Last year my team of lawyers had our annual offsite meeting in Athens, Greece. Besides the sightseeing and team bonding, we also got schooled … by Duc Trang. As I wrote at the time, Duc Trang a senior legal exec
now trains lawyers and other professionals in business acumen and is due to come out with a new book about the Architecture of Deals and how to design transactions. But for our Athens adventure, Duc gave us a session on how to analyze a business’ competitive position in order to make better strategic decisions. along to run a training session on how to analyze a business’ competitive position in order to make better strategic decisions.
Duc has just published Architecture of Deals: Strategies for Transactional Lawyering about helping transactional lawyers like myself and those in my team become more effective at what we love doing: helping our clients meet their business objectives. You can read more about the book here.
His European book launch is in London this week, but let’s see if we can get him to come to Madrid later in the year.
I am very honored to join the Spanish chapter of the European Legal Tech Association and head its section on skills and training. Yesterday, the chapter, led by María Jesús González-Espejo and Laura Fauqueur, presented the Spanish team to the Ilustre Colegio de Abogados de Madrid (ICAM). Each of the section leads in attendance — including Carlos Martín Ugalde, Paloma Aparicio, Moisés Barrio, Manuel Deo, Alberto Dorrego, Gonzalo García Valdecasas, Juan Manuel Moreno (for Javier Martín), Mariló Pardo, María Belén Pose, Pablo Rabanal, and myself — were asked to describe what we hoped to achieve within our respective areas.
To be quite honest, I hadn’t put much thought into what I was going to say. Even though I am fluent in Spanish – having lived in Spain for almost two decades – I am not as good of an improviser in Spanish as I am in English. But when the deputy of digital affairs from ICAM, Esther Montalvá, opened the event perfectly hitting the nail on the head with the challenges and opportunities facing the legal profession, I knew exactly what message I wanted to convey: Lawyers need to focus on and reinforce our original value proposition:
We are your confidants.
We are your advocates, here to defend your rights and your interests. We are not mere traffic lights signaling when to stop and when to go.
We are communicators.
As such, to be an effective lawyer today and tomorrow, you need to improve how you gain and keep your clients’ trust, how you defend their interests, and how you communicate with them, their customers, regulators and other third parties.
At least that was what I wanted people to hear, so I was happy to read in the Lawyerpress.com that that is more or less what I actually said (in Spanish):
Lo importante es preguntarse, en este contexto, cómo podemos los abogados seguir aportando valor”, reflexionaba Eric Napoli durante la presentación de la ELTA española. “Creo que, a pesar o gracias a la tecnología, podemos poner en valor tres de nuestras características que no debemos olvidar. Somos personas de confianza, como los médicos. No somos meros asesores: ayudamos y defendemos los derechos de las personas. Y somos, o deberíamos ser, grandes comunicadores.
My plan is to organize a discussion open to the public on this topic in July. Stay tuned!
As I have written a number of times already, including in my previous post, I still don’t get (i) why cryptocurrencies create better market conditions for building ventures than good old fashioned money, and (ii) why tokenization – instead of just giving investors and workers plain old money – is the only viable path to building a successful business in the digital era. And when the answer comes in the form of a libertarian soundbite about democratization of money, the burden of regulations or the end of intermediation, I am convinced the speaker knows nothing about history, technology or business. The answer has sham (or gullible) written all over it.
That, of course, doesn’t mean that I don’t believe in distributed ledgers (aka Blockchain technologies) as interesting solutions for solving some important transactional inefficiencies. It’s the whole obsession with tokenization and refusing to use real money that baffles me.
