Per Hoffman, vice president and head of legal affairs and sourcing, North East Asia, Ericsson

Asia is a very impressive part of the world where people are generally more technologically driven. It is this drive that motivates companies to continuously innovate. Asians are generally early adopters of tech, and customers are very advanced when it comes to embracing new technology.

When I compare Asia to Europe everything is on a much larger scale. The pace of innovation is unprecedented. Technology is being embraced across Asia, but it is China that is leading the way in technological innovation and development. The pace of development in China is particularly interesting.

For example, when it comes to moneyless payments, China is the most advanced market in the world. I rarely need to carry a wallet anymore as everything can be paid for via a mobile phone. Beijing is one of the biggest startup hubs for tech companies and a leading place for AI technology, research and development. Generally, the consumer and enterprise markets are massive, and therefore the potential for developing and implementing tech is apparent.

Ericsson has an established presence in China, where it occupies nearly half the market for mobile systems. In recent times, Ericsson has strengthened its market share by winning 5G contracts with three major operators in China.

The importance of technological innovation has been cast into the spotlight in recent months. Legal teams across Asia have embraced standardised technology to remain connected. We are using Microsoft Teams and SharePoint products. These platforms provide a collaborative area, where teams across the region can work together, for example to review documents. We are considering introducing a new e-billing system when working with our external law firms. From a contract management perspective, we have various repositories for sales and sourcing agreements.

Today, there are contract databases where you can search for templates and find various clauses. The next step will be AI based search engines, where the platform is itself intelligent and an evolving algorithm informs the search results. It is quite amazing to think about the opportunities associated with AI when applied to legal work. We will eventually be able to predict problems before they arise; we will know if something may cause an issue in a contract before finalising a deal.

Despite all the advantages brought by legal tech, going completely digital this year has not always been an easy task. Technology cannot replace the atmosphere of a meeting room or the human connections shared between individuals. Working remotely also makes it more difficult to introduce new employees into an office. You learn a lot from seeing how members of a team behave and react to others.

Nevertheless, technology can also be used to bring legal teams together. Managing legal operations across five countries means video conferences and meetings are crucialPreviously, we spent a lot of time travelling to meet internal stakeholders, customers and suppliers. Travelling would take up a significant amount of time. But since the pandemic, people have adjusted. One positive is that meetings are typically condensed and well prepared. In this sense technology has driven efficiency, or at any rate it has led to people using their time more effectively.

As we look to the future, technology is expected to play a key role in improving legal services, and within the next five years artificial intelligence will play a significant role in transforming the legal profession. As thing stand, it is rarely used by legal teams, but the potential this technology has is revolutionary.

Greg Chew, general counsel and chief legal officer, Nanyang Technological University (NTU)

Legal innovation is not only about technology, but the way lawyers operate. Most lawyers used to see an in-house role as a way of having better work life balance – this has changed and so have the expectations around them. To be a legal innovator you need to be a solution provider. Technical expertise is a given, being a solution provider is the next step, and the final and more significant part of legal innovation is being a thought leader.

Even though Nanyang Technological University, Singapore (NTU) is a public funded university and a charity, we have leveraged our digital tools very significantly.

When I joined NTU two years ago we were getting contract approvals through email or manually by paper, with several signatories required at the executive committee level. We retooled Adobe Sign, our e-signing platform, to use it, in parallel to e-signing, as an approval workflow system. We were able to do this by using existing licenses, and the new process has been extremely successful and well received.

The lesson is that legal innovation doesn’t always mean spending a lot of money.

The second tool we implemented is Convene, a piece of board management software. We transformed our governance architecture by migrating, as of late 2019, our resolutions, meeting minutes, and corporate instrument documents to this platform. Previously, these documents were circulated by emails. This is still fairly novel for a lot of organisations, and possibly for universities which tend to be slower to adopt certain technologies. We wanted to demonstrate that we could move ahead despite this.

Greg Chew

In most organisations, if you need IT support you log a ticket, and someone will get back to you to say “got your ticket”. We realised we could leverage this system as a workflow tool, not only to track case assignment to, or workload of, our legal officers, but to better understand data analytics – the quantity and quality of the work we’re doing. For this we used a platform called ServiceNow, an enterprise workflow tool.

This system was not ordinarily meant for that purpose, the employees that use it are IT, housing and facilities, the construction team etc. but we leveraged on the platform and licences that were already there. We have now gone digital for legal support requests.

We also embarked on legal process outsourcing (LPO) to handle growing contract demands, which you might think would be based in Asia but is in fact based in Europe. Legal innovation is not confined to home locations, especially with our current global situation.

In future we will look to implement a chatbot for legal help, so questions like “How do I get my contract approved?” and “Where do I get a template for this NDA?”  can be processed. NTU has about 10,000 staff at the University and is the number 47 ranked institution in the world according to recent rankings. We want robust systems and processes that match our research and academic standards and ambitions.

