Category: Features

‘Bureaucracy is the death of any achievement.’ – Albert Einstein

Or is it? Perhaps ask a Brazilian – they tend to know a thing or two about bureaucracy.

‘It’s a very specific problem we have here in Brazil because we are a huge country – we have over 5,000 cities and each one of these cities has at least three different institutions from which it is possible to get different documents. Institutions like the city hall, the labour department, the justice department, the environment department, or the federal government,’ says Pedro Roso, CEO and co-founder of Docket, a legal tech start-up.

And the legal sector itself, says lawyer and tech entrepreneur Bruno Feigelson, is as swollen and filled with complexity as it could be. According to Feigelson, Brazil spends 2% of its GDP on its legal system, and there are currently 100 million ongoing lawsuits in the country.

‘If you compare that with our population – we have 200 million people – we have one lawsuit per person, because you have the plaintiff and also the defendant,’ he explains.

Discontent? Disaggregate

Felipe Monteiro is professor of strategy at INSEAD, and is also the academic director of the Global Talent Competitiveness Index, which identifies the world’s most talent-competitive countries. This has led him to look at how companies and sectors around the world are being transformed.

‘I remember talking to the CEO of a very large, fast-moving consumer goods company in Brazil. This is a very marketing intensive company, and the CEO said: “Brazil is the only country in the world where we have more lawyers than marketing people.”’

All this means one thing for start-ups armed with the technology to bat away reams of paperwork and administration: opportunity.

‘If we go to the legal sector, what’s happening is that whereas one company used to have a full range of activities, a lot of start-ups are coming and trying to break down the full service into smaller parts,’ explains Monteiro.

‘If you think about utilities, BT Group had the full service but now a lot of start-ups are saying “Maybe we can use the infrastructure of BT but start offering different things.” You can think about this as different technologies, but I think most of all, it is not about that. It is that you as a person now have different needs. Maybe an incumbent used to give you all those options, but now independent players can use the infrastructure and offer you different paths, maybe in a more efficient and effective way.’

One company aiming to apply this model to in-house legal teams and unbundle internal processes is ProJuris, a start-up currently enjoying its tenth anniversary.

‘There are more than 1.2 million lawyers in Brazil, which has led to one lawyer for every 190 Brazilian citizens,’ says digital marketing manager Tiago Fachini.

‘Our purpose is to eliminate inefficiencies of the legal routine. We are working with AI in several ways to help lawyers to be more efficient and happy. We are also working with automation and some very neat integrations.’

The company’s SaaS (software as a service) product automates repetitive activities, like creating or updating cases, creating documents, or distributing and managing team tasks. ProJuris also offers software to corporate legal teams designed to improve productivity of the teams who work with contracts, documents, signatures and requests from internal clients. It claims to have more than 1,800 customers, with over 20,000 lawyers using ProJuris every day.

Another is Docket. Founded in 2016, the self-proclaimed ‘document shop’ has developed a platform on which clients – for example, the legal departments of large companies – can manage documentation, allowing faster access to documents, reduced friction with public services and AI-enabled data analysis. Last year, the company participated in Google’s Launchpad accelerator programme.

‘The size of this market is huge. We used to operate without any technology and now we are looking for how technology could solve a lot of problems, through automation or AI and, with this market size, with this very complex system and with technology, I think we have the recipe to create a lot of start-ups in this market,’ says Roso.

‘In Brazil, this year [2019] was the year of fintechs. But I think the legal techs in the next two or three years will be the hype of the year, because we have a lot of solutions emerging. And we have huge potential, because we have opportunities with sectors inside of the legal system.’

Innovation by association

Someone who certainly believes in the future of legal techs is Bruno Feigelson. A lawyer himself, he founded his own legal tech company in 2016, Sem Processo, which aims to connect lawyers and companies in order to resolve and settle the vast numbers of matters that end up before Brazil’s legal system more easily.

But he didn’t stop there. The following year, together with legal departments and law firms, Feigelson – who also runs a law firm, a law school and a legal tech accelerator – created the Brazilian Association of Lawtechs and legalTechs, known as AB2L.

‘At that moment, we had some tech companies in Brazil, but we didn’t have the main legal tech or law tech – it was something like a desert in Brazil for technology. We started the association with just two companies and, nowadays, we have 200 legal techs in Brazil in the association,’ he explains.

Feigelson had observed an increasing interest in technology to assist in legal processes such as contract automation and litigation management and analysis, and he predicted this would evolve beyond the implementation of tech solutions developed in-house to the use of external platforms and processes that would become available on the market. And he is confident that he was right.

‘We have a lot of potential. It’s very interesting because the biggest change is not just the technology – it’s the change of mindset,’ he says.

‘Lawyers are now looking to find a newer way and a better way to change the field. It’s interesting to compare AB2L two years ago and now. Now we have solutions for tax, for compliance and for data protection.’

One particular area of innovation observed by Feigelson is visual law – using design to illustrate legal documents.

‘The biggest lawsuit in Brazil is one in which the state of Brazil is suing certain companies. This lawsuit could be worth billions and billions of dollars. We are drawing all the petitions in order to help the judge show the court what has happened. Three years ago it was impossible to imagine that you would be in a meeting with a lawyer and a designer to improve understanding for the client,’ he says.

But, he concedes, this has not yet translated to a huge number of legal tech companies in Brazil currently.

Growing pains

Roso believes that coming up with an idea for a start-up in the legal sector, particularly in Brazil, necessitates first-hand experience of the market. Docket itself was created following the challenges experienced by one of the co-founders while working for a real estate company.

‘You need to study a lot to create a start-up to solve these processes. It’s different to thinking “Oh, let’s think of something to create.” I think for legal tech you need to experience this pain, you must understand how to solve it. It’s not too simple because we don’t have a standard here,’ he says.

