Google One subscription will be cancelled … Update your payment method by 31 Aug 2026 to renew your storage subscription INF_LIS Podcast Transcript 133.txt 1 100% 132 Brian Full Video Episode === [00:00:00] Akber, thanks for joining this afternoon The honor's mine. And actually, I guess it's evening your time, right? Just hit 10:00 PM. Oh my goodness. Well, I appreciate you carving out time because that's, uh, that doesn't sound like a lot of fun to be sitting on the computer talking to me at 10:00 PM, so, um, thank you. Uh, why don't we start just with, uh, a quick intro, who you are, what you do, where you do it? Sure. Um, in brief, I'm a, I'm a computer scientist at heart. Uh, worked in the city at a investment bank, ended up as a lawyer, and then decided to... Well, figured out a way of combining the two together. So, so, uh, technologist turned lawyer and, and finally living the dream and, and, and putting them together. And, and I guess the environment is such that it's a good time to be doing that. It's very true. Yeah. With AI, and you and I had a great conversation the last time and, you know, I spent years in financial services [00:01:00] also. It's a very different world in terms of focus on data hygiene and data quality. It's a very high-- People talk about legal being highly regulated. They have no idea about highly regulated until you're in a, in a bank. You know, you've got the alphabet soup of regulators, FINRA, um, FinCEN, SEC, OCC, uh, Federal Reserve. Um, those are just the big ones. Um, then you have, you know, local, uh, regulators. It's quite a, uh, there's a lot of scrutiny in financial services and You know, I, I joined, um, financial services right before 9/11 and shortly before Sarbanes-Oxley and the USA Patriot Act that was a direct result of 9/11. And the amount of scrutiny around, [00:02:00] you know, anti-money laundering, so I spent time in anti-money laundering. Actually, most of my time at Bank of America was in AML, and the amount of focus on, um, terrorist financing, which is a subset of AML. You know, AML started, um, really to bust up organized crime and, you know, terrorist financing was a, a later development. And after 9/11, that became a top three risk for financial institutions, and we had to start paying really close attention to anything related to KYC, um, which is know your customer. And quite honestly, th-the data wasn't there to really be compliant with KYC, and we had to do a lot of work. Um, but we're still-- we were still much further ahead than law firms are today. Do you know what? I'm, I'm, I'm processing what you're saying because, look, I was [00:03:00] front office IT, right? I kind of, uh, building, well, pricing derivatives, quite frankly, right? And I felt we didn't take data seriously either. It was actually the financial crisis that forced us to take data seriously. Um- I, y- I, I completely agree in terms of the impact 9/11 had in terms of AML and, and making sure that data hygiene was right. But the financial crisis brought it home to me, well, to, to these financial institutions also through things such as BCBS 239 and, and forcing data governance, data cleanliness where it really mattered and, and led to financial stability. And, uh, y- the other reason I was chuckling is, um, I teach at the University of Surrey. I, I, uh, teach law and technology, surprise, surprise. Um, and financial regulation and, and fintech policy, which kind of go through, y- you know, go hand in hand with that. And my [00:04:00] students are always amazed when I talk about some of the legislation that came in, the ter- you know, anti-terrorism, terrorist financing, et cetera. Um, because I talk about Landsbanki, the, the Icelandic bank that collapsed and, and when they couldn't get, um, deposits back to the, um, the savers in the UK or, or, or, or in Europe outside of Iceland. They pulled up terrorist legislation to say, "Give it back," et cetera, right? And, and, and, uh, you know, I'm just smiling because a lot of these things are now coming together, right? And we- you talked about a, a, a highly regulated industry. It's all starting to come together. Um, but, but, you know, there are definitely those moments where you see You know, it progressing and, and I, I, I, I suppose you're probably struggling to do one of these podcasts these days without talking about AI and, you know, data's key as part of it, right? And, and, and I think that's gonna be a, a big moment as well, right? And I just wonder whether in podcasts [00:05:00] in, in a decade's time, right, probably sooner, people are gonna be, yeah, having that moment about law. Yeah. It was, um, so I was there for through 2008 as well, uh, left shortly thereafter. And the stress tests that the regulators were applying to financial institutions to ensure, um, you know, the OCC's mandate is safety and soundness and, um, yeah. So i- it's, it's interesting how, yeah, Sarbanes-Oxley was a big wave of, um, I would say, uh, controls and, um, data quality, and then a whole another wave with the financial crisis. Um, and we have not had that sort of event in legal yet. I mean, we've had events, right? I don't know if you remember the Panama Papers. I don't know when that was. That was seems like it was 10 years ago. Um, a- and [00:06:00] I think that was a awakening of risks like, you know, existential risks to, to law firms. You know, a breach could mean a really bi- could be a really big deal for, uh, for a law firm. But, you know, the blocking and tackling data that, that sits in the DMS, you know, taking info security kind of out of the system, just the data hygiene of it, there's been relatively little consequence for law firms to not really invest there. And as a result, they, they largely haven't. Um, and now we're in a place where There is a cost associated with the lack of data hygiene, and that's, that's AI, which is kind of, uh, what you're talking about. But I think we need to look at it from the in-house angle that has seen that, certainly within financial institutions. So, you know, I always thought... Look, I, I, I started my journey into law, um, [00:07:00] in 2003. You know, that's when I had this wake-up moment and felt reading, uh, some of Suskind and The End of Lawyers and et cetera, I felt that lawyers had to wake