Legal tech challenges lawyers to add value beyond what they ordinarily do. The things we were spending a lot of administrative time on are now being absorbed by legal tech, so we really need to show the value that we add. In the context of new legal tech coming in, we would rather preserve headcount and leverage technology than grow headcount, but at the same time, we want to upskill team members so we don’t have to deal with rightsizing when the time comes.  We can say we will invest more in technology instead of hiring more people and add skills we don’t have today.

As lawyers we can still be very traditional in our mindset; we see ourselves as subject matter experts and are typically conservative going into fields we don’t know. Some of the Singapore law firms are now realising there’s a gap in the market and have now started to set up companies as spin offs from their own law firms. They’re limiting those companies to legal tech, with set up of legal tech tools which they can offer to their clients.

But what we need to do as a profession is explore how we work in adjacent fields that are not necessarily related to our subject matter expertise. Over time automation and AI tools will get better, so the question is, what is the gap the lawyer has to fill? Those who are very specialised (like tax lawyers) will continue as before. But what does the other type of lawyer do? What’s different about them? I think they’re the ones who will define the future of lawyering.

Janette Loh, General Counsel, Canon Singapore

I’m certainly not someone others would describe as tech-savvy, but I do believe in the value of digital transformation at every level and am constantly reviewing and re-reviewing tech solutions in the market. For example, some years back, contract automation solutions were generally cost prohibitive, but I have noted that in recent years they have become more cost efficient.

A lot of the legal tech we use is developed in-house. The first project we embarked on is a contract management system we call iCON, which allows internal clients to self-manage ownership and archiving of their contracts while allowing the legal team ease of search and oversight. Auto-alerts can also be customised to remind contract owners on impending contract expiry.

We moved on to develop iASK, a legal services request system. This works like a ticketing system and helps us monitor and track requests from other divisions in a more efficient manner. The status and response times of requests can be tracked, along with history of contract negotiations with specific external parties for reference in new transactions. More importantly, iASK also acts as an internal knowledge database to understand better how certain requests were handled for consistency and facilitate knowledge transfer for new joinees.

Over time, we’ve expanded this to be able to assign requests to different teams within the function such as intellectual property and product regulatory. We are also able to loop in matters from other Canon companies under our supervision in this region. As Canon Singapore is the regional headquarters for Canon sales and marketing business in South Asia and Southeast Asia, this helps us to capture matters carried out not just in Singapore but at the regional level as well.

The latest tech we’ve been working on is called iREG, which is a derivative of iCON. Instead of contracts, iREG will be used to record all licences and certifications that are related to our business and products. The system allows stakeholders to track the status of things like licenses or certifications and trigger actions to be taken. The interface allows stakeholders to easily obtain a snapshot of the business and product regulatory compliance in our region. Users are also able to tag products to specific requirements so that in the absence of a requisite license or certification for any product, red flag alerts are triggered.

We hope to integrate this with our order and shipping system to minimise the risk of shipment of products which may not have fulfilled the requisite regulatory requirements for going to market.

This year, I started overseeing the Quality Environmental Health and Safety function (QEHS) and inherited another in-house developed system called iDOC, a policy management system that allows users to upload new division or company level policies and escalate them for approval prior to the eventual publication and notification to the whole company through an auto-link to our internal company webpage.

At our team level, I advocated some years back the use of what we call the Activity Log System, which is similar to the system law firms use to record their lawyers’ time costs. While there wasn’t then an immediate need for such data, I foresaw the necessity to address matters ranging from internal or cross company charging, tracking productivity at both individual and team level and understanding better the nature of work conducted.

I was fortunate to be able to leverage our IT team’s existing system with minor customisations to suit my objectives.  It took a while for my team members in the region to get used to the concept of keying in time costs. However, I believe in recent years, they have learnt to appreciate the value of this brings. It has also been a useful tool for me in explaining and justifying head count replacements when necessary.

In terms of external resources, we use DocuSign as an e-contracting solution. Our contract volume may be relatively lower compared to other industries and electronic contracting is still curtailed in certain jurisdictions within the region under our care. However, we recognise the value of a tracked electronic contracting process and I wanted to embark on it early.

Collaboration between legal and IT is clearly key in the development of bespoke tools. A critical factor for a successful collaboration is ensuring that we do not take our IT resources for granted (which tends to be the case where internal costs are not so visual). As such, I fully support our IT’s team recent efforts in helping their internal clients visualise the IT resources and cost expended for each project better. They are after all a service provider to us as we are a service provider to our internal clients.

I suppose legal tech invariably leads to a discussion on the use of AI. I have spoken with other GCs who have used artificial intelligence to understand better its practical value. At the basic level, for example in terms of automated contract generation, there is certainly value. However, extending its use to a larger scope such as contract reviews may have differing levels of output value depending on the organisation’s needs and the source data it can provide. There are also concerns of output reliability and risks and responsibility.

