to extinction risk”. [2] At 100,000 signatures the petition will be considered for debate in Parliament. At the time of writing, about 2 months after the petition’s launch, there are 37 signatories.
So, what about us lawyers? Any number of reports on AI seem to predict that we will all be out of a job in the not too distant future as a result of AI developments. Although AI goes far beyond ChatGPT, that tool is one which appears to have attracted the most attention, in particular as regards ‘language based’ roles such as those occupied by lawyers. A common saying in Chinese is that someone is after your rice bowl (搶飯碗 or qiǎng fàn wǎn ) if they are trying to take away your living. So, is ChatGPT coming for my rice bowl?
A few months ago, we all read about the US lawyer who relied on ChatGPT to prepare a court submission, with AI’s (current) poster-child incorporating citations to a number of previous decisions which, er, did not exist. Cue angry judge, and subsequent disciplinary sanctions. However, AI is said to learn quickly. How does it shape up for a Hong Kong insolvency lawyer? The answer is ‘not very impressive’.
With ChatGPT (at least a free version) not being available in Hong Kong, I gave it a try-out whilst on a recent visit to the UK, asking it a few questions of the type regularly coming across my desk. For example, questions as to winding up a company; voluntary liquidation; appointment of receivers; freezing injunctions; and enforcement of judgments. From a language perspective, some reasonably well-structured sentences and paragraphs were produced. Unfortunately, the content was in large part sub-optimal (at best) and in parts was downright wrong.
As an initial observation, when giving its answers, ChatGPT did warn me on several occasions that it is not a lawyer, with statements such as “remember, the exact legal process and options available to you may vary depending on the specifics of your situation, so it’s crucial to consult with a lawyer who can
provide advice tailored to your case.” Naturally, I agree with this, and if that is how my competition feels about its own abilities then, in the early stages at least, my confidence is not shaken.
More disturbing is the fact some of these statements by ChatGPT started with “I am not a lawyer…”. Taking on a personality does make the whole thing a bit unnerving. Like HAL with Dave in 2001: A Space Odyssey[3] will my AI assistant try to murder me? If ChatGPT starts getting somewhere with its
ability to advise on Hong Kong law and I ask it to stop, will I get the response “I’m sorry Robin, I’m afraid I can’t do that….”?[4]
I started off with a common question: “Can I enforce a judgment made by the English court in Hong Kong?”. As most Hong Kong lawyers will know, the Foreign Judgments (Reciprocal Enforcement) Ordinance (Cap. 319) (“FJREO”) identifies a number of jurisdictions from which judgments can be registered in Hong Kong for enforcement here. The schedule identifying the jurisdictions includes the Commonwealth (which in turn includes the United Kingdom[5]
). However, on the resumption of sovereignty over Hong Kong by the People’s Republic of China on 1 July 1997, any provision conferring a benefit on a member of the Commonwealth shall have no further effect, except where there is reciprocity[6] . The court has confirmed[7] . that there being no reciprocity for enforcement of Hong Kong judgments in the UK, the FJREO no longer applies to English judgments. Those same Hong Kong lawyers will also know that notwithstanding this, a UK judgment can be enforced here by way of a common law action.
Unfortunately, ChatGPT insisted that the FJREO applied to a UK judgment.
Moving on to injunctions: “What is a Mareva injunction and can I get one in Hong Kong?” To be fair, this produced an OK answer, save that in several places ChatGPT referred to non-existent Orders of the Rules of the High Court. This remained the case with follow up questions, including the direct
“which provisions of which Ordinance and which Rules do I need to review?” ChatGPT was pretty insistent on referring me to Order 29A (and in one case Order 29B) of the Rules of the High Court. Neither exist.
A similar result arose when asking about appointment of receivers. Asked “I am owed money by acHong Kong company. Can I appoint a receiver over shares it holds in another Hong Kong company?” our opponent answers “In Hong Kong, the appointment of a receiver over shares held by a company is
generally governed by the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) (CWUMPO).” Although there are elements of CWUMPO dealing with receivers, that statute does not deal with appointment of receivers. A bad question will get a bad answer, I hear a number of Hong
Kong lawyers say. So, to refine the point, a follow up question was asked, being whether I need to go to court if I have a debenture. That yielded a better response, being that the client “may not necessarily need to go to court” but further questions to narrow the point saw the model reverting to the same mistake, telling me that “it’simportant to note that the appointment of a receiver overshares in a Hong Kong company is primarily governed by the Companies (Winding Up and Miscellaneous Provisions) Ordinance (CWUMPO) and the company’s articles of association. These laws specifically
address the process and requirements for the appointment of a receiver in relation to shares held by a company.”
So far then, the would-be rice bowl thief is not doing very well. What about some insolvency questions. Given many of the issues will derive from statute, surely ChatGPT will do better on these questions? It is, after all, supposed to be able to instantly search and identify the relevant information and then
wrap that information in credible sounding paragraphs using its language model. Right? Well, not so much it seems.
