The Covid-19 pandemic has brought considerable opportunities for Portugal’s technology lawyers as e-commerce booms, regulations proliferate and healthcare apps gain traction, but the wider economic impact of the crisis means law firms’ future is clouded in uncertainty, according to leading technology lawyers speaking at the Leaders League Thought Leaders Roundtable
In many ways the coronavirus pandemic has represented an opportunity for technology lawyers, but it has also, obviously, brought considerable concern. Lawyers in Portugal anticipate a dramatic increase in demand for advice on cybersecurity and regulatory matters, as well as bracing themselves for a flurry of client requests relating to the legal issues affecting the development of new healthcare apps, for example. Generally speaking, the need for social distancing during the pandemic means e-commerce is growing fast and many clients looking to grow this aspect of their business will be relying heavily on their legal advisers. Looking at the wider picture, the economic fallout from the pandemic will also result in technology companies merging, becoming insolvent, or being restructured and such scenarios will provide rich pickings for law firms, according to participants in the recent Leaders League Thought Leaders Roundtable, which focused on technology in Portugal and took place via video conference.
However, while the pandemic may have the effect of generating increased workflow for technology lawyers, there are also fears about the negative effects – many of which could be quite severe – on law firms’ business. Simply put, many law firms, even some of the biggest in the world, are feeling the squeeze. Struggling clients are, in some cases, taking longer to pay their legal bills and, with cashflow becoming an increasingly troublesome issue, some of the legal market’s biggest players are contemplating having lawyers working three or four-day weeks.
DLA Piper partner Daniel Reis said the biggest opportunity for law firms at present is in the area of cybersecurity. “This is generating a lot of new work in areas such as compliance and incident response,” he explained. Reis added that there is generally a lot more cybersecurity reporting, partly as a result of the NIS Directive [the first piece of EU-wide legislation on cybersecurity, which provides legal measures to boost the overall level of cybersecurity in the EU]. Meanwhile, Reis said that the coronavirus pandemic has created considerable uncertainty, and, as a result, clients will need legal advisers to help them deal with the effects, whether that involves restructuring and insolvency projects, M&A, or litigation, for example. In addition, clients also need advice on the digital transformation of their business, which is increasingly becoming a priority during the pandemic.
Clients struggling to pay fees
Reis said that the economic recession caused by the coronavirus pandemic will affect “all economic players including law firms”. He added that the average time clients take to settle bills is starting to creep up. Reis also noted that clients in the tourism and retail sectors, in particular, are “particularly feeling the crunch”. Meanwhile, some major global firms are considering “having lawyers work three or four day weeks or encouraging sabbaticals”. Specifically from the perspective of technology lawyers, Reis said that one of the challenges they face is that technology law is becoming less of a niche area as more and more of the economy is digitalized. He added: “How do tech lawyers now position themselves? It used to be easy to promote ourselves given how law practice groups were described 10 years ago, but now it is not obvious how we should try to win new work.” Reis added that it used to be the case that most law firm practice groups would find technology lawyers for technology matters, but “now, for example, you can’t be a banking and finance lawyer today without a good understanding of technology”.
Reis said there is a lot of technology legislation and consequently there is “always something new to learn”. One upcoming development will be the implementation of the European Electronic Communications Code (EECC), an EU directive that regulates electronic communications networks and services. “Telecoms regulatory work is very complex and there are a lot of regulations on the horizon – for example, we continue to wait for the European e-privacy regulation” Reis said. He added that the “business landscape is also always changing because if new innovative companies become successful, their business models can completely change the market”.