Kenji Tagaya, general counsel, executive officer and head of the legal group, JERA

JERA is one of the largest energy companies in Japan but it is also a relatively new company established as a joint venture between Tokyo Electric Power and Chubu Electric Power.

Having a short history has in fact helped us to onboard legal technology. If our company had a history of a hundred years, it would be almost impossible to fundamentally change the way the legal group works because there would be so much tradition built up that the organisation would be very resistant to change. With a new business one finds that nothing is set in stone. We are also fortunate to receive strong support from our ICT group, which is leading the digital transformation of our company.

But even with a young company, doing something new and bringing in a big change is not easy. One must secure budget and buy-in from management. One must also acknowledge the fact that Japan is a very traditional culture when it comes to doing business. Historically, Japanese companies have relied on paper, ink and physical signatures or seals to confirm documents.

However, COVID-19 has forced companies to examine technological solutions and embrace non-traditional working practices. This may have opened their eyes to the possibilities that technology provides, which will lead to a corresponding increase in demand. We are now able to get corporate approval at all levels via electronic confirmations, and paperless working is moving ahead throughout the company.

We are currently introducing and deploying contractual review legal technology. We introduced two [tech providers] for contractual review purposes, one English and one Japanese. I find this necessary as a Japanese solution is needed for Japanese-language documents and an international provider is needed for English-language documents. Some international companies also claim that they have Japanese language adaptability, but the quality is limited because of the nature of AI. Unless they process a huge amount of data, the AI will not grow to a level of capability that satisfies us.

The next area we would like to incorporate legal tech into will be that of workflow management. At the moment, all of this work is undertaken manually; we pick up the phone or receive emails and the consultation starts. In the future we would like to introduce management software to assist this process.

While not all our legal staff are equally eager for legal tech, particularly if they feel learning a new way of doing things will be time consuming, the technology we have introduced so far has proved to be very successful.

We would like to be even more ambitious with the technology we introduce, but we have not got there yet. Take something like document management systems. Transitioning to this type of software is so complicated that we are not sure which supplier is the right fit for us, or whether any company is able to do what we need. We are watching and waiting for the market to evolve.

Naturally, given the company’s size, the legal group’s work is on a global scale, and we need to work with both Japanese and English language documents. The uniqueness of language is one factor as to why Japan does not have as advanced a legal tech sector as other mature economies such as the US or UK. Japan is to some extent isolated from the global market because of this. It is making some headway in catching up, especially due to the COVID situation, and will hopefully progress further.

I firmly believe that the trend of increased legal tech adoption in Japan will continue and we will see an increasing number of companies introducing some sort of legal tech, whether that is document management, contract review or higher-end AI solutions.

We are looking for improvements to our legal technology in most areas. Although I believe we are a bit ahead of the curve in terms of openness to technology adoption, our use of legal tech is limited to contractual review and the contractual review itself – we are talking about relatively standard documents.

If technology advances and other areas can be also processed by legal tech, then the accuracy and efficiency of our work will be significantly higher, which is why we are looking out for new products and evaluating them on an individual basis. Adopting advanced technology to assist the company is one of our top priorities over the foreseeable future.

Sheldon Renkema, general manager legal, Wesfarmers

It’s fair to say that legal operations in Australia has evolved differently to the US, where businesses typically have much larger legal functions with many more lawyers in the organisation. There’s quite a sophisticated supporting structure around all of that which has effectively been brought into the legal operations umbrella. Australia is a little different.

The Corporate Legal Operations Consortium (CLOC) in Australia evolved out of a desire to bring together a group of legal staff working at some of the larger companies who had an interest in sharing things that we were learning through our operational improvement initiatives. That included technology but it also included other less tech-focused initiatives aimed at just improving our efficiency and service delivery.

CLOC, particularly in the US, also has quite an extensive array of online resources and online collaboration tools, including some active chat forums where people ask information about what’s happening, and seek insights from other CLOC members that might help them with particular problems that they’re facing or issues they need to solve. In the last year or so, CLOC has also put in place a law firm membership so that external legal service providers can share what they’re doing from an operational improvement perspective.

Sheldon Renkema, general legal manager, Wesfarmers

Legal operational enhancement can be a real challenge if you’re starting entirely from the ground up. One of the great things about CLOC is that you can very easily learn from what others are doing, so that you’re not reinventing the wheel. You are learning from others’ experiences, which makes it a really good forum for embarking on that journey, connecting with people who’ve been through similar experiences and being able to benefit from their experience of the things that have gone well or not gone well in that context.

It’s very difficult to actually objectively assess whether what legal tech providers are saying their product or service delivers is actually what it delivers. Being able to leverage the experience of people who have used those products and services to see what the actual output is helpful.

