Allen & Overy today (13 January) opens applications for the 7th cohort of its technology hub, Fuse, and is encouraging legal tech startups to apply, as well as companies focused on digital assets such as NFTs.
The magic circle firm has two different streams for applications: legal and regtech companies that it may work with in the practise or business of law; and then companies through which it can learn about new technologies. It is that second stream that this year will comprise of companies focused on NFTs, payment and security tokens, and derivatives.
Speaking to Legal IT Insider, Fuse head Shruti Ajitsaria explained that this is the third time that A&O has run a dual stream, commenting: “The second group is about how we educate ourselves about new legal issues. We speak to clients and ask them to nominate companies for us to host in Fuse. We receive nominations from our banking clients and from the likes of the London Stock Exchange and ISDA, so not just banks, but a wide range of institutions. This time we have said we want to hear from companies in the digital assets space. We’re looking for different pieces of the value chain, so the cohort are under the same umbrella, but address different legal questions.”
The focus on digital assets startups comes despite a turbulent year for the cryptocurrency market, with multiple bankruptcy filings and the crash of crypto exchange FTX. However, Ajitsaria told Legal IT Insider: “This is a good time to learn because what it shows us that legal is more important than ever and there’s not just an upward trajectory of brilliance in these markets. You have to be cognitive of the risks and be safe and careful. Legal is often considered ‘boring,’ but what has happened reminds us of the importance of doing things in a well-considered and structured fashion.”
While two-way education may be the primary objective, Fuse’s history shows us how things can evolve. A&O ended up investing in fintech startup Nivaura in 2017 and used Nivaura’s platform for Santander’s first end-to-end blockchain bond in 2019.
Ajitsaria said: “While for the moment it’s about education on both sides and sharing our network, if you look at the Nivaura journey in Fuse, Santander did a blockchain bond on the Nivaura platform and we were the counsel. We understood the technology and why it was different to a paper-based bond. From there we did the EIB in 2021 and took the learning from the Santander bond and used that expertise for a different issuance. It’s about asking clients what they are going to want us to understand and trying to forearm us with the expertise that the customer wants us to have. You can either learn from white papers and blogs or from watching people, and we have created the opportunity to do the latter.”
With regard to the legal tech stream, A&O last year ran five pilots and Ajitsaria says: “Our lawyers are trying and using new things, which is great.”
This brings us onto the economy, where turbulent global market conditions are raising questions over whether legal tech projects will still go ahead, and what impact a downturn will have on ‘innovation’ in all its guises.
It is worth noting that A&O has a track record of continuing to innovate in a downturn. But cutting operational costs is often a law firm’s first port of call when margins are under pressure.
Ajitsaria says: “You can either have a mindset of ‘let’s cut everything to the left and right of our core business.’ But the ‘more for less’ challenge is going to increase, and if you want to continue to work for the client, now is the time to put pressure on your ability to be able to deliver more for less.”
She adds: “It would be ridiculous to suggest that clients will be less bothered about us providing work in an efficient and tech-enabled way. If anything, it’s a thing that will push it from being a ‘nice to have’ to a ‘must have.’ In the same way that Covid made us digitally enabled, I hope the recession will have a similar effect: people will have to use legal technology, regardless of what stage of their career they are at.”
What is likely to happen and may be a sign of the types of companies that we may see end up in Fuse this year, is that there will be more focus on technology that directly create efficiencies. Ajitsaria said: “Not all technology is there to create efficiency. Some lead to faster outcomes, while some might make things look better and be easier to digest. The ones that lead to a faster output are the ones I suspect will stay.”
To apply for Fuse click here: https://www.f6s.com/fuse-allen-overy-2023/apply