With this in mind, I was very encouraged by a series of Nouriel Roubini tweets over the weekend where Roubini – who made a public name for himself by being one of the few, brave souls to openly predict the 2008 economic crash – unabashedly called out the willful blindness, ignorance and outward deception of Crypto’s most ardent supporters. For example:
I wrote a 30 page testimony that was a thoughtful critique of crypto and blockchain. And no one, not even @VitalikButerin was able to give me a rebuttal of it. Only 100s of rabid crypto barking dogs hurling insults and threats. It says a lot about the intellect of these losers https://t.co/c4eKa3wESc
So instead of trusting governments I need to trust an oligopoly of Chinese miners who are shady and plan to shaft me? Get real once and for all: there is NO decentralization in crypto. It is a myth. It is a system controlled by a shady oligopoly of miners in shadier countries https://t.co/OJYCTKsrJ6
So the cost per transaction of bitcoin is literally $60. So if I were to buy a $3 latte at Starbucks I would have to pay $63 to get it! So the myth of a “Brilliant new technology that reduces the vast fees of legacy financial systems”! turns out to be a Big Fat Lie! https://t.co/vcOGTNcu7N
In practice, blockchain is nothing more than a glorified spreadsheet. But it has also become the byword for a libertarian ideology that treats all governments, central banks, traditional financial institutions, and real-world currencies as evil concentrations of power that must be destroyed. Blockchain fundamentalists’ ideal world is one in which all economic activity and human interactions are subject to anarchist or libertarian decentralization. They would like the entirety of social and political life to end up on public ledgers that are supposedly “permissionless” (accessible to everyone) and “trustless” (not reliant on a credible intermediary such as a bank).
Yet far from ushering in a utopia, blockchain has given rise to a familiar form of economic hell. A few self-serving white men (there are hardly any women or minorities in the blockchain universe) pretending to be messiahs for the world’s impoverished, marginalized, and unbanked masses claim to have created billions of dollars of wealth out of nothing. But one need only consider the massive centralization of power among cryptocurrency “miners,” exchanges, developers, and wealth holders to see that blockchain is not about decentralization and democracy; it is about greed.
But he also makes an interesting observation about the non-crypto part of Blockchain as well:
Moreover, in cases where distributed-ledger technologies – so-called enterprise DLT – are actually being used, they have nothing to do with blockchain. They are private, centralized, and recorded on just a few controlled ledgers. They require permission for access, which is granted to qualified individuals. And, perhaps most important, they are based on trusted authorities that have established their credibility over time. All of which is to say, these are “blockchains” in name only.
It is telling that all “decentralized” blockchains end up being centralized, permissioned databases when they are actually put into use. As such, blockchain has not even improved upon the standard electronic spreadsheet, which was invented in 1979.
No serious institution would ever allow its transactions to be verified by an anonymous cartel operating from the shadows of the world’s authoritarian kleptocracies. So it is no surprise that whenever “blockchain” has been piloted in a traditional setting, it has either been thrown in the trash bin or turned into a private permissioned database that is nothing more than an Excel spreadsheet or a database with a misleading name.
I absolutely agree, and for the reasons he states, I actually like private blockchains. Not to change the world, but to improve processes. And if you control those spreadsheets, you are able to give your customers much more flexibility, protection and value. Works for me!
South Summit which aspires to be the “the Leading Innovation Global Platform focused on business opportunities and disruptive trends, that gathers together the entrepreneurial ecosystem” was held last week in Madrid. My employer, Amadeus, was a big contributor to the summit both as a sponsor and by providing speakers on various items related to travel and technology. In a strange twist of fate, my very generous colleagues in the Amadeus Corporate Strategy team – who must know that I adore the stage — asked me to represent Amadeus on a panel about “Rebuilding Industry through Blockchain”. How could I say no to the limelight?
Besides me, the panel consisted of a serial entrepreneur/angel investor, the head of Blockchain at a major Spanish bank, and a Palo-Alta based VC. While the other panelists focused on Bitcoin and the case for cryptocurrencies, I discussed the four main uses cases that Amadeus has identified for the technology: managing traveler identity, more user-friendly loyalty programs, improving payment settlements, and baggage tracking. And while everyone else on the panel hailed Blockchain’s potential to disrupt intermediation in raising capital, I stressed that when evaluating the technology’s use cases, we had to take into account our B2B customers’ needs as well as those of travelers, and that to date the biggest problem our industry faces with Blockchain is that it simply does not meet our customers or their consumers’ demand for real-time transactions, inter-operability and customization.
When we got to the topic of whether cryptocurrencies were a valuable means for start-ups to raise capital, my fellow panelists were all very enthusiastic. As Amadeus does not have a position on cryptocurrencies, I kept my opinion to myself. Personally, I don’t buy the emotional argument that cryptocurrencies give more “control” to the individual over his money, or that they ultimately add value and enhance the marketplace for new ideas in ways that fiat money and the current regulations cannot.