In my own in-house legal department, we were using an array of technology from the very basic, starting out at the bottom end in terms of core functionality, things like an internal matter management system, which generates data about what the team is doing and feeds into reporting on what we’re up to. We also have a document management system as well, that allows for ready storage of documents.

We’ve built a number of these tools, for example, a self-serve non-disclosure agreement tool that allows people in our businesses – without having contact with a lawyer – to be able to generate and execute a compliant confidentiality agreement. There’s also marketing review tools and a contract review tool that we’ve built and are continuing to evolve. Our objective is to identify processes that our lawyers would otherwise do that are not particularly complex and not particularly strategically significant. And where we can, making use of a tool so that can be done within the business in a user-friendly way that manages the risk.

Going forward, we are exploring the use of more sophisticated tools, particularly more advanced document review technology. The idea is to do an 80/20 review of incoming contracts so that against some key parameters that we’ve identified so that it really helps the lawyers to narrow down their focus on what’s really important in terms of those contract reviews.

We are fortunate in our business that we are relatively free to look at using technology ourselves, although there is some formality in the process. We have to ensure the software we are interested in complies with our data security frameworks, so everything needs to be reviewed by our cybersecurity team to make sure that it is compliant with our standards. The other – perhaps obvious – issue is fitting it into our budget. Aside from these issues, though, there is a fair bit of freedom for us to explore and test different offerings.

I would make the observation that lawyers increasingly need to be at least attuned to technologies and what they do. There’s an open argument as to whether lawyers need to be capable in skills like coding et cetera, my view is that this is probably not necessary but that they at least they need to be familiar with the technologies that are available, and need to be comfortable living with these.

Lawyers who are beginning their careers now are going to be looking at a very different way of practicing in 10 or 20 years’ time, and they need to be adaptable to that. Some have said that what is really important for lawyers is perhaps not so much blackletter expertise but around building empathy and their soft skills development. I think there’s certainly some wisdom in that.

Xae Hoyy Loh, general counsel and compliance officer, Pilmico International

Legal technology is something we have been exploring long before COVID-19 arrived, but the current pandemic has certainly forced us to fast track projects that we had been planning for the future. I would not say that we are using sophisticated systems – in our market sector it is not necessary to be at the cutting edge – but we have found ourselves using much more technology.

At the beginning of this pandemic there were obstacles to overcome, because we just didn’t know what to expect. No one knew how long the ‘work from home’ situation would last, but I don’t think anyone expected it to last for so long.

As general counsel and compliance officer for the entire food group at Pilmico, I am essentially managing legal work throughout the region. This can be difficult, especially as I am dealing with a range of jurisdictions with different laws on a daily basis. There is no real legal or regulatory alignment across the ASEAN region, which is certainly an obstacle to introducing new tech-enabled processes.

Most legal tech innovations I have come across have originated in Singapore. This is of course partly the result of Singapore’s strong culture of innovation, and the generous funding available for such initiatives, but it also depends to some extent on the regulatory environment. For example, Singapore recognises e-signatures, while countries such as Indonesia do not. As such, a platform which is supposed to lighten the burden by implementing e-signatures is not much use to a business that has a pan-Asia Pacific footprint.

From an operational perspective, things can get even more tricky. Remote working has impacted our operations throughout the Asia Pacific region, which means we not only have to focus on tools that can help our employees at headquarters in Singapore, but for all our staff across various markets.

Over the past few months, technology-driven developments and initiatives designed to make working from home easier have been prioritised. We have rolled out a new console system within the team to help us manage legal files. This has been very useful in making sure we retain and track important documents. This system was initially going to be introduced in the second half of next year, but we fast-tracked the initiative to help assist the transition towards working from home.

The experience has helped me see that in many areas we were still working in a very traditional way. For example, I would review a Word document, send it via email to the other party for review before receiving a marked-up copy for further review. When you look at documents being reviewed in this way, you end up creating many drafts and different versions of one document.

Being forced to adopt new solutions has certainly shown me that it is not the only way to do things. Even something as simple as Google Docs can help solve this issue, but I am increasingly interested in exploring the more sophisticated solutions that are available, such as a one-stop-shop that assists with drafting, reviewing, signing and retaining documents, as well as assisting with contract templates.

The biggest impact technology has made during the lockdown is in terms of how we share information and knowledge. We are now using virtual meeting platforms on a daily basis, sometimes several times a day. I suppose that shows that, for many tasks, there is no substitute for personal contact. We still need to discuss and exchange ideas, but perhaps the way in which we deliver our services will continue to evolve. However, I would say that we now spend more time interacting with our colleagues outside Singapore than ever before. If anything, the inability to travel has brought the wider team closer together. 