Put simply, however, Brazil is not the most conducive environment in which to open up a business. Placed 138th out of 190 countries included in the World Bank’s Doing Business 2020 rankings for starting a business, the country scored 124th for ease of doing business overall (figures taken from World Bank. 2020. Doing Business 2020. Washington, DC: World Bank. DOI:10.1596/978-1-4648-1440-2. License: Creative Commons Attribution CC BY 3.0 IGO).

‘The complexity to open a business, get clients, handle these physical problems that we have to understand our taxes, to pay our taxes – I think it’s not so good yet,’ says Roso.

For the legal sector, there are specific problems, and the very bureaucracy that has created a huge potential market for legal technology platforms also creates hurdles.

‘We have the problem of dealing with hundreds of different courts around the country, each one with its own system. There are more than 100,000 open cases in the Brazilian legal system, so in this decentralised and unstructured scenario, most legal techs fail to obtain and use public information,’ says Fachini.

The Doing Business website identifies some business reforms made by the governments in recent years that have smoothed the way for those looking to start a business. These include speeding up business registration, lowering the cost of the digital certificate, and establishing online systems for company registration, licensing and employment notifications for Rio de Janeiro and São Paulo. The government also launched an online portal for business licences in Rio de Janeiro.

‘I think this government, and other governments, are concerned with being more friendly with entrepreneurs. As a result, we have had laws pass through our congress that make it easier to be entrepreneurs,’ says Roso.

‘We are at the beginning of this agenda. It’s a long ride – we have a lot of things to do, but we are starting, so this is something to celebrate: we start this process here. I think the support from the government is very important because they could transform this whole scenario and bring more investment to our country and generate more jobs. Everyone has some kind of benefit from that.’

A new (ad)venture

The biggest problem, according to Feigelson, is a lack of investment relative to markets such as the US or the UK.

However, the tide may be beginning to turn in the venture capital stakes. In 2019, SoftBank Group launched a $5bn technology innovation fund focused on Latin America. In May 2019, Crunchbase reported that venture funding in Brazil reached $1.3bn in 2018, up from $859m in 2017 and $279m in 2016, according to figures taken from LAVCA, the Association for Private Capital Investment in Latin America.

‘[Venture capital funds] are more present in Latam, I think, compared to three or four years ago – when it was completely different,’ says Roso.

Closer to home, in the legal sector, encouragement for legal tech is not as evolved as it could be, says Feigelson, whether through direct investment or by launching incubator and accelerator programmes. Early adopters are often thin on the ground, and although support is there in theory, the money is not always where the mouths are.

‘The law firms in Brazil, they don’t invest a lot of money in law techs. They don’t have a lot of money, because in Brazil we have a closed system in law firms. It’s impossible to invite a partner that is not a lawyer to introduce to this society,’ he explains.

‘They believe, but they don’t believe in this revolution. It’s very common that I’m going to a conference and talking about international big law and the companies that they are creating. But the Brazilian law firms, they are not doing the same.’

Adds Fachini: ‘Sometimes, our Brazilian bar association (called the OAB) puts some barriers in the technology way, trying to keep the old patterns instead of helping us to develop faster to help even more people.’

Perhaps a cautious approach to investment among incumbents is prudent, however. To throw a potential spanner into the trend among law firms in regions like the US and Europe to launch innovation labs, Monteiro believes that the benefits to incumbents of incubating and/or accelerating start-ups are not always clear.

‘It’s not even a billion-dollar question but a trillion-dollar question: to what extent incumbents will ever be able to integrate whatever those start-ups are doing,’ he says.

‘Imagine I’m a big company, let’s say a bank, and I start investing in fintechs – I have all those fintechs in my lab. To what extent will I be able to change the bank, or will I just be an investor in those new things? It’s not trivial, because the nature of the change is so much more profound than the previous technological changes.’

Monteiro is not speaking specifically about the legal sector, of course, but of a general response to possible technological disruption across the board.

‘I think we have a tendency of thinking that this idea of open innovation and accessing business technologies is more about “How do I connect with start-ups?” But actually, a lot of my feedback about it is that it is not about the connection itself, it’s more about “How do you bring those things home? How do you transform the mothership?”’

But Feigelson has observed the tech revolution (and, perhaps, cultural invasion) continuing apace – across all sectors in Brazil, even legal. And in-house teams, with their proximity to trends across the corporate ecosystem, are well-placed to benefit.

‘In Brazil, if you are a bank you are looking for fintech, if you are a health company you are looking for health tech – all these companies are living a special moment. We have a big movement in Brazil against wearing a tie, nobody wants to wear ties, they want to be modern, they want to be like Steve Jobs,’ he says.

‘The reconnection of the legal world with this new reality, of the fourth industrial revolution, it’s easier for legal departments than the law firms.’

In-house leading the way

‘[Incumbent legal service providers] are starting to realise that technology is a friend which can help them to be more effective and efficient in their daily activities. In the beginning, there were misunderstandings about how technology would and could help, but now everyone is looking for tools to help legal routine,’ says Fachini.

But, in many cases, according to Feigelson, customers are coming from the in-house sector, and not external firms: ‘They take the money that was for the law firms and they put it into legal techs.’

At Docket, most clients are also tech-curious in-house departments. Their concerns are practical rather than innovation-related, in Roso’s view.

‘We have 130 people here, we have a huge team, and we always talk with huge clients, so we need to be prepared to absorb these huge clients. I think their consideration, at the end of the day, it’s not about [whether we are] a start-up, but if we will have the necessary structure to handle them. I think, in most cases, they are very optimistic about how technology could transform the legal department and reduce these operational jobs without any kind of value,’ says Roso.

