Tag: lawyers

The new rules of prevention of money laundering: a challenge for professionals

May 7, 2020

Juan Núñez

The Directive 2015/849 of the European Union to prevent money laundering means a series of new obligations to prevent money laundering, imposed on professionals.

All professionals are (or should be) aware of that, training and organizing our work to fulfill these obligations. But I think it is important, as well, that customers also understand our information requirements and collaborate, since it is a task that is imposed to us.

The Directive 2015/849 of the European Union to prevent money laundering, which shall be transposed to all EU Estates, represents a considerable increase in the obligations of the professionals with regard to the identification and monitoring of operations in which these professionals intervene, at any extent.
These new obligations involve maintaining a vigilant attitude regarding the knowledge of customers and their operations. This supposes a considerable overload, uncomfortable for both the professional and the client, who is focused on providing data on their economic sphere. This function, which banks are already deploying very incisively, is sometimes exaggeratedly extended to any professional, doubling or tripling the control already carried out in other instances, through which it has been previously passed.

In this matter, as it is so many others, Administrations transfer their responsibility to the individuals, multiplying, in addition, the possible liable subjects, in case of slippage. The Directive requires us, then, a series of obligations that we summarize below, because we understand that it is important that the individuals required for information know that it is not an extreme zeal, but an imposed obligation:
The Directive obliges us to formally identify our clients. This means that, if the client is a natural person, we must ask them for their TIN (N.I.F) if they are a Spanish national, or their passport or identity card issued by the authorities of the country of origin (foreigners from EU/EEA Member States), or their passport, residence card or foreigner’s identity card in the case of foreigners from non-EU or non-EEA countries. If our client is a legal person, we must identify it by means of registry reports and a documentary review of the identity of anyone acting on behalf of said legal person and all those participating therein.

The Directive obliges us to identify the beneficial owner of the business or transaction, as well as to take measures to verify said identity. In other words, we have to identify the person on whose behalf our clients are acting prior to accepting the professional assignment, with the signing a sworn statement by the client or the natural person with a power of attorney to represent the legal person.

The Directive obliges us to acquaint ourselves with the purpose and intended nature of the business relationship. In other words, we need to have specific knowledge of our client’s professional and/or business activities, which must be checked by reviewing any supporting documentation it has provided, or by obtaining information from reliable independent sources.
The Directive obliges us to perform ongoing monitoring of our business relationship with our clients. This entails retaining the data we hold updated to ensure they are in line with current realities, despite the passage of time. All information is therefore kept up to date.

Guide to get ready for Brexit

October 11, 2019

Juan Núñez

On 5 September this year, the European Commission published a checklist to provide assistance for European businesses trading with the United Kingdom in the case of a “no-deal” Brexit scenario. It encourages companies to take measures to keep cross-border trade disruption to a minimum and calls on them to prepare for all possible scenarios.

The checklist can be downloaded from the following link: https://ec.europa.eu/info/files/brexit-preparedness-checklist. You can also call Europe’s ECAS helpline with specific inquiries on 00 800 67891011.

Amongst other measures, the Commission has proposed a European Solidarity Fund and a European Globalization Adjustment Fund to provide assistance to those employers and workers most affected by an increasingly likely no-deal Brexit. In addition, the Commission has proposed various technical measures and adjustments to facilitate a smoother transition in the field of the movement of passengers and goods, guaranteeing basic connections, as well as in fisheries and agriculture, with special financial aid. Solutions avoiding a “hard border” between the Republic of Ireland and Northern Ireland are also being studied. If the United Kingdom leaves the Union without agreement, there will be no transitional period, and individuals and companies will automatically lose their equal treatment status. Therefore, the United Kingdom is expected to address at least three issues to mitigate the impact of this: the preservation of the right to free movement of people who have enjoyed it so far, the maintenance of financial commitments, and respect for provisions of the Good Friday peace agreement for Northern Ireland.