Chek Tsang Foo, SVP, deputy general counsel, NTT

When I moved in-house around 20 years ago I knew I wanted to work in the IT industry. The pace of change made it the most exciting place for a lawyer to work, and I have been in the front row ever since. While many of the business technologies we use on a daily basis have evolved rapidly, the technologies enabling support functions have been much slower to take off. Until now.

Onboarding legal tech used to be a matter of trial and error. The technologies on offer felt like a solution looking for a problem, and while there was a lot of interest surrounding legal tech it was difficult to make a concrete use-case for what was available. In the last few years, new systems for contract management and document discovery have appeared on the market and are now extremely helpful for in-house legal teams.

These improvements have little to do with technological development – after all, similar systems have been available to businesses for many years – they result from the growing recognition in-house counsel are a viable market for software vendors’ products services. With the growing economic significance of in-house lawyers as a consumer group, the market has finally moved to develop solutions that meet our needs, which are very different to those of law firms.

For in-house lawyers technology has to be easy to use. It needs to work with other systems and align with existing work workflows, and it has to give functionalities that are fit for purpose. All this needs to be backed up by high-levels of support in terms of training and other assistance. In short, in-house lawyers are not looking for off-the-shelf solutions, we are looking outcome-oriented vendors who are able to work collaboratively to meet our needs.

This collaboration needs to begin at the concept and design stage of a piece of software. Knowing the pain points GCs face, or what does and does not work within a typical company environment would help a great deal in making a system that is fit for purpose. For GCs, the price of a system is not just the cost of the license fee. It is also the time spent customising the software, the effort that goes into implementing the software, and the change management and project management requirements that come with it. We have gone through this cycle many times in the past, so we are extremely aware of it.

At all large businesses the legal team works in an ecosystem. This means when we are purchasing external legal tech, we are looking for products that can scale out. Contract management tools, for instance, can be used for other things. That makes a huge difference in terms of bang for your buck. We are really looking to leverage company-wide platforms.

The other big development I have seen in the legal tech space is a growing awareness among GCs that they need to take control of their team’s transformation. Legal tech is not always about finding external solutions. Often, it is just as important to look within. Currently we are looking at leveraging company-wide platforms as a set of collaborative tools that we can use, ideally with no need to integrate any foreign software or systems into our own ecosystem. We are also leveraging enterprise systems and customising them for our requirements. These systems may not have been designed to meet our needs, but they can nevertheless be extremely useful. It is all about being creative and experimenting with the technology you have available to you.

In the same vein, we have also developed tools within our own function. For example, my in-house legal team created a contract risk scoring tool three years ago. We use it to provide a numerical risk rating to contracts, assessed against our internal legal risk policy and tolerances. We have also built in a traffic-light feature based on the ratings. The tool has since been incorporated into the region’s enterprise deal assessment system, which takes into account assessments from other functions as well.

With all these developments, the next few years look set to a transformational period for legal teams. Legal tech will not just change how fast we work, but what we work on. As technology matures, routine and repetitive work can effectively be automated. This frees up bandwidth for internal lawyers to do more complex work that requires creativity. It will allow us to spend much more time on things like negotiations, strategic planning and resolving complex matters. That is cause for optimism. Perhaps technology will help solve the modern in-house counsel’s struggle for sufficient bandwidth.

Overview: Brazil

It is not news that the role of in-house counsel has become increasingly demanding and complex. The flip side to that is that the in-house counsel role has become even more strategic, challenging and stimulating than it was 5 or 10 years ago.

We live in a world which is much more regulated than it was a few years ago, which moves and reacts at a much faster pace than before, in a world where the risks (legal, reputational and others) that general counsel has to help manage, mitigate and protect from are several and diverse in nature.

Below, in summarized form, is an attempt to describe some of the most relevant themes sitting atop of the agenda of general counsel across the country.

Data privacy and cybersecurity issues

The Brazilian GDPR, or LGPD, will soon come into force. At the time of writing, the Brazilian Congress is still debating whether to bring LGPD into force on August 2020 or postpone its enactment to May 2021.

In any event this is a concrete fact in the horizon of all businesses and their legal departments. To the extent these businesses are subsidiaries of companies subject to European or US data protection laws less adaption to comply with local regulations will be required, but at the very least some compliance effort will be necessary.

Beyond LGPD, cybersecurity and electronic fraud in general are increasingly seen as by in-house legal teams, which are called upon to deal with all aspects and repercussions of security breaches of companies’ electronic systems, from a data privacy, consumer and/or criminal law perspective.

Fake news

When we hear the expression ‘fake news’ we usually think of it purely in the political context. The truth is that a number of professionals and business are attacked by producers of fake news everyday with an aim to harm their reputation and gain undue market advantage for competing businesses. In Brazil this huge new problem is compounded by the additional difficulty that the crimes of slander, libel etc and their penalties were designed for a time when fake news would spread by analog means, and thus the potential of harm was smaller. Currently there is a bill of law dealing specifically with the issue of fake news being analyzed by Brazilian Congress and the Brazilian Supreme Court is conducting an investigation on the subject.

