Emerging Practice Areas and Technology in Legal Services
Artificial Intelligence (AI), Blockchain, Cloud Computing and Data Protection are known as the ABCDs of the emerging technologies in the financial sector, generally referred to as “FinTech”. As a fledgling FinTech lawyer, this author recognises that technology is also redefining the legal field. In this ever-changing business climate, lawyers face a future of transformation on a varied scale and at unprecedented speed. The rise of new technologies will bring about new opportunities, risks and challenges for financial regulators. The legal industry will continue to evolve and lawyers need to stay updated with new emerging practices of law. This article features tips on adapting to changes in the evolving FinTech industry from three accomplished and passionate lawyers of different sectors who have each made immense impact in the legal field. The trio of interviewees are Grace Chong, Head of Financial Regulatory at Gibson, Dunn & Crutcher LLP, Chui Lijun, Partner at Bird & Bird ATMD and Daniel Lo, General Counsel at Cake DeFi.
(From left) Grace Chong, Chui Lijun, Daniel Lo
Challenging but Rewarding Work
Having spearheaded a global project for a financial institution, Grace, shared that one of her most memorable cases involved a blockchain-based payment system governed by the Diem Association. Grace’s role in the project included “regulatory review of licensing, capital, commercial and other due diligence across multiple jurisdictions; drafting and review of commercial contracts and agreements; negotiating contracts with multiple parties and stakeholders; review and assessment of compliance frameworks.”
The project was significant for its sheer size, volume of coordination and complexity. Grace said, it was a “proposed model of a payment platform that has never been previously achieved.” It pointed to the “future of value exchange, commerce and commercial ecosystems, and the way ahead for strategic integration between payments, retail and banking institutions to strengthen financial inclusion.”
In the area of technology disputes, challenging matters involve issues of hacking or cybersecurity breaches. Lijun, who specialises in commercial dispute resolution and regulatory investigations, with a sub-speciality in tech disputes, shared that she “usually has to race against the clock to make quick decisions which can have a long-term impact (whether financial, reputational or operational) on the company.” Beyond the immediate aftermath, interesting issues relating to civil liability would be considered. In particular, Lijun enjoys dealing with the “analysis on how liability should be allocated amongst various parties arising from a situation which is usually caused by a third party.” Lijun said, the “responsibility and accountability framework is still being developed and data poses significant challenges as to the type of legal protection which is available. This makes it both interesting and challenging to me.”
With emerging financial structures, regulations surrounding these systems are shifting as well. The new financial trends have surfaced a litany of fresh issues such as data privacy and cybersecurity to uncertainties about applicable law and allocation of liability in a decentralised ecosystem. Grappling with the changing and developing nature of regulations can be challenging. On 17 January 2022, when the Monetary Authority of Singapore (MAS) issued its guidelines that limit cryptocurrency firms from advertising their services in public spaces and media, many cryptocurrency and blockchain companies, including those in the decentralized finance space, were directly impacted. Daniel said the news “caused quite a stir” at his company, a FinTech platform. He also recalled that the reaction from the cryptocurrency community was “that of shock” and enforced camaraderie within the community to address the matter with the MAS. Within the firm’s internal organisation, Daniel recalls that his company had to “adjust marketing and partnership efforts overnight and put controls in place to manage any existing promotions in Singapore.”
Keeping Up to Date with Developments
As a regulatory lawyer, Grace finds it essential that we “keep at the top of emerging regulatory issues and developments.” She added that she “learns a lot from clients’ matters.” Going deep into understanding the clients’ products and services allows Grace to consider and resonate the clients’ perspectives from a commercial angle.
Involvement in the Industry
Grace places importance on being involved with regulatory advocacy to be at the forefront of understanding and obtaining valuable insights from the industry issues. From her involvement, Grace is in a unique position to influence the outcome of regulatory processes. As a board member of Association of Cryptocurrency Enterprises and Start-ups Singapore (ACCESS), Grace had coordinated industry responses for the MAS’ payments consultations. Grace had also worked with Asia Securities Industry & Financial Markets Association (ASIFMA) to help develop FinTech and Anti-money laundering (AML) best practices for digital assets firms. Grace had supported Global Digital Finance (GDF) to develop a Travel Rule messaging solution. At the present, she is working with the digital assets industry to develop a code of practice for advertising guidelines.
A Career in FinTech
“Lawyers need to understand the basics and foundations of how social, political, technological and environmental factors can affect the law.”
At the start of her career, Grace’s key area of interest had been in financial derivatives. As part of her regulatory practice, Grace had the opportunity to advise on the regulatory aspects of derivatives and securitisation transactions, which she found to be immensely rewarding. On building a successful career in FinTech, Grace suggested “not to doggedly focus on a key area, but to instead be flexible and open to opportunities, valuable mentors, and how one can best contribute and bring value to clients and the firm”. The best approach, Grace shared, is to “contribute meaningfully to the industry and discover niche and developing areas, or to bring new insights to traditional areas of law.”
For the young lawyers seeking to build a career in FinTech, Daniel offered a useful tip: To read and understand about the history of financial institutions and the evolution of financial services. It is helpful as you will “understand the rationale and necessity as to why certain financial processes change and what future innovations may be in the works given current trends”. Daniel suggested that, forecasting what financial technologies may come about to disrupt, such as cryptocurrencies and decentralized finance, will be important for young lawyers to stay ahead of the curve and remain relevant.
Curiosity as a Key Quality
Lawyers need to understand the basics and foundations of how social, political, technological and environmental factors can affect the law. Aside from your core legal skills, curiosity is a key quality for FinTech lawyers and will allow you to “not burn out” when staying in the loop and will give you the opportunity to specialise in further areas within FinTech, which will “inevitably allow you to carve out a niche of your own as a FinTech lawyer,” said Daniel, who also provides career strategy and mentorship advice to law students and junior lawyers.