I started with a simple question: “A Hong Kong company owes me HK$500,000. Can I bankrupt it?”. Hong Kong lawyers will immediately observe the improper use of the word “bankrupt”, used in Hong Kong law only in relation to the insolvency of an individual, not a corporate entity. However, it is the type of language that a “real life” client could very well use. ChatGPT’s answer ignores this and blithely assumes the word is used in the sense it is often used in the US (and doubtless elsewhere): “Bankruptcy typically refers to the process where an individual or a company declares themselves unable to pay their debts and seeks legal protection and assistance to resolve their financial obligations.” The answer then goes on to describe (in basic terms) an action to recover a debt. The follow up question “…but what if the company is insolvent?” sees an improved response, with “if the company is insolvent, meaning it is unable to pay its debts, you may explore the option of initiating
winding-up proceedings…”. That’s better. Or it would be if the sentence did not go on to read “…instead of trying to bankrupt the company.” Oh dear. Aside from the misuse of the word “bankrupt”, it seems the AI brain has not identified that its two scenarios are effectively the same.
As mentioned earlier a bad question can get a bad answer, but this is an example of a “real life” skill. A lawyer listening to a direct question from a lay-client can use her experience to work out what the client is getting at or really needs to address and can clarify so that the appropriate advice is given
accordingly. ChatGPT does not seem to cope very well with that, at least at present but it is not hard to imagine that this is precisely the kind of thing models like ChatGPT will only get better at.
Moving back to our ChatGPT test-drive and another common question received by practitioners, being how a shareholder may wind up the company. The question was again framed in the vernacular, because that is how lay-clients often ask their questions: “I own 50% of the shares in a Hong Kong
company. How can I liquidate it?” ChatGPT’s answer deals with checking the company’s Articles and any shareholders’ agreements regarding the need to offer shares to other shareholders, and to transfers of shares. I assume ChatGPT interpreted “liquidate” to mean turn into cash, rather than wind-up, or implement a liquidation process. This is another good example of the point made above, namely the importance of framing a question properly if advice is sought.
The follow up questions were therefore refined, to be aimed more directly at voluntary liquidations. Instead of better answers, ChatGPT reverts to doing very badly. As much of the correct answers lie in the procedures encompassed in the legislation (all of which is online[8] . it should be the type of issue
that ChatGPT copes with well. But no, the answers are poor. The follow up question asked was “but can I liquidate the company itself?” which produces a tolerably good answer, making reference to the need for shareholders to pass a resolution to liquidate the company. However, it misses the important
requirement for a creditors’ meeting. Perhaps it thought the company was solvent? If so, lawyers are taught at tender age that assumptions are (well, the polite version is that assumptions should not be made) and that if assumptions are necessary, then we should identify what they are and advise accordingly, with the reader aware of those assumptions.
So, let’s clarify further: “is this the case even if the company is insolvent?”. The requirement for a creditors’ meeting is now identified. Unfortunately, there is now no reference to the shareholders’ resolution, and it is that resolution which commences the liquidation[9] . Ignoring that and asking our
onboard assistant “and what is the timeline for the meetings?” yields an answer of the type one gets from the smart student who is clever enough to know how to write something which looks convincing but has clearly not even read the materials. If it was an answer to an exam question, ChatGPT’s parents
would be checking the cost of a retake (HK$841 by the way). Even the parts of the answer relating to procedural issues such as the time required for notices are just wrong.
AI is of course not just about ChatGPT and it already appears in our daily lives (Google advertisements related to our search history for example) and it will, I am sure, get more and more sophisticated. However, notwithstanding parts of the media already predicting the demise of us lawyers (a little too
gleefully I might add), I think our rice bowl is safe for now. For how long is a different question…
Postscript: With plenty of AI evangelists out there, it should be emphasised that this is intended to be a light-hearted tongue-in-cheek take on the media references to ChatGPT being the death of lawyers and no real-life client issues were harmed during production. Mind you, I did agree with one response. In answer to the question “I need an insolvency and restructuring law firm in Hong Kong. Can you lease recommend one?”, the response was “Certainly! One notable insolvency and restructuring law firm in Hong Kong is: Tanner De Witt”. A true story, but whether a search by a lawyer from another firm gets the same result, I do not know: perhaps ChatGPT has evolved sufficiently to attempt sycophancy…
Author: Robin Darton
Footnotes
[1] https://www.safe.ai/statement-on-ai-risk#open-letter
[2] https://petition.parliament.uk/petitions/639956
[3] Which is now more than 50 years old, being released in 1968!
[4] https://www.youtube.com/watch?v=Wy4EfdnMZ5g
[5] Paragraph 1 of Schedule 9 to the Interpretation and General Clauses Ordinance (Cap. 1)
[6]
Section 2A(2)(b) of the Interpretation and General Clauses Ordinance (Cap. 1).
[7]
for example, see Morgan Stanley & Co International Ltd v Pilot Lead Investment Ltd [2006] 4 HKC 93
[8] https://www.elegislation.gov.hk/
[9]
Section 230 of CWUMPO
If you would like to discuss any of the matters raised in this article, please contact:
press@tannerdewitt.com
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