The Brazilian general counsel GC spoke to as part of the research for this report were bullish about the potential of technology to improve in-house life, and took a pragmatic approach to the adoption of innovative tools – whether they be those developed specifically for their own departments, customised off-the-shelf software, or services procured from third-party tech providers.

‘Legal tech is the future; it is only a matter of time before they can prove what they are using is consistent and sustainable. I think that there is no way back – technology will only be more and more relevant to the legal market,’ says Rafael Dantas, director of legal and compliance in Latin America for General Mills.

For some, the challenges around technology revolve not only around selecting system tools likely to be effective, but identifying the best method of procurement. General counsel must find the right momentum and timing between developing them internally (balanced with other priorities within companies) and hiring third-party developers. But, the need for appropriate system tools is widely accepted.

Is disruption coming?

Conditions are certainly favourable in Latin America – and in Brazil specifically, says Monteiro.

‘When you are a developing market, one potential application of technology is offering leapfrogging opportunities. Remember that in a number of these markets they have nothing, and if they adopt the most recent technology, they will basically skip prior stages of technological development. The most well-known case was in Africa with M-Pesa in Kenya where, 10-15 years ago, most people didn’t have a bank account. M-Pesa started offering mobile payments on very simple phones. Many Kenyans don’t have a formal bank account and maybe they never will, because a lot of people skipped and started having a mobile wallet in their cell phones,’ he says.

‘There are a number of examples like this in Latin America. If you want to extrapolate a little and think about the legal sector, there are maybe two points to consider: one, is to imagine that some companies, and some of those start-ups, will never engage with formal legal services as we know them now – maybe they will skip that and they will start engaging with new ways of getting legal services; two, is the level of complexity of the Brazilian legal system – it is so complex, which means that you have a lot of lawyers and that’s why the legal tech sector in Brazil is thriving – because people know that there will be ways of disrupting that market and offering many different things.’

Feigelson certainly knows, and perhaps his enthusiasm – and that of the legal techs, like Docket, which is an AB2L member – will continue to be catching.

‘We believe a lot that we have the numbers and we have the anthropological conditions to make the biggest evolution in technology in Brazil. I work with researchers in Brazil, I work with law techs from other countries: people are coming to Brazil and trying to understand what’s happening here. I think we have a lot of change.’

When GC surveyed and interviewed a host of general counsel at some of the biggest corporate players in Latin America, what emerged was a variety of approaches to the question of how best to incorporate technology into the daily life of the in-house legal department. But whether the response was a wholehearted embrace, a cautious side glance, or something in between, what many agreed on was the fact that technology has made a significant advance into legal teams over the last five years – and that advance is set to continue.

‘In my three years at Bayer, I’ve seen the introduction of many systems. For example, a new tool was just introduced this year for contracts and Prime for data privacy was introduced last year. Comcat (a compliance tool) was in diapers three years ago, but it has gained significant importance around how we report on compliance cases. In my three-year period, it has moved very much towards a technology-based or technology-oriented profession,’ says Catalina Morales, data privacy manager for Central America and Caribbean at Bayer in Costa Rica, currently in an assignment based in St. Louis, US.

Bayer has taken a global approach, with the Central America region assimilating accordingly. But general counsel at Archer Daniels Midland Brazil, Patricia Ulian, has added personal momentum to the tech wave.

‘I myself am a person that really thinks that technology is important, because you really can replace operational work that I think is not a priority for senior lawyers – I try to prioritise the strategic issues and benchmarking, in order to check the other companies and really understand what we have in the market. I try to improve and, if this is the case, we invest externally,’ she says.

‘Five years ago, information control was totally dependent on human action. In-house lawyers were much more operational and less strategic, as they had to dedicate their time to fill in Excel sheets and other reports. The margin of error was high, the time of responses was longer – and those aspects directly influenced the quality of the decision-making process of the company.’

A race to technology?

In this spirit of striving to minimise administrative tasks, the GCs we interviewed for this report have much in common with their counterparts around the world, who have bid farewell to the paper-based days of yore. But some feel that parts of Latin America have further to go to catch up with peers in certain jurisdictions. Selim Erdil Guvener, general counsel at the International Potato Center in Peru, is one such person, having moved to Latin America six years ago after a career that has taken him to London, Istanbul, Nairobi and Benin.

‘I think the legal profession in Peru is behind the US and Western Europe in terms of adopting new technology. Here, I can still only see technology use at the word processing and some systems levels. But lawyers will need to adapt quickly, as digital transformation is picking up speed, especially in the government,’ he says.

Of course, in a region the size of Latin America – including 20 countries for the purposes of our research – and with the unique character of each country, it is impossible to draw conclusions that are too general.

‘Latin America consists of many nations,’ says Ulian. ‘For example, you’ve got both Mexico and Bolivia – these are two totally different countries with different levels of development. When you think of Mexico, there are many differences in culture, and you must also consider the dependency on the US. You also have Brazil, which speaks Portuguese, whilst all other Latin American nations speak Spanish. You have many differences, but Brazil is a pioneer in this area compared to other Latin American countries.’

Vastly differing economical, commercial, societal, and geographical landscapes across the numerous countries making up the Latin American region have resulted in similarly different priorities for the governments governing those countries. Regulatory differences therefore exist across the region and, in some cases, technology regulation might not be the most pressing or significant issue for the relevant country regulators and the legislature.

Despite the inherent differences between the various countries that comprise the Latin America region the counsel who participated in the quantitative aspect of our research were near unanimous in their agreement that technology had become an essential component of any in-house lawyer’s role. Indeed, 96% of respondents reported using specialised legal tech within their departments, with only 11% saying that the use of technology within their legal department hadn’t changed in the last five years.