Tax Reform

With the Brazilian Federal Government and Congress refocusing on the legislative reform after being sidetracked by COVID-19, the first item on the agenda is the Tax Reform. Each of the Federal Government and Congress have proposed and are supporting different bills of law addressing the tax reform. Until this situation is resolved and a common project negotiated it is unclear if, when and how the reform will shape up.

The new tax rules will be a challenge for everyone until fully understood by market agents and interpreted by the administrative and judicial courts. Some of the changes being potentially contemplated are substantial and can have a significant impact on businesses. The legal and business community are paying close attention to the matter and lobbying for the positions they advocate. The Tax Reform will keep both in-house and external counsel busy for quite a while, before and after the approval of the new rules.

Restructuring

Another challenge/opportunity for in-house counsel is the current situation of financial distress for many businesses provoked by the COVID-19 pandemic. This should allow for exposure on the renegotiation of the company’s debts, and sometimes in the Brazilian processes of Recuperação Extra-Judicial and Recuperação Judicial (respectfully pre-packaged reorganization and court-supervised reorganization), hopefully negotiating with the creditors and approving it with the court, as the case may be, the restructuring plan for the company. Conversely, when in-house counsel is employed by a business that is capitalized and seeking acquisitions/consolidation or debt acquisition opportunities, in-house counsel can exercise their legal creativity to the maximum.

We expect the next couple of years to present plenty of these opportunities, which we know come at a heavy cost for many in-house counsel because it generates the pressure to lay-off part of the team, the fear to lose one’s job and all the mental distress that comes with these situations.

Anticorruption

Since the enactment of the Brazilian anticorruption law in 2013 and the beginning of Operation Car Wash, anticorruption compliance and prevention has been at the forefront of the agenda of most businesses and legal departments in Brazil. This is a trend which came to stay and became part of the day to day of in-house counsel, sometimes adding people to the general counsel’s team and more often simply adding regulatory complexity and responsibility in cases where organizational structures do not provide for a separate integrity/anticorruption function lead by another professional.

The state of ESG (environment, sustainability, governance) in Brazil

The discussion around ESG is still in its very early stages in Brazil, certainly less advanced than in the US or Europe. Nevertheless, after the latest annual letter to investors from the CEO of BlackRock and the endorsements that ESG policies have received by a representative group of CEOs of a number of S&P 500 companies, the finance and business world may be coming to realize the size of the environmental threat not only to our health and planet but also to the economy.

When one recognizes the pressure being exercised on the Brazilian Government in light of the illegal burning and deforestation that is taking place in the Amazon, and the strong reaction of world leaders and private investors – both foreign and domestic – it becomes clear that the environment and sustainable practices, together with good governance, are a much bigger concern than ever before for businesses, their customers and, consequently, the general counsel and her team.

Privatizations, concessions and the new role of the BNDES

Another interesting development we are observing stems from the new role attributed to the National Economic and Social Development Bank – BNDES by finance minister Paulo Guedes.

BNDES in the past would finance, through debt and equity instruments, a huge portion of all infrastructure build-out in Brazil plus virtually all its large corporates. This has changed and BNDES is rapidly divesting of various equity stakes it held in publicly-held companies, state owned or not. The most recent example was a block trade of Vale’s shares for R$8.1bn (approximately US$1.5bn) on 4 August 2020, arguably the largest block trade in Latin America’s history.

Additionally, BNDES is in charge of executing the Federal Government’s privatization program and assists, whenever called upon, Brazilian States and Municipalities with their own privatization, concession and PPPs programs. This is an interesting development which provides in-house and outside counsel alike with ample opportunities.

Similarly, PETROBRAS continues to divest from a number of assets, providing for opportunities both on the acquisition and potential buyers’ finance sides.

New and not so new preoccupations of general counsel

Given the increased pressure to deliver more with less resources, general counsel in Brazil have embraced innovation in general, and technology in particular, from within their own company and also from their vendors, be it a law firm, a legal service provider, a Big Four or a lawtech. Competition has never been so intense, but at the same time there are more opportunities to innovate and create new needs that clients did not know they had.

Diversity is another big item on most general counsel’s agenda. Nothing new, obviously, but relevant, especially in an environment where not only women face challenges, but where the LGBTI+, the black and mulato and purely economically disadvantaged populations are given much less opportunity. It is important to acknowledge that the largest companies and law firms have made good progress in the last few years, which is encouraging. However, there is still a lot to be done.

Two other topics frequently mentioned by general counsels are (i) mental wellness related issues in their companies, in their teams and in the profession, and (ii) pro bono legal work. General counsel are trying a number of measures to keep their people happy and healthy at work and this seems to be a fairly high priority for many of them.

