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Out with the old, in with the New Delhi labour reforms?

As the torchbearer of the BRICS economies since its successful globalisation project throughout the ’90s, India’s employment market has been the nexus of an enduring ideological struggle as the nation seeks to reconcile its socialist-era labour legislation with liberalised market policy. 

The frontline of this struggle is seen in the extensive proposals for legislative reform currently being discussed and argued, with the nation’s employers and legal counsel now finding themselves at the centre of this crossroads. 

On the one hand, the overbearingly protectionist laws currently governing employment in the organised sector have long provided security for employees, while employers have benefitted from the associated retention rates and company loyalty; on the other hand, the perception persists that these same laws stifle the foreign investment needed to sustain India’s upward economic trajectory. 

Finding flaws in old laws

Evidently, the legal tensions need to be looked at in the context of the extraordinary societal changes that occurred as India shifted from the colonial British Raj to an independent state in the middle of the 20th Century – an independent state that had socialist principles at its heart. 

These principles are seen reflected in the labour legislation introduced at the time, most notably the 1947 Industrial Disputes Act (ID Act), which still has considerable authority over contemporary labour issues.

Anshul Prakash, employment practice head at Khaitan & Co. – a firm that counts large domestic and international employers in the organised sector as clients – and associate Kruthi Murthy, say: ‘The ID Act, which was brought into force pre-independence for the investigation and settlement of industrial disputes, continues to be the parent legislation of most employment-related laws in India. However, said legislation has not previously been amended or revised to align with labour market trends in India.’ 

And what are the primary aspects of this legislation proving to be the most contentious in India’s fast-changing economic landscape? ‘The prominent villains of the ID Act in 2020 are Section 9A and Chapter VB,’ they suggest. 

‘They make it impossible for an employer to effectuate any change without the consent of workmen. Furthermore, factories, plantations and mines engaging more than 100 employees must obtain the prior permission of the appropriate government before resorting to any layoffs, retrenchment or closure’. 

However, that figure looks set to go up threefold should the latest suite of proposed reforms get the nod; the proposed Industrial Relations Code 2019 suggests a figure of 300.

It’s clear that these issues go far further than a contractual conundrum between employers and their workers; they’re becoming a point of focus in employment litigation before the highest arenas of India’s legislature. 

Recent comments from the Madras High Court during an industrial relations dispute arising from a strike in the manufacturing sector also bring into light how the archaic nature of labour legislation isn’t keeping up with global workforce trends. Trends which India must adapt to. 

A light is being shone on the transient and casualised nature of the modern worker. Most striking is Justice Venkatesh’s assertion that ‘the concept of a person working in a particular establishment or a company permanently is no more in existence. Right from the highest executives to the lowest level of workmen, they keep changing their jobs from one establishment to another always looking for greener pastures.’ 

Such statements show that India’s employment market is suffering the same teething problems as seen in the West, including the UK, when it comes to understanding the modern, transient worker, and legislating accordingly. 

‘The industrial laws available in this country have become archaic and unfortunately, they have not changed with the fast-changing environment in the industry,’ Justice Venkatesh continues. 

‘The law which does not meet the needs of the changing times and remains static, will prove to be more a hindrance than be of any help both to the employer and the employee. We have already reached such a stage. 

‘Unfortunately the legislature, in spite of being aware of the situation, has not chosen to revamp the industrial laws and for reasons best known to them, continue to cling to the out-dated, absolute and outmoded industrial laws.’

While Justice Venkatesh may be accurate in his assessment of prohibitive blue-collar legislation, he could also look far closer to home for more significant stumbling blocks to India’s global potential, namely the infamously slow court system.  

‘Approval of the appropriate government for layoffs, retrenchment or closure is not forthcoming and may be withheld for a prolonged period,’ say Prakash and Murthy. ‘In today’s era of digitisation and the fast-changing demand of global markets, swift adaptation to change is vital to maintain a competitive advantage. Delayed legal processes hampering workforce adjustments present serious challenges to profitability and business success.’ 

Whatever your ideology, an overworked and under-resourced court system runs antithetical to legislative progress. Prakash and Murthy put it simply: ‘The wheels of justice turn very slowly in India. Prolonged litigation and strikes organised by employees result in idle capital, loss of profits, delayed orders, and loss of goodwill from foreign investors.’

But although India’s snail-paced court system is much maligned – and certainly a recurring subject of ire for many employment lawyers who I interviewed – steps towards modernisation are being taken. And though it’s too early at this stage to tell, the post-Covid-19 world may actually bring in some positive changes when it comes to access and engagement with the court system, with technologies such as videoconferencing and e-filing coming to the fore. 

Employment in the 21st Century

The global move towards casualisation and transience is no more pronounced than in the entrepreneurial technology sectors; sectors defined by innovative – and intrepid – employees both on the junior and executive level. 