Quite the contrary: investors want liquid markets where they can easily get their money in and out of ventures. Furthermore, efficient market theory tells us that the value of a security should reflect all available information in the market. Tech entrepreneurs may love the idea that they can cheaply raise large quantities of cryptocash without the costs and hassles of having to comply with regulations, but in the long run transparency and certainty create dynamic markets. You can raise more money on the U.S. stock exchange than say on the Indonesian one because investors know that they can easily exist an investment and that the market is efficient.
With the original securities acts of 1933 and ’34, the U.S. government wasn’t trying to protect the sophisticated investor from big corporate greed. The regulations were designed to protect the unknowing from being bamboozled by scams and ponzi schemes. They demanded transparency and disclosure of risks, exactly what today’s ICO market tends to lack with fairly scandalous, yet predictable results:
A recent study prepared by ICO advisory firm Statis Group revealed that more than 80 percent of initial coin offerings (ICOs) conducted in 2017 were identified as scams. The study took into consideration the lifecycle of ICOs run in 2017, from the initial proposal of a sale availability to the most mature phase of trading on a crypto exchange.
And if you thought you had just raised $30 million over night in Bitcoin, what is your money worth today?
Bull run? Crypto-currencies are bust. BTC down 70% this year. Other major ones down 80%. The rest down 95%. Major cryptos down another 10% yesterday alone. In which La La Land do these Crypto Lunatics live? They can’t think as they lost 90% in less than a year. Wake up! https://t.co/dFQIJ6oRJR
So why should we think that the marketplace needs cryptocurrencies to raise capital? Certainly new ventures like AirBNB, Whatsapp, Facebook, WeChat, Twitter, Instragram, Uber, Booking.com etc successfully raised capital with old fashioned money. The more I hear someone claim that cryptocurrencies will democratize money, the more I am convinced that the speaker has either absolutely no idea what he is talking about or is full of crypto-crap. That doesn’t mean that the current VC model is not a scam itself. To a certain degree it is. But paying workers in tokens instead of money or promising investors they’ll get rich quick without full disclosure is not the solution. It’s a swindle.
If you ask me, we shouldn’t be talking about Blockchain at all. Yes, I think it will be an important back-office tool to improve efficiencies, but not life-altering. What we should all be talking about is Artificial Intelligence which — for better or worse — is the real game changer.
Finally, I really enjoyed the opportunity to speak at the event. When I got off stage, I remembered something that Bill Clinton once said shortly after leaving the presidency: the hardest thing about no longer being president was walking into a room and not being greeted with the presidential anthem. In other words, being on stage is addictive. It feels good to be listened to and treated with undeserved respect. Earlier in my career, I spent a lot of time speaking in public, and last week at the South Summit, I remembered how much fun it was to be on center stage, especially when afterwards you get to interact with very smart people. And the icing on the cake: running into friends and former colleagues at South Summit and reminiscing about the good old days.
Thanks all around to everyone involved, especially my excellent colleagues in CST.
A few Saturdays a year, I teach a course in Business Strategy to junior associates at Uría Menéndez through the FT/IE Corporate Learning Alliance at the IE Law School in Madrid. It is an awesome program that gives Uria’s young lawyers training in business skills that are essential to becoming more effective lawyers in today’s demanding and ever-evolving marketplace.
As great as that sounds, while I wait for the students to arrive, I can’t help but feel some sympathy for these guys who are about to be subjected to my monologues on lawyering and business strategy for five hours on a sunny Saturday morning.
This week I was very fortunate to have attended the first of a three part workshop on Digital Transformation for Chief Legal Officers held by the Instituto de Innovación Legal in Madrid. A special thanks to María Jesús González-Espejo and Laura Fauqueur for the invitation!
It was fascinating to listen to the other participants share their experiences about the pressures their teams face in the Spanish marketplace. Most were chief legal officers and general counsels from Spanish companies or offices, and while the team I manage and the business we support are global, the challenges are the same: how to deal with containing costs, regulatory uncertainty, adapting to change, evolving skills, risks to our companies’ reputations, and how to reinvent ourselves and the value that lawyers add to our in-house clients.