Says Ulian: ‘I believe legal technology is already helping us to work smarter and can make in-house teams more efficient, improve knowledge retention, accelerate professional development and reduce potential burnout.’

Making connections

Some general counsel stressed the importance of technology in bringing closeness among parties, be they internal, external, or even customers.

‘I think the future is about AI and connection, because as much as we can be connected now, we cannot connect things and people – AI helps with this. When you can make out as many links as you can between people and information – for example, you can now make a complete profile on and of anyone… This is powerful because I can have a conversation with them and convince them of something, because essentially, I know them now,’ Ulian explains.

‘We can see this when purchasing items on Amazon: when you buy a product, Amazon offers you other related products. This is embryonic and I think the future will be more like that. The more connected we are with information, the more connected we are with people.’

But on a more prosaic level, the existence of technology can foster a greater understanding between legal department and business partner.

‘We are now a lot closer to our clients, thanks to technology. Not only from a telecommunications and technology point of view, but also because we’re able to follow their work and provide support almost instantly. Now that we have significant information technology support, we can understand what the client’s business actually is,’ says Guvener.

‘Let me give you an example: we have a monitoring and evaluation platform where we gather all the information – this is not necessarily legal information. But, we do have the key performance indicators in there. We can look at it and identify the key challenges colleagues are facing. We can see if there is anything related to legal challenges. Therefore, we can pre-empt project implementation challenges before they become real bottlenecks for projects. The ability to work on legal documents in real time is a real big change.’

The human touch

Much discussion on the topic of technology centres on the issue of how much professionals have to fear from technological advancement. But many of the general counsel we spoke to were relaxed about any potential ‘threat’ posed by machines.

‘Technology is not here to replace a lawyer’s work, but rather to enhance it. There is a human factor that lawyers provide – interpretations, judgement, decisions, solutions and knowledge of legal systems and a particular business situation – that need to be part of the entire law system, that is why technology and human knowledge are complementary. On the other hand, if a lawyer keeps up with the different technological changes and embraces new technologies, the exercise of the legal profession will be improved. In fact, I believe you will become a better professional,’ says Juan Pablo Ovalle Arana, country counsel at IBM Colombia.

Rather than replacing lawyers, those we surveyed for this report were strongly in agreement that technology was a tool to be used to enhance the outcomes provided by lawyers, not replace them. 66% said that technology could enhance outcomes for in-house departments to a great extent, with a further 31% agreeing but to a moderate degree. Only 3% of respondents had a divergent opinion.

There was a sense among general counsel in the region that the increasing use of technology tools was unlikely to remove lawyers from a role as ultimate architect of legal solutions, primarily because of the importance of the human element in contributing to productive outcomes.

That humanity was defined as communicating through body language, reading through the lines, and responding to the emotional component of client representation, identifying the exceptions that prove the rule, and the quirks of life and law that build the richest understanding of any situation.

Applying emotional intelligence – be it with opposite parties negotiation or litigation, or in internal client interactions – is far from an exact science, yet the lawyer’s role relies heavily on these essential interpersonal skills alongside technical expertise. As in the healthcare profession, while a machine might contribute pinpoint accurate analysis and speed to a diagnosis or treatment, there is currently no automated substitute for bedside manner. For this reason, some of the general counsel we spoke to pointed out the limitations on true disruption to the legal profession, and the potential for hyperbole when applying buzzwords and jargon terms perhaps more suited to analysis of tech trends to the nuances of practising law. Rather than a discussion of disruption, those general counsel felt, a more accurate description of technology’s impact would be in terms of incremental time-savings rather than replacement of core duties.

‘There is an element of “frustration” that is recurrent for the legal professionals, and it is a client saying “My lawyer doesn’t understand me”. I have been in situations where I have to go through a call center bot and they give me a number of options, but I am not always sure that my question will fit any option. So, the interaction with the machine is not always perfect, and “the human touch” is still needed,’ says Ovalle Arana.

‘I think we, as lawyers, would need to learn to interact with new technologies such as Artificial Intelligence, Machine Learning and others. The work between man and technology has never been so important and efficient and it is up to us to take advantage of it to make our profession evolve.’

But, for some, even outside of AI and any mythology about the robotisation of the profession, the cold touch of technology can already be felt – ironically aided by the very tools developed to improve communication.

‘Today, you can negotiate and close a big deal without meeting the other party in person. That’s a dramatic change, because it allows you to work remotely, even in complex fields. The challenge is that by losing the personal touch, it will hurt the lawyers in their capacity to develop negotiation tactics and so forth,’ says Alberto Vergara, head of litigation for Scotiabank Chile.

‘You save cost in matters like travel and meetings but, on the other hand, you will lose some useful tools that only the experience of personal relationships provides to lawyers. Right now, you have general lawyers that don’t have external meetings – they work exclusively by their computers, so they don’t have any real relationship with their counterparties. I would say that is problematic.’

Most in-house counsel interviewed agreed that technology was a partner in the process – an increasingly unavoidable one – but not a rival. Yet support for technology in corporations, particularly legal departments, nevertheless butts up against frequent barriers.

Leadership

Unsurprisingly, support from corporate leadership is a prerequisite when it comes to weaving technology into the fabric of internal teams. Those at companies already well versed in technology often gravitate more quickly towards technological solutions.

There was a sense among some interviewees that timescales for innovation in more tech-based industry sectors could be truncated compared to more traditional sectors, or those with less of a technological provenance. Tech companies, for example, often enjoy a head start in the mindset of management, and a supportive attitude among the general workforce to tech or innovation-based change. These elements can help teams enjoy quicker productivity and efficiency gains than more traditional companies, who might be less open to technology culturally.

