The rise of Fintech and its impact on the world of commercial law
What is Fintech?
Fintech is an umbrella term used to describe advanced software technologies used by businesses to transform and innovate the way they operate their financial services. With today’s corporate industry fuelled by market competition, the progressive use of Fintech systems has shown to pave a way to new economic success through the seamless, unconventional approach it brings to finance management. Through the emergence of technologies such as Block-chain, banking institutions can chronologically track and secure their transitions with greater transparency, and protect Data through advanced safety nets created by distributed ledger systems. Further to this, Fintech’s systems of Artificial Intelligence (A.I) can revise natural language to create algorithms and forecast at a rate faster and more accurate than ever before. This is not to mention Block-chain’s Real Time Gross Settlement technology which ensures individual payments are carried out instantaneously; lessening potential settlement risks in a transaction. As this wave of digitization continues to progress in our world of modern business, Fintech’s global market is predicted to see a 24.8% growth from $127.66b in 2018 to $309.98b in 2022. With this, many financial giants are beginning to act upon the reality that “technological innovations will be the heart and blood of the banking industry for many years to come”. In this light, it seems to follow that if corporate institutions fail to develop their services accordingly, they will “risk being burnt to the ground” as warned by global banking expert JP Nicolls.
Fintech’s impact on the World of Commercial Law
In 2013, we saw a glimpse into Fintech’s relationship with the legal world as international firm Bird & Bird were shown to utilise cloud security services as the foundation for its data protection, data portability and intellectual property management. Years later in 2016, we saw the increasing recognition of Fintech as a unique driving force in the legal industry as Global firms Clifford Chance, DLA Piper and Hogan Lovells all announced deals with Canadian AI provider Kira systems. Kira is a machine learning system that provides a modern approach to extracting data from large document volumes. As an advanced machine, its software performed extremely accurate due diligence reviews by searching, highlighting, and extracting relevant content for analysis, completing tasks up to 90% faster than the average lawyer. Furthermore, its ability to produce calculated algorithms gave firms an edge in forecasting the future of sectors such as Competition and banking and provided them with a foundation to prepare and adapt to future markets. Despite the fact that Fintech is still growing into the legal industry, it has already shown to act as a golden solution for firms around the world as they ‘face the pressure to adapt’ to a modern financial market. Evidently enough, Fintech is continuing to help businesses deliver ‘the next level’ of service that their competitors are constantly striving to achieve.
Threat to Lawyers
As Fintech continues to develop and merge into the world of law, we are led to question whether it will begin to pose a threat to the traditional roles of commercial lawyers. In recent times, large US firm Baker Hostelter claimed to have transformed the way we operate legal services through their hiring of ‘ROSS’, ‘the world’s first artificially intelligent lawyer’. Constructed from International Business Machine’s (IBM)’s question-answering computer system ‘Watson’, ‘ROSS’ takes the next step in using Machine Learning to read and understand language, postulate hypotheses, and research remarkably faster than any human lawyer could. As Chief Information Officer Bob Craig revealed,
“You ask your questions in plain English, as you would a colleague, ROSS then reads through the entire body of law and returns a cited answer and topical readings from legislation, case law and secondary sources to get you up to speed”. Additionally, “ROSS monitors the law around the clock to notify you of new court decisions that can affect your case”.
Such technology has been significant in the Bankruptcy division, as ‘ROSS’ has learnt from associate roles to independently analyse market precedents, assess company debt and calculate finance cutting solutions far more effectively than your average solicitor. Even at such an early stage, we can recognise that with Fintech systems producing effective and reliable services to clients without delay, it draws us to question whether evolving future technology can and if so will replace a lawyers role in a firm. Efficiency and adaption are key to keeping up with ever-evolving global markets. With the commercial sector being renowned for its long hours, perhaps we will be seeing a few more ‘ROSS’’ in the workplace as opposed to work-drained lawyers. As spoken by Chief A.I Scientist (at Facebook) Yann LeCun, “Our intelligence is what makes us human, our AI is the extension of that quality”.
Mindful of this idea, it is estimated that in 5 years, 23% of a lawyers’ role will be automated; this leads us to question what the future holds for the legal industry in 15-20 years where technology will have progressed dramatically. If Fintech becomes powerful enough to completely consume a lawyers’ role at a firm, this would transform the industry on a revolutionary scale. The collective understanding of law as both an academic and a professional pursuit that requires years of relentless work and dedication loses value, and the structure of a ‘law firm’ becomes autocratic and operated by machines alone. This is an image that thousands of future aspiring lawyers from around the world hope to never see come into fruition, however, the reality stands that we do not know what modern technology holds for the fate of finance industries and their roles.
Man vs Machine
This nature of work, like many others in the legal profession, requires a deeper level of autonomy in order to be carried out effectively. The ability to navigate legal discourse through persuasively shaping, presenting and rebutting arguments can only be done with a complex understanding of rationale that in current times; machines cannot match.
However, it is important to not get too hung up on the future of tech and to instead recognise the world of commercial law as deeply complex and with this, as are the roles lawyers play for their firms whether they be trainees, associates or partners. In this light, it may be fair that by nature, certain tasks in this profession can only be performed by the mind of man and not through the operation of a machine. This is largely evident when we consider sectors of dispute resolution and litigation where lawyers negotiate issues of defective products, unfulfilled contract terms and infringement of IP rights, and in further instances; are ordered to litigate these arguments in court. This nature of work, like many others in the legal profession, requires a deeper level of autonomy in order to be carried out effectively. The ability to navigate legal discourse through persuasively shaping, presenting and rebutting arguments can only be done with a complex understanding of rationale that in current times; machines cannot match. Undertaking this degree of work is beyond the more menial and mechanised tasks that can be carried out by computers such as automated NDA drafts and research into due-diligence areas.
Albeit the reality that Fintech is gradually becoming more intertwined in the legal world, it remains evident that there are simply aspects of being a lawyer which technology will forever be out of touch with. As recently expressed by Baker McKenzie’s Global Chair Milton Cheng on CTGN, a lawyers’ role, especially as part of a global firm transcends to be so much more than stationary tasks that can otherwise be managed by technology. It is about developing personal relationships with clients and colleagues on a “cross-cultural scale” and building chemistry of loyalty and trust to which can be utilised to achieve the best outcomes for all parties. To operate in this field requires a level of interpersonally which machine cannot possess. We can naturally communicate with a collective understanding of one another allowing us to build a foundation to perform transactional work on a global scale. This feature of mutuality is integral to what it means to be a commercial lawyer and this is an aspect of the profession that Fintech simply cannot replace.
What we can gage from this discussion is that Fintech ought not to be viewed as a force to be feared by the lawyers of today. Instead, it is a modern tool that will continue to evolve and simultaneously assist them in their day to day roles.