We also had two practical examples of the use of artificial intelligence for the automation of contract generation and claims management and discussed what legal officers should look at when selecting a contract management tool. One of the best lessons that came out of this what that automation cannot be done in a vacuum. In other words, it is not something that belongs just to the Legal Department. You need the support and buy-in of your internal clients, aka the Business.
From our experience, automation makes a lot of sense for the Business. It not only helps in terms of simplifying the customer experience and speeding up the contracting process — bringing in revenues quicker and decreasing administrative costs — but in theory should also improve post-contract account management. Standardization should significantly make the lives of your billing departments better, making it much easier for them to prepare invoices and collect fees. Account managers — especially for those with large portfolios — will also find it easier to engage with their customers over the life of a contract. Implementation and delivery teams should enjoy the benefits of standardization and simplification, being able to quickly identify customer requirements and better allocate resources over multiple projects. For these reasons, the work flows and automation should be developed in a way that has the end-user experience at the heart of the design and benefits all of your internal stakeholders. But start small. Don’t be overambitious.
At first many lawyers — obsessed with making sure that all t’s are crossed, i’s are dotted and no loophole is left un-closed – distrust automation or at least fear that it will render our work irrelevant. But with the simplification of menial tasks, we lawyers can focus on what really adds value and where the exciting work begins: helping our clients succeed. Once we reach that realization — as we have in my team — we not only welcome that task, we encourage it.
But there is a but: it takes two to tango. I can only simplify, standardize and automate what my business colleagues are willing to do themselves on their end. Simplification takes more discipline from our sales colleagues who ultimately will have the harder task of selling a one size fits all model — as opposed to something tailor-made — to the customer than it does from us. How many times have you heard: “Just give me a one-pager”? The Business demands a simple, short contract, but when it comes to negotiating the commercial terms, they want all the flexibility in the world, and that flexibility means tailor-made, non-standard contracts. So the next time someone comes to you demanding simplification, force them to begin with the commercial terms and go from there.
It takes two to tango. We’re ready to dance. Are you?
You all are going to think I am the Grim Reaper of new technologies, crying that the sky is falling at every turn. Yes, I am using this blog as a forum – amongst other things — to discuss the difficult decisions that businesses, lawyers and society need to face when looking at how new technologies like Artificial Intelligence, Blockchain and Biometrics may impact our lives. (examples, here, here and here).
Working for a tech company that invests millions in innovation, I am very interested in seeing how we can use new technologies to improve society. But in order to do that, we need to be very vigilant. The consequences of not doing so could be disastrous and significantly change the course of humankind.
More practically, and more immediately, if we want to prevent the concentration of all wealth and power in the hands of a small elite, we must regulate the ownership of data. In ancient times, land was the most important asset, so politics was a struggle to control land. In the modern era, machines and factories became more important than land, so political struggles focused on controlling these vital means of production. In the 21st century, data will eclipse both land and machinery as the most important asset, so politics will be a struggle to control data’s flow.
Unfortunately, we don’t have much experience in regulating the ownership of data, which is inherently a far more difficult task than regulating land or machines. Data are everywhere and nowhere at the same time, they can move at the speed of light, and you can create as many copies of them as you want. Do the data collected about my DNA, my brain, and my life belong to me, or to the government, or to a corporation, or to the human collective?
. . . Currently, humans risk becoming similar to domesticated animals. We have bred docile cows that produce enormous amounts of milk but are otherwise far inferior to their wild ancestors. They are less agile, less curious, and less resourceful. We are now creating tame humans who produce enormous amounts of data and function as efficient chips in a huge data-processing mechanism, but they hardly maximize their human potential. If we are not careful, we will end up with downgraded humans misusing upgraded computers to wreak havoc on themselves and on the world.
If you find these prospects alarming—if you dislike the idea of living in a digital dictatorship or some similarly degraded form of society—then the most important contribution you can make is to find ways to prevent too much data from being concentrated in too few hands, and also find ways to keep distributed data processing more efficient than centralized data processing. These will not be easy tasks. But achieving them may be the best safeguard of democracy.
The world my children and their children will inhabit will be vastly different from ours in ways we cannot even begin to imagine.