Although technology “emerges as a winner from the crisis”, according to PLMJ partner Pedro Lomba, he added that the “platform economy, collaborative businesses, mobility, transportation and tourism are suffering considerably” as a result of the pandemic. However, he added that the coronavirus outbreak has also represented an opportunity for some businesses, such as those that have launched, or will be launching, new logistics services. “For example, Uber launched new delivery services and partnerships in the logistics area, which raises some regulatory issues,” Lomba said. “I’m certain that there will soon be regulation of delivery services.” Lomba added that the supply chain has undergone a huge transformation. He continued: “This transformation will accelerate, the question is: will new technologies, such as big data or blockchain, build a more resilient supply chain system? With e-commerce expanding, the supply chain will be redefined.”
Economic recession concerns
Meanwhile, Lomba said the market for digital healthcare will grow. “Online consultations and digital healthcare are growing exponentially – in the near future, we will have prescription apps as they have been recently approved in Germany” he explained. However, Lomba added that economic recession is a concern, though he said he believed that Portugal has “so far, productively managed the crisis, and there is a new governmental programme for digital action that will provide more opportunities”.
Technology is so pervasive that “no longer can it be a secondary practice area because it is everywhere”, said Lomba. He continued: “Tech clients don’t like too much over-lawyering, they like pragmatic responses. Lawyers should be transaction engineers as they bring together different interests, private and public. Here, relationships with regulators will become crucial because a forest of new regulations will come.”
Lomba said it pays to “never be too smart” with regulators and collaboration with them is crucial. He added that new regulations will come into force, such as the EU platform regulation, the EU Digital Content Directive, and the “whole package of new laws under the Omnibus Directive for consumer protection”, which, according to Lomba, will be a big opportunity for law firms to “find work and provide advice”. He adds that the EU Omnibus directive could also give rise to liability litigation.
5G will create disruptive business models
Cybersecurity represents a major opportunity for law firms because data breaches, security incidents and overall technical and operational risks associated with online information security are increasing, said Vieira de Almeida partner Magda Cocco, head of the firm’s ICT practice. She added that this environment meant cybersecurity was a “must-have concern for all companies, particularly those handling particularly important, confidential or commercially sensitive information.”
Not only is the market itself far more sophisticated – and evolving at a very fast pace – but the legal issues associated with cybersecurity are becoming increasingly complex, Cocco added. "Technology will inevitably and consistently penetrate all sectors – every sector is looking into technology, including using artificial intelligence and blockchain, but this new tech society and economy poses legal questions – both new ones, and complex variations of classic legal issues," she said. Cocco added that the advent of 5G, Internet-of-Things and artificial intelligence would result in “new and disruptive business models, and lawyers must be able to help clients in anticipating such legal questions and having a solid but imaginative strategy to address them.”
One of the effects of the current crisis will be that "agile law firms with collaborative environments and a forward-thinking approach" will survive and eventually increase their market share, according to Cocco. She added that, during the crisis, she had challenged her team to "rethink the business and the way in which we may help our clients with it." Cocco continued: "There is a huge challenge ahead for tech lawyers. While by nature this is already a high-speed area of law, now really is the time to hit the ground running.”
Demand for high-speed data transmission rising
Cocco said that, to be able to provide value-added services to their clients, technology lawyers need to: firstly, know and understand the new technologies, in all their forms; secondly, have specialised knowledge in several branches of law, such as data protection, cybersecurity, intellectual property, and regulation of electronic communications and media; and thirdly, “understand and dominate” the regulation applicable to the specific sector where the technology is supposed to be deployed. In addition, on top of all these requirements, Cocco said technology lawyers need to keep up with all the legislation, guidelines, and regulation that the relevant authorities publish in an “almost frantic way”. This requires “highly specialised knowledge tools, smart collaboration, and innovation”, she added.
As cybersecurity is a major issue for clients, there are significant opportunities for law firms to advise clients on “designing and tailoring integrated responses” that bring together legal advice and technical expertise, said Morais Leitão partner Gonçalo Machado Borges. He added that there will also be demand for “preventative” advice, involving the review of security procedures, as well as “incident response” work, such as advising on the criminal prosecution of hacking cases. Machado Borges also said that e-commerce would present plenty of opportunities as “bricks-and-mortar trading is suffering”. He said that with more people working from home, there will be increased demand for “high-speed data transmission”, and said that the telecoms sector “values connectivity and safe data transmission”. In addition, law firms will have the opportunity to provide anti-trust advice related to digital platforms.