up and worry about the data. Um, but that was very much from the perspective of a bank needs to know what these things are, what these ins- you know, financial instruments are, and quite honestly, they're just contractual obligations. So that brings legal into what running a bank needs as part of it. But it was, you know, in the financial crisis, what we saw is all of a sudden those terms that went in, and there was a particular term called rating downgrade clauses that, you know, actually I, I remember being on secondment at a bank and, you know, I had the audacity as far as the, the, the, the traders go, to dig my heels in in staying in line with credit policy and saying, "We can't put this rating downgrade clause in." You know, it basically said that if the bank gets downgraded, [00:08:00] um, so many notches, then, um, the counterparty has the right to terminate, which, which sounds reasonable, right? It's a material change in the credit worthiness of who you're facing and therefore, you know, the, the, the, the whole commercial deal is a different one. And I'll never forget that the trader pulled me aside and said, "What the hell, Akbar? If this happens, I'm not there, you're not there, none of us are there. Who, who cares?" And, you know, it, it, it's really interesting to me that, you know, fast-forward financial crisis occurs, regulation comes in, a lot of regulation comes in and, you know, you're now asked to, um, stress test. You're said, "Well, if there were a three-notch downgrade under these clauses, so your, the bank's credit worthiness goes down We want you to un- uh, you know, to, to tell us how much money goes out of the door as a result, right? What is the financial impact? And we want you to take a [00:09:00] percentage of that and set that aside as, as, as regulatory capital. So all of a sudden, that clause that someone said, "Well, unless that happens, at which point the end of the world is there as far as we're concerned, so we, we just don't need to worry 'cause we're not around at that point," all of a sudden it's been pushed onto saying to your in-house legal team, "Well, we need to know about this because it's got a consequence, not now, you know, not, not when, when, when, when, when, when the downgrade or, or some nuclear event happens, but it's got an impact now because we're forced to say, 'Well, what if the world's conditions change?' Right? Because we don't want another financial crisis." So, you know, I saw in-house teams having to worry about that. And coming back to what you were saying, the problem is that, you know, I think law firms kind of neglected that, and the lawyers were one step removed because they were just solving the legal problem of documenting these things and not feeling, you know, the, the, the idea that [00:10:00] if you could understand what was in these agreements and you could merge it with transaction and trade data Then, then it gave it meaning, you know? So, you know, I, I, I, again, I remember, um, being back at, um, Allen & Overy and, you know, found that we finished a, a big securitization deal. I was, I was, um, found myself as being an expert on, on derivatives in the context of securitizations, which kind of niche of a niche area in many ways. And, you know, there was this ridiculous, um, for-- Well, not ridiculous, a, a very important form that the client in-house legal team needed to fill out that frankly was a very thorough summary of the terms that I, as external counsel, was putting into the documents for them. And I remember talking to, yeah, this in-house lawyer and, and just saying to him, "Well, why don't I fill it out?" And, and he said, "What do you mean?" I said, "Well, you're being asked to put it into a system your side. [00:11:00] I've just drafted all of these documents. I know them in my sleep, and if I don't know them in my sleep, then, then you've got a problem. Just send me the questions, right? Send me a screenshot, and as part of what we are providing, I'll give it to you." I mean, it was amazing how quickly that in-house lawyer gave it to me because, because they clearly hated doing that, but it was all about data by that point, right? Because, you know, it meant so much. And, and I think it's, it's actually quite sad for me that it's taken so long for law firms to recognize that, and it's taken, you know, technology and AI to mature so y- you know, to, to suddenly have its moment of, of, you know, the, the whole world. My, my children know about AI, right? You know, find me a person that doesn't know about AI at the moment. You know, and, and again, you know, so many people that you speak to, lawyers, you know, "Well, when did AI happen?" "Oh, yeah, 2020, '22," et cetera. You know, when ChatGPT became public. No, AI's been there [00:12:00] for a long time, right? And the need for data has been there for a very long time. It's just the, the reason law firms haven't seen it is they've just worried about solving legal problems. And I actually think that's meant that they've not listened to their clients, the people they work for, that have been... You know, the digital agenda hasn't just arrived, you know, particularly in our banks. You don't just ma- you know, walk up with wads of cash and pass it over. You don't just do things manually. There've been systems and data for a very long time. But as lawyers, we've chosen to say, "We'll sit in our ivory towers and continue working through words and words only, and not data." Yeah. And you know, um, I had a conversation with, uh, Bjarne Tilmann, who was on the pod- he's actually on this week's podcast. Our episode will air in a couple of [00:13:00] weeks, so, um, we're recording on August 13th. Um, that's a great episode, and w- the way Bjarne described the legal department of the future was very different than what I experienced in my years in corporate America. So as part of my AML work, we had to engage with legal frequently, as you can ima- as you can imagine. And there, there was an absolute firewall between even my-- So I was in risk management, which is not in the business. We're a risk management function that is aligned to various, um, areas of the business. Um, and we had to go through a firewall, a portal. We didn't have direct access to legal. Legal even had a separate reporting