Who Needs FinTech Lawyers?
FinTech lawyers play a meaningful role in co-creating solutions around the deployment of new technology across different industries. FinTech lawyers are needed by any business or trade that wants to “disrupt traditional finance institutions (e.g. banks, insurance companies) by improving and automating the deployment of financial services or even traditional finance business that wants to utilize technology to make their processes better and more efficient,” said Daniel.
Working In-house for a Crypto Firm
As a FinTech in-house legal practitioner at a crypto firm, Daniel and his team at Cake DeFi broadly cover regulatory, marketing, products, intellectual property, operations, transactions and disputes matters for the company. Daniel shared a day in his life at work, “Mornings are spent at the gym before diving into overnight e-mails and Slack messages. Updating my daily task list based on high, medium and low priority has become a necessity – it changes throughout the day as I get ad hoc requests for comments or get pulled onto calls.” On any given day, Daniel could be drafting or reviewing agreements, reviewing cryptocurrency related legislation and providing comments on the legal impact surrounding a new product or marketing campaign. “Afternoons are reserved for alignment calls and stand-up meetings. Evenings are to ensure that high priority items have been completed or diarized for the next day,” shared Daniel.
Risk and Opportunities in Blockchain and Web 3.0
While some are struck with the desire to get more involved, given the many unknowns facing the crypto industry and regulation as we head into a new era of crypto market clarity, it may be considered “risky” to work in a DeFi or Web 3.0 related company. On the risk in job security, it would be “relatively more risky” to work at a DeFi or Web 3.0 company now, said Daniel. However, if one is interested to join the ranks and learn about the Web 3.0 industry, “as a Web 3.0 believer,” Daniel said, it is “more of a risk to not get involved now more than ever”. Daniel feels that now is the time for Web 3.0 companies to “filter out who the true believers are”, to get involved now when the industry is experiencing a low point “speaks volumes” and can “set you up for a budding FinTech career when markets turn back up”.
Technology of Law
To help the Law Society and law firms play a bigger role in identifying areas of training in the evolving world of FinTech, Lijun opined that we need more “integration and dialogue with non-lawyers who are at the forefront of those issues to work out how we can collaborate to fill the knowledge gap for legal practitioners”. Lijun strongly feels that the “younger practitioners can play a bigger role” in helping us to identify the gaps, as the natural curiosity and energy which accompanies youth are instrumental when it comes to navigating the brave new world.
The use of technology may improve the practice of law in Singapore. Depending on the state of the technology and how it addresses the needs of our day-to-day legal work, there is “no shortage of LegalTech solutions out there” and those which really stand out are those which are “developed closely with the involvement of legal practitioners or with their needs in mind,” said Lijun.
On using technology to enhance the legal work that we do, there are efficiencies which can be generated. For example, due diligence or document review can be significantly aided by technology to some extent. However, for it to truly enhance the work that we do, it is important for us to “appreciate the risks of using such technology, their limitations and calibrate the client expectations accordingly”. Lijun insightfully shared that how we train technology to do the work that we do is also important as (like humans), the technology can only be as good as the training which it was subjected to.
Law Firm of the Future
At present, there remain significant gaps between technology trends and the readiness of law firms to meet their needs.
Diversity and Client-centricity
The “law firm of the future” would have to be more “attuned to the needs of its clients” than ever, said Lijun. It is a given that we should have at our fingertips the legal solutions, however, users of legal services increasingly expect out-of-the-box solutions and an understanding of their business(es) and objectives.
“I am also optimistic that the ‘law firm of the future’ would have much more diversity, especially in the senior ranks,” said Lijun. Grace shared similar views on having a client-focused mindset. Grace said, lawyers need to ensure that they are “building strong and deep foundations with clients” to establish relationships forged on trust and an extensive track record of solid work.
Having diversity in the workplace is “not simply an ideal,” said Lijun. It is “easy to miss the point that diversity is also good for business,” said Lijun. She added, the “difference in views and perspectives enables us to chart a more successful path through the various challenges that technology and the future may pose to us“.
Learn from the Past
The need for resilience and agility is essential for law firms of the future. In the history of law firm collapses, it has been noted that law firms can die with extreme ease and astonishing speed. “John Morley’s research in this area based on news and litigation records for every major law firm collapse since 1988 has important implications in this respect,” said Grace. The reasons for such collapses have turned on business practices, regulatory structures, and organisational dynamics. Notably, this can happen even to large and long-standing firms with a strong reputation.
Grace pointed out that the values of the “law firm of the future” should draw from lessons of history. The need for “strong management and leadership, communication and collaboration between offices, clear values and accountability” remain key.
Communicate and Collaborate
Grace shared insights from her practice in an international law firm – one of the key findings from the research into law firm failures are the “substantial gaps regarding who knows what and when, as well as the logical next steps in either case.” For instance, there is a gap in available information — partners are privy to facts and factors not available to associates. There are “gaps in both experience and in the strength and depth of client relationships, and therefore gaps in the value an individual might provide to a prospective new firm.”
Grace and her team ensures that the firm’s associates are also apprised of the “why and how” the organisation and her make certain decisions, including the structural strengths and assumptions of the organisation. In addition, Grace also recognises the importance of equipping her associates with the ability, skills and confidence to forge strong relationships of their own to bring maximum value to clients, as well as to share about the firm’s expertise and skills with other offices. Given that the use of emerging technologies in the financial sector gives rise to new emerging areas of law, Grace observed that we should be “slow to assume and instead be open to sharing, communicating and collaborating.”
Author: Amanda Goh
First published in the August 2022 issue of the Singapore Law Gazette.