Pro bono became more widespread in Brazil in the last decade and many of the more sophisticated firms run more or less structured pro bono programs. Interestingly, very few general counsel based in Brazil seem to take this into consideration in their hiring decisions compared to their foreign counterparts. We expect this to change and to become more important to them going forward. We certainly hope so as it would be a movement in the right direction.

The changing needs of in-house counsel and the challenges they face inside the company

This article would be incomplete without mentioning the current needs of general counsel and their teams in the challenges they face daily in delivering to their internal clients and other stakeholders of their businesses.

We continue to hear that law firms still tend to think more about what is good for them instead of for their clients. We continue to hear that law firms do not listen, do not innovate and do not engage in true dialogue with their clients as to what their needs are and how they can collaborate together. Conversely and to be fair, we sometimes hear the same speech from managing partners of other firms: that the majority of general counsel do not engage in true dialogue with their firms as to what their needs are and how they can collaborate together.

It seems that someone ought to take the initiative of this conversation. Considering that law firms are the service providers in this relationship and usually well paid to deliver solutions, we are of the opinion that law firms should overcome their old ways and their fear to get in front of the client somewhat vulnerably because they will not have all the answers, venture out of their comfort zone and take the first step. Whoever does that earnestly, consistently and diligently has a much higher chance of success at developing a closer and more meaningful relationship with its clients.  

 

*The author would like to acknowledge the contributions made to this article by his partners, for which he is very grateful.


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Overview: Nicaragua

According to official figures, Nicaragua has maintained a growth rate of 4.7% and 4.5% in 2016 and 2017 respectively. However, due to the social and political unrest that the country has experienced since April 2018, the economy has slowed down. According to the Central Bank of Nicaragua, for 2018 the economy contracted by 5.016%.

Despite this, Nicaragua offers significant tax incentives in many industries, including import duty exemptions, property tax incentives and income tax relief. The country has a well-established free trade zone regime with significant foreign investments in textiles, car harnesses, medical equipment, call centers and back-office services. The construction sector has also attracted significant investments, driven by large infrastructure and housing projects, as well as by the telecoms sector, resulting in increased coverage of mobile telephony and broadband.

In reference to the current crisis derived from the arrival of COVID-19, the State of Nicaragua has not issued pronouncements or decreed the application of labor measures. For this reason, the employment sector has been implementing the tools or measures established by the Labor Code for events of force majeure and that affect the survival of workplaces. The main measures are:

  1. Collective suspension of employment contracts.
  2. Individual suspension by mutual agreement for a specified period.
  3. Cancellation of employment contracts as a result of the company’s request for definitive cease.
  4. Partial hiring to continue operations with a minimum of workers.
  5. Bilateral vacation enjoyment agreement between employer and worker.
  6. Reduction of shifts. The employer may decide on a shorter working day without a salary reduction.

Additionally, telecommuting is largely being applied despite the fact that it is not regulated by current labor legislation. Telecommuting can be implemented taking into consideration the same minimum rules and rights and guarantees for the benefit of workers established in local laws.

When it comes to the post-pandemic job market opportunities, it is very difficult to be able to predetermine Nicaragua’s short-term future. Many companies have been reducing operations. Despite this, the Government of Nicaragua has not decreed any special regulation, nor has it been made known if there is a plan to alleviate the situation in the short or medium term.

There are companies that, having access to information technologies, have been able to adapt and face new challenges. E-commerce platforms are in high growth due to their legal possibilities to operate in the local market.

In the financial sphere, the board of directors of the Superintendency of Banks and other Financial Institutions (SIBOIF), issued a statement in June establishing temporary conditions that financial Institutions can grant to debtors of all types of credits in all sectors of the economy.

The temporary conditions range from:

  • The deferral of payments.
  • Extending the original payment term.
  • Granting grace periods of up to 6 months for principal and interest.
  • Conducting an assessment of an individual case based on the institution’s internal policies.

This is subject to certain classification criteria of the portfolio or debt. All requests for temporary conditions have to be made before 31 December 2020.

Additionally, the crisis has forced the business sector to adopt e-commerce modalities and measures, which are not particularly regulated in local legislation. However, the legal basis of e-commerce is found in the political constitution on the principles of the right to protection and respect for privacy and freedom of business, that serve as a basis for contractual parties to freely agree on their contracts, provided that they do not contravene express law, morality or good customs.

In this sense, despite the fact that Nicaragua does not have legislation related to e-commerce, anyone who wishes to undertake contracting and activities related to e-commerce will have this possibility with public limitations, such as those related to consumer rights and data privacy.

The rights of consumers are regulated in Law No. 842 ‘Law for the Protection of the Rights of Consumers and Users’ and its regulations, contained in Executive Decree No. 36-2013. The protection of personal data is regulated in Law No. 787 ‘Law on Protection of Personal Data’ and its regulations, contained in Executive Decree No. 36-2012.