structure, right? That maybe dotted lined into the CEO, but, [00:14:00] um, you know, essentially reported to the, to the board. And that created a very insulated legal function where, um... And you know, when Bjarne was describing, he was using an example of Workday. You know, Workday's legal function is extremely integrated into the business and, you know, is proactive, right, not reactive. When w- you know, when we would engage legal was after something bad happened. And I, I feel like the future of internal, of the internal legal function, AI is going to enable, hopefully, um, hopefully they don't just reduce headcount and I make no promises, right? Because public companies have investors to, to keep happy. But my hope is that AI starts taking away some of the grunt work that these legal functions have been bogged down in, and allow them to get more integrated into the business and [00:15:00] have conversations like the one that you described. Um, Mark Shelton, who's GC at, at, at Barclays, head of investment banking, you know, he had a lovely line we would always discuss. There's no P in legal, right? It's cost, you know? Um- W- we've g- you know, I think that's the very future of legal, making sure that we're aligning to solving problems for people and, and, and not getting caught up in the administrative p- piece and giving business meaning and outcomes to people. That is, um, just so important. I mean, my first client involved persuading a CFO That overcoming the legal problem was worth spending, uh, what we estimated would be $10 million on an AI system in, in 2011, right? This, this is, you know, as I mentioned, you talk to people about AI today and when did it arise, you know, [00:16:00] according to them, AI hadn't even been in-invented at that point, right? But it's all about bringing legal to the table and exposing and, and bringing to the table the value they can bring, because when you merge that with other data, other information, it's suddenly very, very powerful. Yeah. There's no P in legal, but there sure can be a big L, right? So it's-- I mean, the same is true with, with risk management, right? There's no P in risk management either. But if that function fails to do its job, you know, my listeners have heard me talk about the four lines of defense. So, uh, you know, in Bank of America, we used to talk about the four lines of defense. First line of defense is the line of business, so that's the consumer bank, the investment bank, the wealth bank. Um, then there's a second line of defense, which is the risk management function, where a-AML sits and corporate compliance and regulatory relations, all those things. Third line of defense is, uh, corporate audit, [00:17:00] right? So, uh, I also spent, uh, several years in, in corporate audit, and if the first three fail, the fourth line of defense kicks in, and that's the Wall Street Journal, um, because that's where you end up if the first... And, you know, talk about an L, um, you know, if the regulators were to come in and, um, you know, write a sanction or a cease and desist. I mean, this has happened at huge financial institutions. You don't hear about law firms, um, having that level. It's very rare that, uh, y-you end up in the Wall Street Journal, but you're starting to hear, hear about it directly related to AI with, you know, lawyers at white shoe law firms, you know, um, submitting court documents with hallucinated citations. Uh, so I kind of feel like we're, we're more vulnerable than we were now that we're becoming tech-enabled as an industry. Would you agree? We are, but I think it's gonna [00:18:00] get worse because we're still solving legal problems. Actually, there's a journey, right? When we start solving build- bus-business problems and we get it wrong there, there's even further to f-fall. That's not to say we shouldn't be heading in that direction. I absolutely think we should be heading in that direction. But we've got to really understand, um, how we change how we operate, the process by which we operate as, as, as lawyers, and how we add that extra value. And, you know, for me Most of, you know, I, I can't claim to have seen all of the, the cases, and you've probably seen, um, Charlatan's database, for example, of the hallucinations, um, in, in various court cases, et cetera A lot of them come down to process, come down to supervision, come down to lack of training, understanding that pressure on someone to deliver something and frankly not follow their, their training. You know, uh, as, as, as, as practicing lawyers, we've all had our moment where [00:19:00] we've not spent the time and researched and done that, but you- we typically did it in a moment of low stakes, and the, the partner we were working for and supervising corrected and got that. And I think too much of the profession is becoming a bit too lazy, seeing, um, you know, being wowed by the technology, you know, being, being quite technophobic, being wowed by it and, and just making assumptions about what it can do and therefore what we don't need to do, and forgetting that accountability. It's, it's actually a topic very close to my heart at the moment. Um, I'm the current co-chair of the Technology and Law Committee at the Law Society of England and Wales, and we're currently penning the practice note for use of AI by the profession. And, and we really need, in my view, to really spell it out and educate around the expectations. You know, uh, I think we've unfortunately done a very poor job as an industry and the various bodies that take, you know, that, that, that are [00:20:00] there to... It's very easy to say, "But you just keep, you, you, you're still accountable." We need to go further than that. Well, therefore, what, what do you need to do? You know, I've run an exercise just a couple of months ago for one of the top 20 law firms, um, here in England and Wales, and I'm stunned at what I had to do. You know, uh, this, this was a, a project about helping them with their data strategy, and it morphed into having to persuade the lawyers why data is important. And I never thought I'd be in a world where I had to take the SRA solicitor rules and say, "Well, this is what happens if you don't get your data right. You overcharge a client. Guess what the consequences