Working in SC Ventures isn’t for the faint-hearted. It is super-challenging, mostly in a good way. SC Ventures isn’t about ‘quick wins’ or digitising existing business propositions. It is about completely reimagining the business and creating new revenue streams. The job covers a whole spectrum of traditional legal expertise, from commercial to Information Technology, from payments to venture capital advice. It naturally includes emerging new areas: legal and regulatory issues relating to blockchain, digital assets and data analytics.
Legal professionals have an important role to play during digital transformation. The new models cut across existing business and product lines and venture into territories the organisation hadn’t previously explored. To help the change, lawyers need to identify key legal and commercial risks and bridge gaps between separately organised and managed teams.
Lawyers in corporate organisations need to upskill to gain a deep understanding of the new business models. The transformation work will look different depending on what it involves and many variables may be unfamiliar. For example, setting up a technology platform connecting SMEs with service providers requires a fundamentally different legal approach than advising on the provision of financial services. It requires stepping into the shoes of a technology-based service provider while remembering that the technology provider remains part of a regulated organisation. Striking the right balance isn’t easy. However, a lawyer who learns how to walk the line between the traditional approach of a regulated institution and the requirements of an agile, technology-savvy corporate startup will propel innovation.
This traditional approach doesn’t work when contracting with fintech startups, which are often small, without in-house counsel and with no spare cash for external lawyers. Fintechs may not be accustomed to dealing with regulated companies and their organisational and regulatory complexities, either because they are exploring new business models themselves (through partnering with a financial institution) or because they are relatively new to the market. Their financial stability may be below what a big organisation would typically expect of its suppliers. Financial arrangements may not follow the traditional ‘fee for service’ model. Revenue from these relationships may be linked to the value of future transactions or to the number of referrals. Fintechs’ business model may be based on offering a commoditised service that, in order to remain cheap, cannot take into account the individual requirements of its clients to an extent that regulated institutions are used to dictating.
Understanding this difference between traditional, vendor-type contracting and the new ecosystem of partnerships with fintech startups and other entities is key to protecting the organisation in the main risk areas while not exposing these vendors to a tsunami of contractual requirements. It is essential to make risk-aware but commercially realistic judgement calls between the traditional approach and the key contractual requirements.
A good illustration of where the old world meets new is the approach to ownership of intellectual property. Traditionally, big organisations wish to own what has been specifically created for them. However, when it comes to understanding ‘why’ they would want to own intellectual property or, even more importantly, ‘what’ it is they consider worth protecting, it is often less clear. In this exploratory stage, startups create improved products, thanks to the number of clients they work with. That one improved product may be their only market offering. Without being able to improve it and provide it to multiple customers, they won’t be able to scale. Without scaling, they won’t attract investment. Without investment, they are more likely to fail.
People who could transform from within: Doing things differently requires imagination, courage, and a strong dose of frustration. It also needs knowledge of the institution, its processes and the unwritten rules of successful engagement. That knowledge takes time to gain, and more time to understand well enough to change. We needed like-minded lawyers who are hungry to do things differently, but who also have that institutional experience. With the right attitude and a mix of soft skills, lawyers can then secure the support of subject-matter experts to offer end-to-end solutions.
Doers and owners: Being an advisor isn’t enough; it is important to feel part of the team, to understand the whole business proposition (on any given day, as the direction may change at short notice), and to be willing to roll up their sleeves, lead (often, to project manage) and to take ownership for the end result.
Cooperators: Advising on complex projects requires close cooperation with other lawyers and people from across the organisation. Empathy, positive communication and other soft skills are key ingredients of effective cooperation.
People who understand technology: Of course, lawyers need to use technology to do their work efficiently. More importantly, they need to understand the evolving technology that underpins digital transformation, as well as the risks associated with it, to provide adequate contractual protections.
People who are comfortable with discomfort: You may not get instructions that will give you a full picture, or the instructions may be out of date by the next day because the project has taken a turn in a new and exciting direction. Remember, this is an experiment. Uncertainty is okay.
New business models influence our approach to legal risk: cross border nature of ventures, dependency on ecosystem of third parties and value of intellectual property should be analysed case by case.
Lawyers working on innovative projects need to be T-shaped: in addition to obtaining technical skills, lawyers need curiosity, competencies and soft skills that will enable effective solutions.
Collaboration is key: the ability to make a right judgement call in an environment of imperfect information flow is increased in a collaborative environment.