The publicity of the beneficial owner of the companies will be accentuated soon

January 25, 2019

Juan Núñez

The Fifth Directive of the European Union for the Prevention of Money Laundering and the Financing of Terrorism, of 30 May 2018, echoes the great concern over the recent attacks suffered (Paris, Nice, Berlin, Brussels, London, Barcelona and Cambrils), and is determined to toughen the surveillance measures, and one of them is to improve “the transparency of the companies and other legal entities, trusts (” trust “) and similar instruments”.

For this purpose, it establishes that Public Registries must have “sufficient, accurate and current” information on the beneficial ownership of the companies and allow public access to this information. It is reminded that the beneficial owner is “the individual or individuals who ultimately own or control, directly or indirectly, a percentage greater than 25% of the capital or voting rights of a legal entity or that, through agreements or statutory provisions, exercise a direct or indirect control of a corporation”. If the beneficial owner is also a corporation, the beneficial owner of this corporation shall be consigned, and the chain will continue upwards until reaching the beneficial owners who hold control in more than 25%.
The Directive emphasizes the need for the “legally bound subjects” (the companies themselves -by means of their directors-, financial entities, public registries, notaries, lawyers that provide corporate or real estate advice, real estate agents, among others) to collect and safeguard these data, maintaining them in a “sufficient, accurate and current” way.
For years, this information has already been gathered by companies, affected professionals, financial institutions and notaries.

The novelty lies in the public access to the information contained in the registers, which the Directive concludes that “it allows for greater control of information by civil society, including the press or civil society organizations” since ” The confidence of investors and the public in financial markets depends to a large extent on the existence of a rigorous disclosure regime that provides transparency regarding real ownership and the control structures of companies “.
It is also a novelty that, if there is no real ownership, because the capital is in hand of partners with smaller shareholdings, the data of the directors of the final company will be consigned.

The scope of this publicity remains to be seen, and its collateral effects can be disconcerting (all the citizens to know who is the owner of half of the city, it is a collateral effect that does not have much to do with the fight against terrorism…).
We must remember, however, the misgivings that caused the first company Directives, back in the 70s, which forced to deposit the annual accounts of the companies in the Commercial Registry.

Digital revolution : What about lawyers?

December 15, 2017

Patrick Conrads

Like many other professions, lawyers are affected by the digital revolution. Technological tools and artificial intelligence lead to simplified and automated procedures that upset/subvert/shake our traditional ways of working. In addition, lawyers no longer have a monopoly of knowledge, which is now open, free and available to all. By opening up knowledge, the digital revolution with its portability tools is pushing for transparency, responsiveness and collaborative mode.
The profession is now faced with multiple challenges: economic sluggishness, globalized competition, artificial intelligence, the emergence of an increasingly sophisticated outsourcing, transformation of some of its know-how into commodities. It is also competing with other professions, that is why it is now essential to focus our efforts on driving change.

Although the brand „lawyers” carries many guarantees of quality of service (strong ethics, demanding discipline, guaranteed competence), these essential elements are not sufficient to allow the profession to build its attractiveness and profitability model without holding account of the expectations expressed by consumers.

Lawyers must therefore question the value of changing the way they work, interacting with their clients and with their various partners (jurisdictions, administrations, other professionals). Innovation requires to increase the risk culture and also requires phases of implementation and adaptation that are not always compatible with the profitability requirements of firms.

Despite this, digital electroshock must be seen as a real opportunity for lawyers, the challenge being to think about how to take advantage of it.
Indeed, advances in new technologies offer many advantages: saving time, money, quality and efficiency in the collection and pre-processing of legal information, for example.

New tools of work develop as well as predictive justice. With softwares, it is possible to calculate the probabilities of success in court and to predict the amount of compensation that clients are likely to receive. These softwares recover a maximum of rendered decisions and allow a quantification of the legal risk. Predictive justice is a step forward for litigants because they can have an idea of the chances of success of their action, but the software remains only tools.

However, the use of simple technologies makes it possible to increase accessibility without weighing on the lawyer’s agenda, for example by setting up extranets (Internet tools allowing the storage and the sharing of documents: contracts, procedure, company documents, or calendar sharing). Technology can therefore be a source, under certain conditions, of increased proximity and better service (doctrine.be, droitbelge.be).