of that are. You muck up your client money, um, in terms of, you know, how you deal with that, and again, you can be struck off there as part of it." I, I, even as someone who's been in the profession afterwards, I was truly stunned by how quick we were [00:21:00] to distance ourselves from data that would come to roost in a really poor way if we then overlay AI through it. I've, I've just worked with a, a con- conveyancing firm. They're, they're a niche conveyancing firm. They, they decided not to go with the AI that comes within their practice management system. They decided not to go for one of the, the big boys with, with adverts all over Times Square, et cetera, et cetera. And they've decided to build it themselves. And, you know, it's interesting that, that there's a, there's a blank in their practice management system That within, and I, I think you're, you know, you, you've got a data database kind of background. You know, it will probably get filled with some date like, you know, 1st of January 1990, no, 1900 or something like that You know, catching that later and, and figuring out why the AI went wrong and just setting these traps for you going forwards, there's a lot of nasties hidden there.[00:22:00] And, you know, the, the tragedy for me is we somehow feel it is beneath us to roll up our sleeves and get the data right. You know? There's a sense of entitlement that I've studied so hard, I've busted gut, I've worked these really long hours, this is my time. Why are you getting me to fix the data? You know, and the stories I'm hearing around, you know, well, the partner just gives it to the PA to do, even though the data and getting it right is so important. The associate gives it to the PA to do. You know, and, and creating this culture whereby we don't create that world where the PA can go say, "Well, how am I meant to answer this question?" 'Cause if you've not defined the data point, the data governance isn't there, it's meaningless. You know, two, three very good lawyers, even if they did spend the time on it, would give you a different answer. You know, and that, that played out. You know, I talked about the, the, the, the bank where I was filling out that [00:23:00] form around the rating downgrade clauses and the securitization hedging. You know, for me it was really insightful and I remember very clearly 'cause, you know, I got this list of questions. I thought, "Well, what do you mean by that?" And they honestly had no idea. You know? Um, something as, as, as, as, as important as, um, well, what do you mean by what's the rating at which this happens? Because the, the documents sometimes expressed as when you hit this rating, then the action occurs, or when you go below it, it occurs, and they've not defined that. So I could straightaway tell you that this bank is gonna have inconsistent data because different people had answered it in different ways. The poor kind of quant downstream, which was throwback to, to my days, you know, that, that had led to my journey into the law firm. He just assumes these are smart people and they know what they're doing. Um, it, it's, it's, um, uh... The, the, the one thing I will say is I'm very glad I followed my instinct because, 'cause I tried to work with lawyers when I was still on the [00:24:00] technology side as a quant at, at, at UBS, and, you know, both internally and also working with industry players and leading law firms, et cetera I, I struggled because the answer was, "Well, you're not a lawyer, you wouldn't understand it." And my instinct was that I needed to become a lawyer such that they would even just listen to me. I mean, my, my wife's the one that, that paid the price, right? The, the, the, the story is that I proposed, and apparently my next words as soon as she has secured the yes was, "Well, I'm gonna be a student and you're gonna, you're gonna fund it." So my, my, my wife was the one that, that, that, that paid the price for it in many ways. But I think that was so important because even with being able to say that, "No, I, I, I, I hear you. I've, I've drafted these documents before. I know this. I know the law. I've advised leading institutions on, on, on the law and regulation here," um, it's still a battle to help people [00:25:00] understand the seriousness of it. And I think, you know, what we're going to see in terms of AI exposing this catastrophic things happening because even though people spend a lot of time, they don't understand how those, the, the, the, those, those tiny bits, the, the, the data governance, data quality issues will surface. And, and you know, we're gonna be, and we already are, being very quick to blame the tools. Um, um, um, um, and you should never be blaming your tools, right? You probably got the right or the wrong tool. And, and, and, and again, you know, a particular bugbear of mine is, is people talking about AI and not realizing that it's, it's a suite of tools and, and ways of working, and it's not just about the tool, but the process you work with it and the data inputs, et cetera. Gosh, you know, I, I sometimes I'm saddened, right? Because we think the AI moment has hit, and I'm thinking to myself, "We've got a long, long way to go." [00:26:00] You know, and, um, so many aspects of kind of the risks that you highlight, um, when I look at industries that have mature risk management practices, again, banks are at the top of that list. And think about the, the three, I used four jokingly calling the Wall Street Journal, but let's, let's take the three real lines of defense. You don't have those i- in law firms. I've never seen a law firm with a risk management, um, you know, group of like risk professionals that, that sit and align themselves to a practice area and work v- in tandem with the practice to ensure that all the compliance boxes are properly checked, and then having on top of that an internal audit team that comes in and evaluates the control environment to ensure that the processes, a- another set of eyes [00:27:00] to say, "Okay, I know our policy says that we, we check our citations and that they're not fabricated. Let me see your controls. What happens if somebody ignores that policy?" L- that we've seen it play out many, many times now. You need those layers in order to ensure That the