And, of course, expressions of support from leadership much be accompanied by practical encouragement – namely, financial support. Of those who participated in our report, 60% said their department had received an increase in budget for technology over the past five years. Those who had received an increase in budget were much more likely to cite technology as a strength of their legal team, at 71% (compared with 30% of those who hadn’t received an increase in budget), and to think that their company was well positioned with their use of technology, at 76% (versus 40%). Of course, the leadership of the legal team must be live to the necessity of obtaining budget specifically for technology – and, according to some, it’s a matter of outlook.

‘If the person that is leading the legal area doesn’t take the fact that they will need money for innovation or applying systems or technology into account when they are developing that budget, well, that’s a failure. It’s just because they haven’t thought about it,’ says Pablo Enrique Urrego Hernández, head of legal at Diageo Colombia.

‘What normally happens is, in the middle of the project, you ask the CEO to give you money for something you haven’t taken into account. Probably you can ask for some more money, but you must have already had the idea of developing that technology. You have to be smart. That’s why I say everything is part of the culture. If you have that in mind and it’s part of your DNA as a lawyer, you will be able to get the resources.’

For this, Urrego Hernández believes it is important for the GCs themselves to lead any example and model a progressive attitude towards embracing technology.

‘We need to develop leaders on these issues, and my challenge is to become a leader. I probably won’t be the one that will develop the systems, but I could be the one who can push everyone to understand that adopting these kind of systems is a good thing.’

Practical makes perfect

In a region as diverse as Latin America, practical constraints can be a common source of frustration among leaders eager to implement technology in multinational corporations.

‘We do have countries and projects where internet connectivity is an issue. In those cases, having world-class technological tools available to us can actually be time consuming and frustrating,’ explains Selim Guvener, general counsel for the International Potato Center.

‘We’ve been looking at how much can we do by teleconferencing rather than travelling, allowing us to have as much face-to-face interaction as possible – without having to travel across the world and contribute to global warming. On one hand, technology is developing significantly, but on the other, there are still parts of the continent that are lagging behind.’

Even when accessibility is not an issue, there might be competing systems in play. In rolling out a global contract life cycle management system, Bayer found it had to abandon systems in certain jurisdictions, for example.

‘In the past, each region had developed their own IT tool for contracts. Now that we are migrating to the new tool – which is the single tool which will be used by everyone – it creates an additional challenge for areas or regions that need to leave the tools that were already developed, and migrate to this too,’ says Alejandra Costa, head of law, patents and compliance for Central America, Caribbean and Andean region.

‘If you’re a big, global company, you also need to prove that this technology is in accordance with the entire IT project globally. Not just in terms of local security – because what you are doing on a local level can interfere in security – but you need to understand that everybody has to approve,’ adds Patricia Ulian, general counsel for Archer Daniels Midland Brazil.

Interface issues might also become apparent when engaging with external parties.

‘When you are outsourcing your services to a large number of outside counsels, it is natural that each and every law firm uses their own system and has their own routine. It is difficult to make sure that the external company is using your system or actually providing the information that your company requires,’ says Rafael Dantas, general counsel/director for legal and compliance Latin America at General Mills.

[Data] Private: Keep Out

Thinking globally has not only practical implications, but also regulatory ones, meaning that companies must stay compliant across the board – preparing themselves to be fit for purpose in the most rigorous regulatory regimes, even if this means appearing heavy-handed in jurisdictions with a less prescribed approach. Nowhere is this more evident than in the context of data protection, as Catalina Morales, data privacy manager for Central America and Caribbean at Bayer, discovered when implementing a global system to ensure compliance with the EU’s General Data Protection Regulation.

‘Obviously there were, at the beginning, rejections: why do I have to apply GDPR, locally it’s not applicable, I don’t process EU data. But, even though you don’t process EU data, you may be doing a clinical trial locally, and in that clinical trial the data is being sent to our headquarters in Germany – so there you should be complying with GDPR,’ she explains.

‘We had to explain every simple situation where GDPR could be involved to make them see that actually it was important for us to apply it, even though locally you don’t have an obligation.’

In Bayer’s case, the system in question acts as a repository for data processing activities, enabling swift and detailed mapping of what data is accessed and when. But, in other contexts, technology could muddy the data security waters in terms of risk and accountability.

‘The more digital we become in our work, the more difficult it is to establish network safety and security. So, at the same time, we need to educate the people who are using and accessing our network in order to protect it. This will require training and capacity building for our workforce,’ says Guvener.

A clear understanding of accountability in data processes must also be ensured, to avoid ‘the machine’ being blamed for data leaks, when the issue might be one of process or authority.

Winning hearts and mindsets

Across the board, a major challenge for those implementing changes in systems and processes is gaining the buy-in and support of team members. Those on the frontline of using new technology might raise myriad concerns, ranging from reluctance to adjust to a new way of working, doubts in the quality of the system itself, through to a more existential fear of being rendered redundant.

Those who participated in our research thought that, as a whole, the profession was not adequately prepared to adapt to technological changes. Only 22% of participants believed that today’s lawyers were properly prepared and equipped to embrace technology, despite 97% saying that their team members were receptive to its use.

‘I believe the first step is constructing a culture of digitalisation, automation and using technology so that people understand that these are tools that can make life easier and better. They are not competition, they will not replace a lawyer – in my team, every person is important. What I want to be able to do is to free capabilities – give my lawyers freedom to work on other issues,’ says Urrego Hernández.

‘If you have a lawyer spending time doing contracts, that’s not right! You need to liberate, create time for them to do all those things and be able to develop other skills. What technology can do is become a partner in that development – it’s their best ally for that. If people start to understand that technology is a partner and not an enemy, or a possible substitute for their job, that will change the progress of what we have been doing.’

For Urrego Hernández, such a culture change means not only approaching new technological systems and processes with an open mind, but with a willingness to share company information with external legal tech developers, in order to develop bespoke solutions.

