According to the recently published results of the UK Innovation Survey 2019, innovation activities have been on the decline since a peak in 2012-2014, with only 38% of businesses considered “innovation active” in 2016-2018. Notwithstanding this, the phrase “innovation” is near ubiquitously referenced within the legal industry. Which begs the question, how do lawyers actually contribute to innovation for their clients and the broader FinTech and crypto ecosystem?
These days, it wouldn’t be unexpected to hear those within the legal industry dismissing “innovation” as little more than a mere buzzword. For years, evangelists both inside and outside of the industry have waxed lyrical about how ripe the industry is for change itself and how it provides services. More recently, calls for legal innovation has broadened to include how the legal industry needs to contribute to disruption and the technology ecosystem more actively. Although to the naked eye the wider contribution to innovation by the legal industry may not be obvious, in reality change has continued to occur at pace and the legal industry is contributing in multiple and innovative ways.
This is in large part driven by innovative lawyers who have recognised the value of working with their clients to not only tackle difficult legal questions but to also devise innovative legal structures and approaches to help their clients move their technology businesses forward—in many cases utilising newer models of working learned from their innovative clients. Such models include providing support through distributed teams or in partnership with other providers, and more heavily utilising technology to deliver their services.
At a more basic and fundamental level, innovative lawyers put the client at the centre of their business model, understand clients’ needs and problems, and offer new ways of meeting those needs or solving those problems. And small (even obvious) steps can delight clients—whether that be providing know-how or training on the latest developments in artificial intelligence or blockchain, offering easy-to-use document templates or providing introductions that have the potential to develop into lucrative relationships. Ultimately and however, clients are looking for answers and solutions that they can trust and rely upon now. And by delivering today, industry participants can not only put themselves in frame for future opportunities but differentiate themselves from the pack.
Legal issues are often cited as roadblocks for innovative companies, particularly those operating in the FinTech and crypto space. This is particularly the case in businesses that marry financial services and technology. That is because financial services is a highly regulated space for the good reasons of retail consumer protection, investor protection and the stability of the financial system. This level of regulation can be daunting for technology entrepreneurs. In addition, often the legal questions arising are novel and the applicable regulation not drafted for the facts in play. This is where innovative legal counsel that is deeply entrenched in both cutting edge technology and the related legal issues can make a critical and important contribution. Some examples of potential road blocks in the FinTech and crypto space include:
– Does my FinTech business need to be regulated? What are the costs if so and time consequences? An innovative lawyer may be able to assist by analysing your product and making suggestions on the nature of the product, your target audience/market and how it is offered.
– I have designed a digital/crypto asset and I am not sure about what it is legally and how it may be regulated or not. A good lawyer will analyse what you have designed and not just say “No”. If there is a legal issue, you expect an innovative lawyer to work with the client and contribute to product design and help the client achieve its commercial objectives.
– I require assistance meeting other non-legal industry participants to help move my business forward. Can my lawyer help? In addition to providing innovative legal advice, a good lawyer with industry knowledge and connections can also open commercial doors for clients by making helpful introductions to other clients and/or contacts.
In addition to helping clients with their legal needs and applying innovation as part of their service provisioning, lawyers can play an active role in innovation by engaging with and supporting the wider ecosystem. This is particularly so in the FinTech and crypto industry where legal regulation has such an important role in product development. Ecosystem members, particularly incumbents, need to access the perspective of others to discover how they can innovate themselves.
Participating in incubator and accelerator programmes as mentors, partners or sponsors can provide unique insight into the type of challenges new businesses are facing as well as how they approach solving those challenges. This can enable a legal services provider to gain a better understanding of how it needs to position or evolve its services. The FinTech Legal Labs, powered by Ashurst, is an example of an evolution of the accelerator model developed by Ashurst lawyers who saw an opportunity to support the wider ecosystem whilst providing earlier-stage businesses with in-depth access to legal advice, Ashurst’s deep investor client base and pathways to greater legal support. Other law firms have implemented programmes similarly aimed at generating two-way learning opportunities that support the innovation agenda.
In conclusion, good lawyers don’t just provide black and white answers to questions of law for their clients. In areas where innovation is a key driver of business, such as the FinTech and the crypto industry, lawyers can contribute significantly by providing innovative solutions to legal challenges that help product design and development. There is also active support of the wider innovation ecosystem to which lawyers are and can make a significant contribution. The modern legal industry is a critical and key player of the innovation ecosystem.
By Abradat Kamalpour, Partner, Ashurst LLP and Architect of FinTech Legal Labs and Tara Waters, Partner, Ashurst LLP and Head of Ashurst Advance Digital