control environment fits the risk profile. And those, uh, the, I think the root reason that we don't have that is because partner capital would have to fund it, right? Like that's a non, that's, there's no P in that, to your point, right? And, you know, um, there haven't been a lot of Ls, right? There haven't been, until recently, that many, um, you know- What, what I see it, if, if we can interject- Yeah ... see it in-house. So, you [00:28:00] know, one bank that I was working with, they had a, uh, a, a master agreement, trading master agreement in place with the Royal Bank of Scotland. Now, we have something called close-out netting, and you normally get a legal opinion to say that you may, uh, you know, the close-out netting is enforceable. Now, these opinions run for, the England and Wales opinion is close to 300 pages. And a large investment bank will maintain about 1,000 of these legal opinions and save about a billion dollars of regulatory capital if they can show they have a legal opinion that says that trading agreement is enforceable in terms of its close-out netting provisions. So this bank, um, said, "Yeah, we've got an opinion." And they tick the nettable flag. I mean, that's a tragedy of itself, right? The law firm gets away with writing close to 300 pages, chuck it over the fence to the [00:29:00] bank, who then has to turn it into a yes or no in their systems. So, so that, that, that is a live illustration for me of the law firm saying, "Nope, this is where my role stops, and I'm not gonna add any more value." Right? "I'm not gonna be a real part of that billion-dollar reg cap saving. I'm only gonna be involved in the very legal component of it." Now, let, let, let me start with what happened here. It turns out that they did have a legal opinion, but in their systems they tracked it as saying that they had a close-out netting opinion for England and Wales. And I'll never forget the day where I had to call up the GC and say, "You've got a problem here, and the regulator's not happy." And he said, "Well, what do you mean?" I said, "Well, your agreement's with the Royal Bank of Scotland. The clue's in the name, Scotland. It's got its own, its own jurisdiction. You should be tying it to the [00:30:00] Scottish opinion." There was no control framework to do that. And, and I tell you what it was, it was the lawyers were too lazy or too y- they thought it beneath themselves to be- get involved in the data. And the data didn't allow you to pick England and Wales, didn't allow you to pick Scotland, it just had UK there. Now, if we are going to move to a world where we are helping solve the entire business problem, and we're gonna have to, right? Because otherwise our clients of lawyers, be it in-house or be it of law firms, are gonna say, "Well, I can do a lot of this stuff myself using AI." The, the, there's, there's-- they're not gonna be perfect, they're gonna miss some of the nuances, but the cost saving is part of it, and it's so ex- and, and, and there's no hiding that, right? You, you know, this, these barriers that we built up that meant people could say, "But Akbar, you're not a lawyer, you don't get it," those barriers are [00:31:00] gone, right? You know, uh, uh, my wife maybe ought to have said, "Just, just wait, Akbar, it'll be available through AI," right? She is a computer scientist, by the way, so, so maybe she could have said that. Um, so you know, it's going to come because we're gonna have to chase the, the bigger piece of the business problem. And at that point, there's a lot more to gain, but there's a hell of a lot more to fall if we get it wrong. And then we're going to get the three lines of defense. We're going to get ways of working. You know, and, and actually one of the things that, um- You know, I'm very passionate about is, is kind of, you know, there's, there's a lot of talk about smart contracts, et cetera. And I, I, you know, a legal opinion is very much at the heart of what a lawyer does. They give their opinion on legal matters, right? And particularly in the US, it's a very established practice, and, and actually law firms have kind of, you know, committees that, that talk about, you know, the risks and what they will accept and what, what they won't accept, uh, et cetera, [00:32:00] as part of it. And, you know, one of the things that I've been looking at for the last few years is smart legal opinions, and how we can use that to connect the advice we give as lawyers to be more, um, a part of the business as part of it, as opposed to having all these intermediaries that have to... You know, there's this crazy situation on these close-out, uh, netting opinions where, you know, these lawyers that do nothing but these close-out netting opinions pass it over to the bank. Some of the biggest US banks have 20 people who just specialize in reviewing those opinions, right? Full-time people. I mean, we're writing the advice in a way that it needs another set of lawyers to even read what it is and turn it into a yes or no before it even gets anywhere near to the business. And it's just gotta make its way into saying, "Well, what's the reg cap calculation?" So, so, you know, I, I've been exploring that. Um, a- a- a- as, as you know, I'm a professor at U- University of Surrey. I'm [00:33:00] supervising a PhD student who actually retired as a lawyer and, and, you know, was one of these experts on close-out netting, and got him to-- He's, he's just writing up at the moment, and just trying to look for the possibilities here, right? You know, the law changes. You know, how can we create a world where the law changes, the legal opinion gets updated, and it automatically causes some sort of action that means the business do the right thing because of what the legal advice says? I mean, it's not gonna be straightforward, it's gonna be fraught with difficulties. But I love your positioning of the control frameworks that you need around there. But if you get that right, just think of the prize in terms of what we can achieve as part of it, right? In terms of law genuinely kind of accelerating how we empower business, how we empower-- You know, it will have wider society benefits for law [00:34:00] in many ways. Yeah, I think that's, that's going to be one, um, pressure that the legal industry is