‘You might not be able to find what you want because it’s not yet developed, but you can find someone able to develop it. But in order to find that ally, you have to be really open minded,’ he says.

‘They need information that might be confidential, or to understand problems that normally you would not talk about outside the company. But once you understand they are an ally and give them trust, everything goes more easily.’

It’s an oft-repeated thought that lawyers are conservative and slow to adapt to change when compared to those in other professional sectors. But some believe that it’s sometimes unfair to stigmatise lawyers in this way. Rather than comparing apples and oranges, it’s important to compare apples and apples, this thinking says: areas that involve much human interaction can’t simply replace entire thinking or decision-making processes, and perhaps those areas of the profession not seeing drastic technology-induced changes are those that require a large amount of additional insight on top of what technology can provide.

Not everyone agrees on the uniqueness – and, hence, immunity – of the law when it comes to technological innovation, however.

‘I think that lawyers believe they are not comparable. This is why we have sometimes not implemented technology. But I do think that our services are totally comparable to other areas that have already implemented these tools, like in accounting and finance teams. We are able and we can implement those tools – and there is no need to be afraid of that,’ says Costa.

‘I remember when we implemented digital signatures for several legal procedures, there was a lot of resistance from lawyers in the region, but now we use it on a regular basis and digital signatures are part of what we implement in contracts and data procedures. I think there are a lot of things that we can do and I think that legal departments are more than prepared to undertake this.’

The chicken and the egg

Across the board, across continents even, there is a sense, even among many in the legal profession, that use of technology lags behind in the law. If there is a reluctance for legal professionals to adopt technology when compared to other professions, there was some discussion about why.

Some of those who provided input for this report speculated that, perhaps due to its difficulty as a subject, many were avoiding law, choosing instead to train in other business areas such as marketing, business administration, and other areas that are useful in a globalised business world, and currently popular career choices. Perhaps law struggles with its (perhaps unfair) reputation as a stopper, rather than an enabler, and this is a disadvantage it in the innovation stakes.

If it is true that law is at times seen as a less attractive choice for potential candidates, is it the very lack of technology and innovation in the law that is deterring minds from a traditional legal career, and attracting them to a newer breed of company? Bruno Feigelson, lawyer, entrepreneur and president of the Brazilian Association of Lawtechs and Legaltechs, thinks this might be the case:

‘They asked associates in big law firms in Brazil if they dream to be partner one day. They don’t want to be partners, they are not happy with the way things happen, so these new structures, these new law firms, these new ways, are attracting the best talent,’ he says.

‘The big challenge for the big law firms in Brazil is how to attract the better brains to the law firms. They want people that understand how to use software, how to use design, how to understand the legal system in another way, they start to search for new opportunities. We have a lot of special persons doing law tech, trying with new law firms, so we have a new evolution with these new young people and also the youngest people from the legal departments, they are searching for another way.’

Regardless, it seems obvious that the various arms of the evolving ecosystem for legal solutions – in Latin America and globally – could benefit (and are doing so, in many cases) from cross-pollination. Especially in the world of tech, recognition is growing about the importance of having people from different areas share ideas and explore how synergies can be created. Engineers, lawyers, people from different disciplines, can share experiences, generating improvements and new ideas in the process, which can then be applied to solutions.

Winning the innovation battle

But, as those in-house will be quick to attest, the legal profession is very much a profession of two halves – and it is often in-house teams, in close partnership with other business functions, who lead the game when it comes to tech adoption.

Interestingly, when it comes to using technology, looking to external law firms for guidance remained a rarity. Only 35% of our respondents said that they were satisfied with the use of technology by their external firms, despite 86% saying it was somewhat or very important to them that their law firms keep abreast of new technologies. Only 26% said that they looked to their external firms for guidance when it comes to new technology, with even fewer – 18% – saying that their firms had offered to share or help with the implementation of tech systems.

‘In Latin America, and in Colombia specifically…there are just the typical law firms that have a hierarchical structure of partner, associate, staff and so on,’ says Urrego Hernández.

‘They have the old-fashioned way of working and trying to change that is like trying to break a bargain. They do not care much about innovation and, I have to say, it’s frustrating, because in-house legal teams are far ahead of the legal firms in terms of using technology and using these kinds of tools.’

It’s not true to say that law firms are trying to hold back the tides across the board, however, and some noted some flexibility and adaptability among external providers.

Feigelson is seeing the shoots of technological growth starting to show in the legal system in Brazil – evidenced by some law schools beginning to teach coding, and an increase in management approaches such as agile, conceived in the software development sector and often assisted by technology tools.

‘It’s very common in Brazil for the boards of the big companies to invite the CEO to go to Silicon Valley to understand how disruption is happening, in order to change the way of the future. So, the CEO goes there and they get completely brainwashed. They come back to Brazil, they hire a chief of innovation and they start to do things in another way,’ he says.

‘The legal department starts to be completely alone in the company, because the legal department knows how to work in the last century; they have some trouble connecting with and understanding these new ways within the big companies. So what we are living now in this moment is that the legal department is trying to be new. It’s very common for legal counsel to be trying to understand innovation, going to legal class about innovation, reading books about innovation.’

‘But I think the legal department is more advanced than the law firms – they are inside the companies, they are living this change, and they need to reconnect with this new world. So the reconnection of the legal world with this new reality of the fourth industrial revolution – it’s easier for legal departments than the law firms,’ he says.

The future

Recent years have seen an expansion of the role of the in-house lawyer in a number of different directions. Legal qualifications now sit at the centre of a wheel with an ever-increasing number of spokes, of which technology is one – in Latin America and across the globe – and to be equipped for future success (and relevance) legal professionals must keep their toolkit well maintained.