In addition, new tools that are now financially accessible make it easier to generate simplified legal documents and platforms for linking lawyers and litigants (my-lawer.be). Platforms also appear for mediation or amicable dispute resolution with reasonable stakes in a diversion perspective.
Other tools exist only at a rudimentary stage but should multiply rapidly, like chatbots. It is a program that incorporates an algorithm to establish short conversations between a user and the website. Also known as „conversational agents”, these programs will develop an increasingly sophisticated language and draw on an increasingly rich mass of information (associated with the recurrence of certain frequently asked questions) to allow a first sorting in the questions asked by the litigants: the user asks a question „in natural language” and gets an answer as soon as the machine has identified the question.
Computer programs of artificial intelligence are also developing. The best known in the legal world is Watson, a program developed by the IBM company, which responds to the questions asked in natural language. A specific version of Watson has been developed specifically to answer legal questions: Ross40, which has been „hired” by a dozen law firms. This program is not only able to find among millions of documents a legal answer to a question asked, but also has a system of learning: It self-improves as it works.
These Artificial Intelligence tools will eventually replace the lawyer in his job as a legal technician to extract relevant references to the case. The lawyer will focus on the strategy and the human aspect of the case, which is at the heart of his job.

On the other hand, the digital revolution has also changed the requirements of customers who are better informed, Google being their first consultant. They want simple answers in fast deadlines. Clients’ legal needs are evolving into turnkey solutions, which forces us to reinvent our services and the relationship with our clients. Two major implications are to be taken into account:

The first one concerns the standardization of some of our services: Regular products such as general sales conditions, company statutes, a rather simple work contract are now „standardizable”. Faced with the already active presence of online platforms with more standardized services, we can see that the client now accepts the idea of reducing some of his expectations (especially the „tailor-made” dimension) to satisfy an immediate need or constraint budget. The lawyer will have to accept this phenomenon of standardization of some of its services, because of the appearance of the digital.

The second implication relates to the phenomenon of rating benefits: It is not unlikely that in the long run, there will be indications on lawyers in relation to defined criteria as its efficiency or the respect of the budget. This notation can be unfounded, unfair or simply artificial, but it is a phenomenon inherent to the Digital. If we do not accept this phenomenon of „desecration” of certain aspects of our profession, then we will undergo this digital change rather than accompany it.
Customers have become digital consumers and are looking for more agile solutions for communication, pricing, listening and content. They are more and more demanding which has consequences on the valuation of the service, on the prices practiced and on the way the right is approached as product. The client wants to become an actor of his file and the lawyer becomes neither guide nor companion of road.
The challenge is to learn how to serve them the way they want. The need for legal advice is immense in our complex society, and machines can offer us more resources and time to put the human in the center. Too many lawyers today perceive innovation as a threat rather than an opportunity. However, it is by developing a prospective vision of its activity and refocusing on its added value that the lawyer of tomorrow will be the winner of the digital revolution. The client will no longer come to his lawyer to obtain an obscure or abstract legal answer. He will come to share a common experience with his lawyer and together they will work out the best practical solution to adopt.

Therefore, the lawyer will have to change his practice. He will have to have the tools of Artificial Intelligence while remaining focused on his primary role, that of consulting. Also, measuring risks, listening, empathy, pedagogy, ethics, deontology and creativity will remain constant. Explaining the issues to the client, diagnose, and find solutions cannot be done only through a machine, the lawyer will always use his skills to know whether it is advisable to follow or not the opinion of the machine given as an indication.

Artificial Intelligence should not be seen as competing with human intelligence, but as complementary. It will always take humans to think the rules, to elaborate them, to do justice and to apply the law. Even though people have access to information, they do not have the skills to understand it. The lawyer will always be indispensable to interpret the rules of law. He also has an increasingly important role to play regarding the psychological, social and human support of his clients. An innovative lawyer does not see justice as an end but as a way to do his job better. He uses technology to rethink and improve the key elements of his business and his added value.