going to feel is as the commodity work starts to get eaten away at, um, you know, th- there's going to need to be an elevation of, um, use of lawyer, lawyers' brains. And, um, it's going to force them to be more integrated and more connected to the business. So, you know, as a, uh, being an entrepreneur for many decades now, um, I started my journey, uh, I wasn't even old enough to drink when I started my first business. It was a collection agency, and we used to work with legal partners, uh, quite a bit, as you could imagine. Uh, then I went into the corporate world and then back as an entrepreneur. So I've been, um, I, I've had lots of exposure to the relationship between client [00:35:00] e- you know, client and external counsel, um, internal client to inside legal functions. And I, I can tell you that my experience has always been of an arm's length nature, and, um, I think that I'm not alone in my feelings around that. So this is a great opportunity. I don't think that it's a lack of curiosity. Um, I do feel that there are dynamics that make the relationship the way it is, you know, somewhat arm's length. But I feel like the, um, the barriers between client and law firm are starting to lower as a result of technology, and as we start to eat away at the lower tiers of legal work, there's only one way-- direction to go, and that's up the complexity scale. And we're entering into a world now with AI where we're gonna have a much more complex regulatory [00:36:00] environment. I mean, think about just, you know, with robotics and self-driving cars and, you know, all of the new, you know, regulatory frameworks that are gonna have to cover that. And, and, you know, as the world gets more technical, it gets more complex. And, um, I, I think it would be welcome by lawyers to engage and understand, engage with and understand the business in a, in a deeper way. It's just, you know, I think with, with law firms specifically, uh, you know, there is a cultural dynamic that, that, that needs to be pivoted, um, in terms of how they engage with clients. Um, I'll go back to Bjarne again. Uh, the reason I asked him to be on the podcast is I saw another podcast he did, and he, he had a real zinger of a line. He goes, "I have never seen an industry less curious about their clients than, than law firms," which I thought was interesting. And I [00:37:00] think it's-- that's a perception, um, because I don't think it's, I don't think it's a lack of curiosity. I think it's a cultural dynamic. I don't know. What are your thoughts on what's driving the perception of my legal partners aren't really that curious about how my business operates, they just wanna put out fires? I think it's been a function of the business model has been so good for so long. And in terms of, you know, you, you bring in super smart academic, um, insecure people, put them into this hothouse of Being together, a very l- culture of long hours and demands on billability that you don't have time to think and, and, and fail fast and, and be innovative in a, in the true sense. Um, and I think it means that we're always clutching at things and doing them at, [00:38:00] at, at, at, at supersonic speed. And, you know, another area that I, I, I work in is digital assets. So, you know, for me that's a nice mix, right? It's tech and increasingly a lot of law and regulation, um, issues. I, I actually pleased to say that I've, I've helped write the VAS rules for the Philippines SEC recently and, and, and Cambodia, and we've got a couple of other jurisdictions on the way that we're assisting with. And it's been a real struggle with... We, we, we need lawyers at the table there because there are things that, that, that, that very much are their purview, but the understanding is so, so shallow. You know, when I talk about, um, uh, cryptocurrencies, et cetera, I, I, you know, come... I, I ended up writing the compliance risk framework for BlockFi. So they were one of the, you know... It was all, all good until they took a loan from FTX and never, never a good idea. But, you know, [00:39:00] when you talk to people about what actually happens, you know, there's very little understanding and little curiosity that you need. You know, you get statements such as, "Well, it's immutable." Well, no, not really, but there's a whole load of assumptions that you've made in order to get there. And, and actually that reminds me, you know, n- now I'm kind of going down this, um, this, this, this train of thought. That reminds me of the f- pre-financial crisis, you know? And, and I think I, I said that I, I worked on these securitizations, um, structures and, you know, the rating agency were, were giving them AAA ratings and more AAA ratings and, and, you know, 'cause I did it one day and other people did it and, and i- if you dared ask the question, "But how does it work?" You know, kind of, "Why has it got a AAA rating?" And everyone would just look at you and, and, and, and say, "Well, don't, don't be stupid." And, and you're almost... Y- you had so much work, [00:40:00] you, you were encouraged not to be curious. You know, a- again, an- another very happy memory I have is, you know, one, one of the big investment banks called up, you know, the partner I worked for and said, "We need the documents done in, y- you know, overnight and we're gonna close the entire deal tomorrow." And I remember going into the partner's office and, and, and, um, saying, "Look, I've canceled whatever plans I have for the evening. I'm very, very happy to do it. Please don't get me wrong," right? But I can honestly tell you, I don't think it's humanly possible to get all of the documents right. It's just too complex, and we really can't understand what's going on. And I will be forever grateful for, you know, that partner taking a view that-- Well, he listened to me. You know, I'd like to think I'd earned that, that respect, and, and he knew that I was, I was [00:41:00] totally serious when I said, "Look, I'll do it." You know, that very deal, the law firm that did take it on ended up getting sued for negligence. Mm. And I can tell you exactly what it is. We don't create that space because of the business model for people to be curious, and the technology is, is moving so quickly. You know, uh, look, I, I, I did a computer