In the current circumstances, from the contractual standpoint, it is favorable to incorporate and apply the ‘rebus sic stantibus’ principle within the clause of the contracts in force and those that will be formalized in the future, since the crisis has had a direct impact on economic stability and compliance of contractual obligations. This leads to reviews of the repercussions and effects that the pandemic may cause to each of the contractual parties, with the objective of avoiding breach of contracts and finding healthy alternatives to face contractual obligations, particularly in service and lease contracts.

At EY LAW Nicaragua, we are currently advising all those companies and investors to adjust to changes in the current times and providing our support in advising and accompanying them in all legal and regulatory processes related to the above aspects.


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Overview: Dominican Republic

This article contains an overview of the impact that COVID-19 has had around various sectors of the Dominican legal market, as well as some of the legal solutions that have emerged to tackle the crisis that the pandemic has brought with it.

Firstly, it should be recalled that the Dominican Republic has traditionally been characterized at the international level by its strengths in trade, the service sector, the tourism industry and agricultural production, but it has also positioned itself in recent years as the fastest growing economy in Latin America – being at the same time one of the most important economies in all of Central America and the Caribbean according to various indicators. This has been achieved on the back of its industries and the Free Trade Zone sector, which generate about 60% of the country’s exports and have a great impact on local employment.

However, the impact of COVID-19 in the Dominican Republic has been felt in a very negative way in several of the industries that have traditionally served as a pillar for the national economy, especially the tourism sector, which has been the worst hit by the pandemic.

The Central Bank, through the Monthly Indicator of Economic Activity (IMAE for its initials in Spanish) indicated the reality of the various industries in terms of their economic performance for the period January-May 2020 compared to the same period of the previous year, noting that the industries most affected were: hotels, bars and restaurants (-42.6%), construction (-23.2%), mining (-16.3%), transport and storage (-11.0%), free zones (-9.8%) and local manufacturing (-7.8%). On the other hand, the sectors that have established positive markers according to this indicator are the following: health (12.4%), financial services (10.5%), agriculture (5.2%), real estate activities (5.0%), communications (4.1%) and energy and water (2.0%).

In this sense, the Dominican legal community has had several challenges in terms of how to face the crisis and provide the different markets with the relevant legal solutions to mitigate the impact that COVID-19 may have in the various productive sectors of the country.

Labor advisory services have been among the most in-demand legal services today as a response to the uncertainty caused by the unprecedented scenario in which the pandemic has put Dominican workers. In our country, as in most of the international community, telecommuting practices and the suspension of employment contracts have increased, and, consequently, brought a mechanism of legal procedures that allow for the proper management of work in accordance with the law and the established processes.

On the other hand, as far as trade is concerned, there has been an accelerated transition to e-commerce and the use of digital platforms. Both public and private institutions have adapted to the digital trade model, promoting modern tools such as the use of electronic signatures and online payment systems that contribute to the agile development of trade practices without the need for physical contact or transport to the distributor.

An unfortunate aspect of the crisis in the economic and social sphere is the inevitable insolvency of single-owner businesses and small- and medium-sized enterprises due to the lack of liquidity generated by the suspension of business, and the consequent drop in sales. These businesses developed a negative cash flow, paying employees, suppliers and other fixed expenses, without incurring any – or little – income.

Faced with this reality, the first steps that businesses can take are to invest more capital, if possible, or turn to bank financing to help pay for the drop in sales. However, if none of these options is feasible, then corporate restructuring should be considered as a solution so that businesses can reorganize without having to cease operations. In this regard, we count with the Law 141-15 on Restructuring and Liquidation of Companies and Natural Persons that entered into force in 2017, and that availing to its provisions is a highly feasible and currently required option to face the economic crisis, allowing, among other things, the restructuring of businesses facing economic difficulties, with a process leading to a reduction in the liability burden to enable the business to continue its operations, thereby benefiting its creditors and employees.

Finally, with regard to future options in the context of private investment, the Law on Public-Private Partnerships (PPPs) was recently enacted in the country, which seeks to facilitate the development of infrastructure and services of social interest, by channelling private sector funds to finance infrastructure and projects that contribute to the country’s sustainable development. PPPs have the potential to become one of the main mechanisms of support and cooperation for the reconstruction of the country’s economy, as they enable budgetary constraints to be addressed in a more timely manner, the execution and operation of works and services by the private sector, as well as diversifying the range of public services and infrastructures, allowing the incorporation of innovations and new initiatives in the sector, among other advantages.

At EY Law, we have the knowledge, experience and different lines of services aimed at meeting the legal needs that may be had in any of the aspects addressed in this article. We have innovative solutions and proposals that favor the development of an excellent business climate at local and international level, based on good business practices, ethics and responsibility with an integral and multidisciplinary team. 


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