The global economy is in crisis and the situation will “likely only get worse” according to Machado Borges. Law firms’ cashflow will become a more serious challenge and they may look to introduce “more flexible arrangements and experiment with new ways of organizing practice areas and delivering services to clients”. Meanwhile, keeping up to date with developments in an increasing number of technological fields can be daunting, Machado Borges said. He added that lawyers face the challenge of “staying focused and finding new ways to stay relevant and differentiate themselves”.
Machado Borges said the aforementioned EECC will be a “major event” and will lead to a new range of services falling under the definition of electronic communication services. In addition, he said an “emerging regulatory framework” for artificial intelligence will be developed. Another growing area will be censorship on social media platforms (for example, in relation to public health), which will lead to issues concerning freedom of speech and expression.
Poor legislation and no case law
The coronavirus pandemic, and the associated lockdowns, have led to an explosion in technology, with the result that people are more technologically aware, said CCA Law Firm partner Martim Bouza Serrano. He added: “Technology is now the solution for everything.” As a result, there will be opportunities for law firms to help companies that have been “ultra-analogue” in their outlook. In addition, Bouza Serrano said that with more companies shifting to a greater degree of homeworking, this will give rise to increased cybersecurity issues as well as issues related to employee privacy in terms of how employees are monitored.
One of the key challenges technology lawyers face is having to be “first on the scene” and advising on a problem for which there is no precedent, said Bouza Serrano. Another issue is “bad laws”, where time has not been taken to consider the problems created by such poor legislation. In addition, there are no specialized courts and often no case law, said Bouza Serrano. “It is difficult to guarantee that the courts will understand the case,” he added. “There are also weak regulatory bodies with regulators that are too focused on punishment, rather than providing space for companies to flourish.”
Given the explosion in e-commerce, there will also be a significant increase in consumer-related issues in the sector said Bouza Serrano. “This will shine a light on how advertising is done on the internet,” he added. “There will also be significant development in the health space and in the related ethical issues.”
Law firm leaders must take innovation seriously
The boom in Covid-19-related mobile apps – including those related to contract-tracing, telemedicine, the provision of healthcare, and helping elderly people to manage at home – represent a significant opportunity for law firms, according to Cuatrecasas senior associate Sónia Queiróz Vaz, who is head of the firm’s IP, data protection and TMT practice in Portugal. She added that “5G-related challenges, the increase in e-commerce and the greater need for video meetings for working at home and e-school – as well as the increase in digital services in general – means that cybersecurity, big data, the demand for greater bandwidth and faster download speeds, as well as technology, privacy and trade secrets protection will all become major areas of opportunity.
Meanwhile, the development of the internet-of-things, the use ofsocial networks, blockchain and personal data-related issues – as well as the impact of technology on banking, health and education, for example – means law firms need a multidisciplinary approach to providing advice, said Queiróz Vaz. She added that, when determining the future of law firms, innovation must come from the top and leaders must take the issue seriously – she said this was “definitely the case at Cuatrecasas”.
As technology rapidly develops, lawyers will be needed to provide the support to ensure such developments are legal, said Queiróz Vaz. “There will be not only IP, privacy and TMT issues, but also tax, banking, health and labour law issues, for example – with the development of e-commerce and technology, lawyers must be prepared to assist our clients by covering all areas of practice affected by an app, for example,” she explained. “We work on specific training in different areas of practice that some lawyers may not be familiar with – such as tax, public law, banking and labour, for example – so all lawyers working in different areas of practice are well prepared and able to identify whether a client has, or might have, a potential issue and can involve other colleagues to provide integrated advice.”