science degree at Cambridge. I, I had the benefit of one of my professors, Mike Lynch. I had Demis Hassabis in the years couple, you know, a couple of years, um, up from me, et cetera. You know, you were, you were amongst giants, right? You know, Nobel Prize winners to be, et cetera. John Daugman, who actually had, you know, a professor at Harvard in medicine, then computer scientist, taught me neural networks. You know, and, and, and, and, you know, he had, he'd come up with, um, the neural networks to kind of ident- iris recognition in, in, you know, this would've been in, in, in, in the '90s. Um- It's all about having that, you know, p- people in technology are struggling to understa-[00:42:00] to, to, to keep up with the changes that are happening. And it's not, you know, w- w- w- w- it's impacting every aspect of our lives, and it's just not possible for lawyers to say, "It doesn't impact us." Because if our clients are using technologies, it's impacting us as lawyers. And, and, you know, it's a, it's a really scary time for me in, in, in, in, in that regard, right? Because you've got to change the model, right? And, and I think we're, we're, we're taking it to the extreme, right? Because every partner is saying, well, you know, a- asking turkeys to vote for Christmas and saying, "Well, you know, it'll be the next generation that needs to worry about it. Well, just let me get across the line and, and put my feet up and retire." And I don't think we're doing enough for the profession and, and realizing that the pace of change at the moment is just, we, we just [00:43:00] can't afford to do that. Yeah. So speaking of, of that and, you know, the next generation, um, I had, uh, I recorded an episode that should be out ahead of this one with, um, Mike Schmidt Berger from Norm Law today, and it was a fascinating conversation. So Norm Law is what I would call a, a second generation AI native firm. They have the who's who of former regulators on their advisory board, former chair of the SEC. I mean, just real heavy hitters. They've got, um, e- extremely credible, like Mike was managing partner at Sidley for a decade plus. Um, they are taking a different model and they are taking the best of what Big Law brings, which is all of that human, the, the most talented legal professionals on the planet. You know, an advisory board with a [00:44:00] very um, risk-focused lens through which they look. And then you've got the AI native platform that doesn't have all the baggage that a traditional law firm has, like compensation models that are completely out of date when you move away from the billable hour, client engagement models like we've been talking about that are so-- you know, were designed 40 years ago, um, capital structures such that they have an MSO that's, they got 50 million from Blackstone. They're already at a, a unicorn. They just raised at a, a round at over a billion dollars. They've only been in existence a couple of years. Um, y- and they don't have all of that cultural inertia that I was talking about earlier that has to be redirected, and they're, they're taking swings. It's not the, the first generation of AI native firms that's just doing contract and data privacy agreement review and NDAs. They're [00:45:00] doing real substantive legal work. Not bet the company work, but m- several rungs higher than what the first generation did on the complexity ladder. And I'm looking at, you know, and apparently investors are too, are looking at the edge that they're gonna have in making change. They've got a capital structure that they need funding, they get it. Law firms don't have that, right? Like in the US anyway. Here, uh, Model Rule 5.4 doesn't allow for any fee sharing. So you either gotta move to Arizona and become an ABS, or you gotta leverage an MSO. It takes time. It's somewhat messy. And for an Am Law firm to do it, and I know several are looking, there was just a, I think it was a Financial Times article that named some firms in the upper echelons of the Am Law that are looking at this model. But like Norm's already got it, right? They need capital, I'm calling Blackstone. They're already 50 million in our cap table. [00:46:00] And I'm looking at how are these big law firms gonna compete? Um, and I know we're almost out of time, but like, I'm curious your thoughts on big law's ability because they're, they seem to be moving slower than their cl- their counterparts on the corporate legal side. I've, you know, I talked about S- Stephen Crowley from Ford posting on Bloomberg Law, and the title of the article is, "Hey, law firms, you're not keeping up." So we're behind in the law firm world. We've got AI native structures starting to appear that take the best of what we offer as a big law firm, and they've got, you know, potentially unlimited capital with funders like Blackstone, and then you got these law firms with all this inertia that has to be redirected. Are we gonna be able to make change fast enough before the chickens come home to roost? I s- I still think it comes also [00:47:00] back to the data, right? Like, I actually think we will find that, you know, we talk about the treasure trove of, of data that a law firm has, but it's missing the business data that accompanies it in a lot of cases. So, so I think that there is a real risk that, you know, if, if they then suddenly run towards the capital, they will have missed the boat if they don't start moving very quickly. If I compare it to what some of my large investment bank clients have when their in-house teams start to look at using AI on some of the data they have that then can pair the agreement data with the legal opinion data that they have with reg data, you know, in, in terms of expressing regulation in some sort of codified form that, that is machine readable. The value is just so much more there, right? And it's really gonna reduce the law firms in terms of the value proposition that they provide as part of it. And I've written a- an article that was [00:48:00] published by the Law Society Gazette. You know, if, if we're not careful, we're going to reduce ourselves to being the fuse, the insurance policy. And, and you go to a lawyer when you want someone to have someone to sue if it goes wrong. That, that, that will be our function. Um, y- you