As Urrego Hernández aptly puts it: ‘You don’t have to spend your whole time being a lawyer, you have to spend your whole time being a lawyer that can fix problems, not just by using law, but by using other tools, other skills and other people to help you.’

Here at World Services Group, it is our pleasure to introduce you to the second in our series of GC special reports examining the present state of technology use by in-house legal departments around the globe.

Based on the stories and experiences shared as part of this report, there appears to be no denying that the use of technology in the legal sector is flourishing across Latin America. From blockchain-backed smart contracts to law firm relationship management software and everything in between, evolution is evident in all aspects of legal life – much of which is being driven by in-house legal departments. With positivity emanating and uptake rapidly increasing, the point of maturation for legal technology is not just on the horizon, but rapidly approaching.

As private practice lawyers, this means that we must also be at the vanguard of technological development. With the range of novel applications being implemented by forward-thinking counsel and their businesses, it is crucial that we understand the disruptive potential of technology in order to ensure that we remain relevant as trusted advisers in an ever-changing corporate environment. General counsel have made technology a business priority, which means that we must make it a business imperative.

Getting buy-in and leadership from all corners of the profession will be an essential component for long-term success. New solutions will require new thinking and, as the report reveals, implementing technology into legal functions is not always a straightforward matter. Considerations around the ethics of different innovations and the impact they can have on businesses and their legal departments is just one prominent example shared of the new challenges being faced by counsel of all walks. Oftentimes, these will have no clear and obvious precedent to follow, which speaks to the importance of engaging with members across the legal fraternity.

At World Services Group, we do not want to be passengers as our profession changes around us; we strive to be agents of change that help to facilitate progress. Partnering on projects like this provides us an opportunity to directly engage with thought leaders from across the legal world and glean insights into what the future of the legal profession may look like, as we collectively chart a renewed path for the practice of law and enable our member firms to add value for their clients.

Finally, I would like to extend my thanks on behalf of everyone at World Services Group to all of those who took the time to contribute their views and opinions as part of this project. The insights you’ve shared will undoubtedly ignite discussions and establish a dialogue about the impact technology stands to have on the legal sector – both in Latin America and further afield – but more importantly, help us all to consider how we can harness its potential for the betterment of everyone in our profession.

J. Michael Bernard

Chairman,
World Services Group

Equity Member,
Dykema

Since the beginning of the internet, the potential for technology to be exploited and misused has been a primary concern for policy makers. As technology has continued to expand and play an ever more prominent role in our everyday lives, these concerns have only broadened, becoming both more frequent and unique – and with each new technology comes a host of new ethical concerns.

As technology continues to evolve in the business world, while the legal profession may have been slow to adapt and progress, times are changing. The development of technologies such as machine learning and artificial intelligence are being applied to legal in an effort to reduce overheads, improve accuracy and boost efficiency. But despite the advantages legal tech brings, there remain concerns around technology and how it may implicate professional ethics.

In the research that underpinned this report, 18% of those surveyed said that implementing new technologies within their teams had raised ethical questions. On its surface, this would suggest that in the legal space, the use of technology was almost always done in an ethical fashion and didn’t raise concerns. But speaking in more detail with some of those counsel who had faced ethical issues painted a different picture, suggesting instead that many general counsel are not yet attuned to the new types of ethical questions arising.

Ethical by design

Just how technology is developed for, and used within, various legal functions is one source of significant ethical debate – particularly given the inherently secretive nature of the profession. One general counsel working in the banking sector, describes some of the ethical issues encountered with how legal software is applied.

‘In Brazil, we have a major problem dealing with the volume of mass litigation cases involving consumer and labour issues that we face. Here at the bank, we currently have over 120,000 active lawsuits.’

‘To help deal with this, I have software that allows me to access cases to find out what judges are doing, or have done, in cases related to my company and/or my competitors.’

Having software that enables counsel to quickly view other similar cases from the past is not revolutionary, but having cases analysed in order to provide suggested arguments according to the jurisdiction and the judge is.

‘The information is public, but this system can offer me suggestions on which versions of arguments would be best for certain judges. It can also help with predicting what may happen in my case.’

‘Using this, I can build a better defence or consider alternative options. For example, if the software revealed that I have a 70% chance of losing a case, I can use this information to propose that we may be better off agreeing to settle the case. Then, when it comes to working out a settlement, I have the statistical information that would allow me to know how many other similar cases have been settled. That provides me with the information that will help me decide how much money I should settle a lawsuit for.’

Using statistics and predictive capabilities in themselves is not inherently unethical, but the potential to build on this system in unethical ways is apparent. The potential for alternative sources of data that could be used to help build a better profile on judges and predict their behaviour is vast – social media is just one prominent example of this.

‘This kind of concern is being raised, but it is not a major concern right now. What may be an ethical concern is the data itself. The real problem arises only if you use confidential information, or if the data could be used to make correlations,’ says Marcelo de Araujo associate professor of philosophy of law at the Federal University of Rio de Janeiro.

De Araujo has worked closely with developing ethical protocols and codes for emerging technologies, including machine learning. He says that the data used to teach these systems can itself be an unintended source of ethical issues.

‘Machines can be influenced by human bias and emotions. If the original data is biased, the output delivered by the machine will also be biased. Machine learning will typically find out underlying patterns in the data set, a task that would take too much time and expertise for human beings to do unaided by AI systems,’ he says.

‘But if the original data set contains an unusual number of references to decisions that, for instance, marginalise black citizens, chances are that the prediction suggested by the AI system will reflect that kind of pattern.’

Alejandro Fernández R-B, head of legal at Cotemar, has grappled with similar issues.

‘In Mexico, when you have a labour case, mainly it’s because the former employee feels that he was entitled to receive a bigger compensation. Some cases, they are right; some cases, they are wrong.’