In France, the process of change is already well underway. Lawyers expand their field of action: they collaborate with other regulated professions, manage transversal projects, and develop innovative tools.
Emmanuel Macron initiated the movement by passing a bill in 2015 that opens the door to interprofessionality, external financing and authorization to market related goods and services on an ancillary basis. „These adaptations are at the origin of a remarkable dynamic of creation of new structures and new technological solutions „. (Stanislas van Wassenhove, Lawyer And Initiator Of The Digital Electro-Choc Conference)
In Belgium, the Bars (Avocats.be and the OVB) have created in 2016 a digital platform to put lawyers in touch with the courts and tribunals. A year later, young lawyers launched the Incubateur.legal to educate lawyers about new technologies and innovation;
In addition, the European Incubator of the Brussels Bar (INCUEBRUX), which aims to complement the incubator of the O.B.F.G, has just been created. This incubator, which wanted to be mixed and international, has for mission to ensure the training and the information of the lawyers of the bar of Brussels on the technological developments which concern them, to be a place of exchanges and debates on the modernization and the reform of the legal profession, to act to ensure that the bar is committed to the digital revolution in accordance with its values and to federate European initiatives on technological innovation and its implications for the profession. Several projects are already in preparation (http://www.incubateur.brussels).

In conclusion, the developments in artificial intelligence offer the lawyer new perspectives to manage knowledge, organize data, and anticipate the outcome of litigation through predictive tools and thus free up time to accentuate its advisory role.

Beyond certain prerequisites (finance, IT, communication, project management), the lawyer will open by developing his human and relational skills: listening, empathy, acceptance of failure, creativity, agility, adaptability, management of emotions, letting go and sharing experience. Emphasis will be on well-being rather than know-how.

For lawyers, being interested in innovation, not only technological but also economic, managerial and societal is a prerequisite for the necessary transformation to ensure the sustainability of the essence of the legal profession: to defend and advise the human.

Some people think that the technique is neutral and that everything depends on the way users control it. Others, highlight the dangers of any technical progress, including digital. Without wanting to be able to decide this debate, we can highlight the following certainties:

• Digital technology can make people aware of their legal needs and contribute to the knowledge of the law, which is an essential element of the rule of law.

• For professionals, the eruption of digital is a threat because the benefits become interchangeable, and are judged by customers only in terms of price, which becomes the main criterion of choice.

• Digital represents a world of opportunities: by breaking down the barrier of inaccessibility, it makes it possible to come into contact with non-consumers and thus gain a lot in productivity. Similarly, getting rid of tedious, non-value-added tasks also increases productivity.

As an indication, here are the digital proposals from the report by Kami Haeri, a lawyer at the Paris Bar, on „the future of the legal profession”:
• Develop a culture of innovation, integrating the concept of entrepreneurial risk into the lawyer’s learning;
• Sensitize law firms to new offers for their clients, including the provision of „intelligent forms”, general legal information („freemium” offers);
• Sensitize law firms to develop a branding strategy that goes beyond the name of the founders and ensures the firm’s outreach through other forms of brand expression;
• Introduce in the management of firms, new practices and new tools borrowed from the world of business: develop work in project mode, assign assignments to younger employees in the development of the firm, set regular interviews and, in any event bi-annual;
• Professionalize the management of firms, favoring the management of non-lawyer firms, such as secretaries general.
In short, lawyers are experts at controlling the risks of their clients and they have developed sharp specializations. The skills of excellence must today be coupled with the skills identified as those of the future by the last Davos Economic Forum: an entrepreneurial attitude, a listening posture, open to project management and multidisciplinarity as well as collaborative methods.

http://www.justice.gouv.fr/publication/rapport_kami_haeri.pdf https://www.lecho.be/actualite/archive/L-avocat-3-0-augmente-par-la-technologie-libere-descarcans-du-passe-et-forme-a-l-humain/9961894 https://revuedesjuristesdesciencespo.com/2017/03/07/lavenir-de-la-profession-davocat-entretienavec-maitre-kami-haeri/
http://openlaw.fr/index.php?title=Open_Law,_le_Droit_Ouvert https://blockchainfrance.net/2016/01/28/applications‐smart‐contracts/ http://www.coindesk.com/ipo‐and‐insurance‐projects‐win2000‐at‐blockchain‐hackathon/ http://www.rossintelligence.com/

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