know, there's so much-- My, my journey's shown me that there's so much value lawyers can bring. I think the US actually does a lot better at that, right? And you look at where people who have worked in big law and some of the roles they take business side afterwards. I'm not sure we've got that same culture, um, you know, the other side of the pond. Um, but it, it, it's gonna be a challenge and, and, and I'm fearful. Um, you know, uh, I, I feel I have a, a love for the profession. Um, and, and I feel that, um, you know, it, it may just take one or two, um, incidents, high-profile incidents And it might just force the issue. But it's, it's not, it, it-- I don't think it's just gonna happen because [00:49:00] everyone thinks it's the right thing to do. Yeah. I mean, the good news is we're not out of time yet. Um, we will be if we don't start the work in earnest now. There's still a lot of experimentation happening, and hey, I get that. Like, I hear people ask the questions about ROI, um, you know, I talk about the three waves of this transformation. First wave being copilot era, which is with a lowercase C. Um, you know, the Harvey's, the Gora's of the world. Second wave being, you know, the, where we re-engineer the process and unbundle the legal work and enable it to, to scale with technology. And then the third wave being the, the autopilot or the agentic era, and we are still figuring out wave one and, um, th- you know, these AI native firms are starting in wave two. They don't have-- They're not using workflows from 1995 that they bolt [00:50:00] a copilot onto. They're starting in wave, in wave two, which is, um, light years ahead of, of where we are. So I'm hopeful that, like, candid conversations like this inspire, um, a sense of urgency. I don't think panic is the right path, but a sense of urgency moving in earnest and understand- making the investments and stop the pearl clutching in the industry that, "Hey, we're, we're making record profits." What worked yesterday won't work tomorrow. W- well, in- investing in people, right? And investing in our future generations, and realizing that this isn't about replacing the junior work because we'll create another problem as part of it, right? Th- you know, th- this, this is about, you know, the reason we sponsor the PhD is because it's [00:51:00] an investment in the future, right? You know, and, and, and, and, and that's got to be the way you look at it. Um, y- you know, I, I guess I'm opening up a whole can of worms there in terms of what do we do, you know, do, do the junior members of our profession equally have the maturity to realize that it's so crucial that they don't take the shortcut and use AI and kind of You know, remove their ability to, to learn. You know, and I have a l- a l- a lot of fun explaining to people how neural networks actually operate, and the fact that it's all about feeding it more data, trying things, getting things wrong, trying again, et cetera, et cetera. And the moment the junior associate, the trainee gives that to the AI to do, it's actually them that suffer. But again, it comes back to the, the, the, the business model, right? The pressure is such that, you know, you're forced, [00:52:00] in many ways, to just look for the fastest way to get it out for the client demands, et ce- You know, I, I... One thing we haven't touched on is, you know, the client's always right, right? So, so may- may- maybe, maybe this is just what it is, you know. M- maybe clients have got to play a part to that. You know, and I know clients are equally bashing up law firms to say, "Look, if the AI can do it fast and, and, and, and therefore, you know, do you really need to charge me that? We want you to use AI as part of it," et cetera. But maybe they need to play a part of that as well, right? And, and, and be a bit more mature and foresighted in terms of ultimately where we're trying to get to. Yeah. I think the challenge with that, I agree with you. I think the challenge with that is there's so much pressure coming from shareholders onto boards down to management to deliver savings as a result of this that I think it's gonna impair the clients [00:53:00] from thinking long term. Because if you're at a publicly traded company, you're beholden to shareholder demands, and they don't really care about the profession, right? I mean- But what you're saying there buys into the view that AI, what will it do to society? It will just reduce jobs, it will reduce cost. It's not really buying into that view that no, it's, it's value creation. It means, you know, as with all other big advances, it actually changes the very nature of what we can achieve and work, right? You know, that's implicit in the statement that you've made there. Um, but, but, but, but you're right. You know, it's, it's, it's those short-term pressures that we put, be it through shareholders or be it through, you know, a, a, a corporate's investor demands. Um, but it's gonna take a brave few who, who try it the other way, as you say, the AI natives, and, and maybe they'll just put enough pressure to, to mean that [00:54:00] people realize, um, you know, they'll, they'll be the new blockbuster if they're not careful. Indeed. Indeed. I use Netflix and Blockbuster quite a bit. Um, there's lots of lessons I think we can learn from how that story played out. But, um, this has been a fantastic conversation. I knew it would be. Thank you so much for, for staying up late, uh, on your end. Um, how do people find out more about, uh, D2 and yourself? Um, d2legaltech.com. Um, just, um, you know, uh, we, we do a lot of work in the derivatives ISDA space. Um, you know, there's lo- lots of material out there. Um, and, and hopefully, um, it can help people think through some of the challenges and opportunities that we have. Um, but, um, you know, we, we, we'd love to have a con- more conversations with you, Ted, and, and, and others on it. So yeah, please, please get in touch anyway. That sounds great. All right. Thanks again, and, [00:55:00] and, and have a good night, Akbar. Thank you. Bye. All righty. Thanks for listening to Legal Innovation Spotlight. If you found value in this chat, hit the subscribe button to be notified when we release new episodes. 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