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In what ways do you see the in-house legal role evolving in your region over the next few years?

I believe the role of in-house lawyers will become more important to corporate businesses in the future. Artificial intelligence will obviously take a larger part of the standardised legal work. At the same time, the world is becoming more and more complex every day when it comes to compliance requirements, cross border transactions, trade platforms online, ownership rights, tax, IT, artificial intelligence and so forth. The need for finding sensible and good structures and solutions in this environment will create a need for skilled legal teams in-house for all businesses that want to keep up with the development.

Have any new laws, regulations or judicial decisions greatly impacted your company’s business or your legal practice?

The GDPR regulation that came into force in May 2018 has obviously had a great impact on our business. Additionally, there have been many important new initiatives from the EU, ECB and EBA regarding the European market of non-performing loans (NPL) that is likely to impact the business of our company (in a positive manner). In particular, the EU commission have initiated several measures to tackle the high NPL ratios in EU member states, the most recent update being in March 2019 when the Council adopted a reform of capital requirements for banks’ non-performing loans. Generally, the proposed measures aim to speed up the progress in reducing NPLs in Europe and prevent their renewed build-up.

Looking forward, what technological advancements do you feel will impact the role of in-house legal teams in the future the most?

As we are already seeing, more and more standardised lawyer work will be automated by artificial intelligence. For example, due diligence reviews, standardised non-complex contracts, producing standard corporate documents and other functions will be taken over by computers. As you will see these advancements, I believe that the role of in-house lawyers as a trusted advisor for your company will become more important. Actual influence in the business, and not just providing answers to legal questions, will be a crucial success factor for in-house lawyers once the technology advancements really start accelerating.

Thought Piece: NPL Directive and the market

Over the last ten years the market for non-performing loans (NPLs), where you have debt purchasing entities purchasing portfolios of NPLs from credit institutions, has matured from crisis activity into a more structural and functional approach, and today we see a more mature NPL resolution environment. The commercial, technological and regulatory advances are going in the right direction. Nonetheless, the market for NPLs still remain insufficiently developed. The number of NPLs in Europe is still at critical level, thus there is still a great need for proper development of the regulatory environment to boost the secondary market for NPLs.

The new NPL Directive proposed by the EU Commission (not yet adopted) aims to speed up the progress of reducing the level of NPLs in Europe and slowing future build-up of bad loans. One of the main introductions with the new NPL Directive is the aim to develop a more efficient and well-functioning secondary market for NPLs all over Europe. Today, the legal framework in Europe for purchasing and selling NPLs are very different from jurisdiction to jurisdiction. There are jurisdictions where there is no regulation applicable for NPL transactions at all, and on the other side you have jurisdictions where a bank license is required in order to purchase and invest in NPLs. For instance, in Norway non-financial institutions are prohibited from investing in NPLs. Strict regulation on the investors impedes the participation of a wider variety of potential investors. The NPL Directive (in its current draft form) will remove these kinds of impediments for NPL investors across all countries in the EU, but at the same time implement proper controls and oversight.

By applying the same set of rules for all countries in the EU, the NPL Directive will ensure that the market participants have one rule book and one regulatory regime to consider for any NPL transaction in EU. As the market participants will know the legislation they need to deal with regardless of the jurisdiction, you will have a shared investor base among all EU Members. This in turn will increase the number of NPL investors and improve competition across borders which will enhance the incentive for banks to divest NPLs. More transparency and predictability in the secondary market for NPLs will allow potential purchasers to more accurately price the assets and do the transactions more efficiently. This will lead to reduced cost for the participants which means they can use more funds to unload NPLs from the banks.

The original proposal of the NPL Directive also includes a new introduction with the accelerated extrajudicial collateral enforcement (AECE) procedure. The AECE is meant to be a swift mechanism for recovery of collateral that reduces the cost for resolving NPLs. It is an out of court enforcement procedure giving the security holder the right to enforce the security in accordance with the agreement entered into at the time when the security was provided between the security provider and the security holder. The procedure is not meant to be available against consumers or private households, only against corporations.

Even though the proposal is meant to simplify the regulatory regime in the Member States, the proposal does not affect the numerous safeguards for borrowers available under EU and national legislation. On the contrary, it introduces a number of additional safeguards, in order to limit potential risks from the sale of consumer loans and credits, such as minimum information requirements, complaints handling, personal data protection and so forth. In certain European jurisdictions, such as Norway, you can already see quite extensive requirements for collection companies, in respect of establishment, reporting and registration requirements. Proper regulation, requirements and control results in a better reputation for the market – the debtors are more likely to feel respected by the collection companies and you will see fewer unserious players in the debt collection market. By not having participants using aggressive or unethical collection and recovery procedures you will to a greater extent avoid negative episodes, including bad attention and publicity, for the debt purchase and collection industry. So, for the more serious market participants these rules are very much welcomed.