‘But the software might recommend that I can settle with them for a lower figure that they are entitled to. So, that is the ethical issue. Because in some part, I want to, and it’s my duty with the company, and on the other hand of course, I want to be fair with the former employees. So, that is an ethical issue that I am seeing as a result of this software.’

Show me the data

Since the implementation of the General Data Protection Regulation (GDPR), safeguarding data has not only been an ethical responsibility for general counsel, but a legal obligation. Many countries across Latin America have followed the lead of the European Union and aligned their existing regulations or introduced new laws around data protection.

Brazil’s suite of data protection laws are set to come into force in August 2020. The Lei Geral de Proteção de Dados (LGPD) stands to have a marked impact on business and broader society, with protections possibly set to be enshrined in constitutional law in the future.

‘The public at large increasingly perceives the protection of their personal data as a pressing question. There is now a new bill for an amendment to the Brazilian Constitution that would turn the protection of personal data into a fundamental right,’ explains de Araujo.

‘Most citizens seem to be aware that they are giving away too much personal information online, and that it is far from clear what private companies are currently doing with their personal data. Over the last few months, there have been reports of two cases of technical failures which compromised the personal data of 28,000 citizens in one case, and 70 million in another case.’

In both of these cases, the culprit was a government institution, heightening public awareness of data-related issues at a time when business is preparing for increased scrutiny with the introduction of the LGPD.

‘As a banking service, we provide credit cards to a lot of our clients. Using this data, I could learn, for example, that a client of the bank is going to the beach every weekend, because they buy something on the way there,’ says the banking GC.

‘The specifics of what you buy is information that is protected by law, but a bank could use other information from the transaction to try and sell the client a product. For instance, you could contact the client to try to sell them travel insurance, because you know that this person goes to the beach every weekend.’

Equally, it could be said it would be unethical if a bank were to use this information to discriminate against a client by developing assumptions based on spending patterns.

‘People who go to the beach every weekend could be discriminated against if I make a correlation with something else that affects their credit score. The client could call the bank and ask, “Why is my credit score affected?” Right now, if I say that our system says you go to the beach every weekend and your salary is $1,000, therefore you probably cannot pay your bills, we would face problems,’ explains a GC in the financial sector.

‘If we make a lot of correlations like this, we can face problems. This kind of model can become so sophisticated – it deals with a lot of data and one of the dangers is that this data could trigger a warning that says this person is a good or bad client for the bank. I think we could face real problems in the future.’

In order to address the potential for making such ethical and legal breaches, banks across Latin America have implemented measures to limit data access across a company.

‘We have a specific department here at the bank comprised of lawyers, software engineers, operations people and risk analysts. They analyse and see the flow of all data in the company and check to see if the information is sensitive or if it must be kept confidential,’ he says.

‘This team applies the law in order to protect the information of the people linked to these types of risks. I think we have this department in the bank after the implementation of the GDPR law and we are spreading this culture of data protection in banking – we are not only compliant to banking secrecy law, but for data protection. There is still a lot to do, but the bank is in a good shape’.

In the future, the implementation of new technology will only continue to make data collection and analysis more sophisticated and complex. Data protection has always given rise to ethical concerns for corporate counsel, but technology has made data security a major point of concern. With data breaches gaining global attention, some general counsel in Latin America believe that it will only be a matter of time before stricter global controls are implemented.

‘I really believe these types of regulations will become global at some point. Maybe the United Nations or another global entity will try to implement regulations that are more globally focused, but I would guess that, regardless, the principles surrounding data protection will all be the same,’ says Pablo Enrique Urrego Hernández, head of legal at Diageo Colombia.

Will Siri practice law?

Separate to the ethical concerns raised from algorithmic bias and data protection are the fears surrounding legal tech’s potential to replace lawyers.

‘Some people believe that there is an ethical discussion surrounding legal software that could attempt to destroy the value lawyers bring,’ explains Urrego Hernández.

‘If you develop software that could replace lawyers, then essentially a lawyer could be replaced by a machine. The idea of technology is not to be viewed as a risk to job opportunities, but instead as a tool that could help lawyers focus on tasks that are much bigger and add more value.’

Despite the way legal tech is viewed, its potential to be an industry disrupter is generally accepted. Of the more than 200 general counsel surveyed across Latin America for this report, 84% thought that technology would be a moderate to great disrupter over the next five years.

‘What will probably happen is that systems will be so highly developed and so detailed on what we want them to do, that tech will probably not take into account any human emotion. There are so many factors and possibilities that could be used to create a system that could probably emulate repetition, but, in the end the human factor is key,’ says Urrego Hernández.

‘At the moment, there is not true artificial intelligence – I do not know whether this could change in the future – but, up until now, there has been no system that can replace human behaviours and ways of thinking.’

Legal tech across Latin America, like much of the world, is still in its development stage. Most of its implementation has revolved around low-level work but, as technology continues to develop, the issues that could be raised by legal tech are still fundamentally unknown.

‘Experience has taught me that while you develop these things, you start seeing issues you have never seen before, and there is no doubt that the future of legal tech will present many barriers that will need to be addressed. At the moment, what we need is to be objective, although imagination is powerful and out-of-the-box thinking is good,’ says Urrego Hernández.

‘The list of ethical concerns that could be raised by new technology is extremely extensive. What should happen is that ethics should be part of your life. At the end of the day, ethics should be one of those main considerations that you have to take into account in every aspect of your life.’

Whether in-house counsel across Latin America resist or embrace technology, legal tech will inevitably transform the delivery of legal services, though not without a host of other issues to contend with. Ethical conduct will remain pivotal to ensuring the legal profession remains independent, effective and accountable.