India’s prominence in the field of tech and innovation (particularly Bangalore, dubbed the ‘Silicone Valley of India’) has led to the sector becoming the new battlefield for industrial relations. 

‘Unionisation in India is largely restricted to the traditional sectors such as the manufacturing industry, where labour unions have helped blue-collar workers with higher employment insecurity successfully negotiate higher wages, job security and other demands,’ explain Prakash and Murthy. 

‘However, large scale lay-offs by IT companies, long working hours, automation and digitisation led the predominantly white-collar employees to organise themselves into trade unions in states such as Karnataka, Tamil Nadu, and Kolkata.’ 

Regardless, the traditionally blue-collar mechanism of collective action might not prove to be the most viable course of action in securing greater employment security and benefits for the burgeoning white-collar workforce. 

One only needs to look to the original Silicone Valley to see how the specialised nature and sophisticated skill sets inherent in the tech and innovation sectors favour an employee’s market, as large employers throw around ever more competitive employment benefits and remuneration packages in an attempt to attract premier brainpower to their stables. 

Should India’s similar workers recognise the utility of their highly specialised skillsets, unionisation might even prove to be more of a hindrance than a support, considering, as Prakash and Murthy suggest, that ‘the prominent effect of unionisation and its associated risk is a reduction of inflow of foreign capital.’ Capital needed to grow the tech sector and to provide sustainable employment possibilities. 

‘Greater involvement of trade unions in the technology sector is likely to curb the flexibility of employers in terms of dealing with employee issues,’ add Prakash and Murthy. ‘By and large, it had stayed free of unionisation and unionism all these years, which is perhaps also why the sector has seen considerable domestic and foreign investment which in turn led to a greater number of jobs being created.’

The unorganised sector

The elephant in the room is the informal labour sector. Government and UN figures point to a total of over 84% of Indian workers being employed in the informal sector and contributing to 60% of the economy.

This is despite regulations and workers rights amounting to zero, with agriculture and manufacturing – sectors with a particularly high female workforce, and largely from rural communities – being disproportionately represented, raising the question of whether an over-regulated organised workforce could be to blame for such high figures. 

‘Due to labour-market rigidity, establishments, especially those in the IT and services sectors, are looking towards the unorganised sector for engagement of independent contractors, freelancers, consultants or gig workers,’ say Prakash and Murthy. 

‘Engagement of the unorganised sector is an attractive option as parties are free to agree on the terms and conditions to them based on the business needs of the employer. Further, since the unorganised sector is not covered under the compulsory social security laws there is less financial liability on the employer.’

Still, some nascent steps are being taken to increase protections for those employed in the informal sector. An opt-in National Pension Scheme has been floated by Prime Minister Narendra Modi’s government to aid workers in their retirement. 

However, unlike in the US or UK, employers are not obliged to match contributions made by their employees.  Instead, employee contributions are market-linked, and several investment instruments are made available. Furthermore, a mandatory 40% of pension wealth must be paid into an annuity to ensure lifelong payouts. 

Gig-economy workers and platform workers (hired by the likes of Uber, Zomato, and other disruptive technologies) are also benefitting from a reform in the Code on Social Security which may pave the way for health and maternity benefits, life and disability cover, old-age protection, and other benefits as determined by the central government. 

What the future holds

These are just a few of the Modi’s pro-capital reforms aimed at consolidating and simplifying the legislative jungle for employers. But, as Prakash and Murthy point out, ‘such labour legislations continue to predominately regulate and benefit only the employees of the organised sector.’ 

The centrepiece of these reforms comprises a set of four codes consolidating a previous set of 44. As might be expected of any red-tape reduction exercise, fundamental elements of the new legislation have been accused of stripping workers of the right to strike and unionise, specifically the new Industrial Relations Code which will subsume significant elements of the highly protectionist 1947 ID Act. 

No better is the ongoing ideological struggle happening in India’s labour market better encapsulated than here. For while the legacy of worker protectionism is still apparent in much of the country’s organised sector, this mentality conflicts with the economic viewpoint that the foreign capital required to maintain India’s upward growth is hobbled by trade unionism.

However, given the ongoing global coronavirus pandemic, a cloud of uncertainty has been cast over the future of these labour reforms. Government statements suggest as much of a willingness as ever to pass the reforms, but to what degree they will resemble their pre-Covid-19 image is now uncertain. 

The lack of social security in the informal sector was thrown into sharp relief by the mass urban exodus as workers returned to their rural communities once post-lockdown unemployment became a reality. This could provide the catalyst for a serious debate on long-overdue reforms to the informal sector. 

Will socialist-era labour policies of old be subsumed by market-friendly reforms, or be built upon to adapt to the post-Covid-19 world order? This remains to be seen.

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Covid-19 may have awoken a sleeping bear

Although the federal government may have relaxed healthcare regulations amid the pandemic in an effort to quickly respond to the growing number of Covid-19 cases, enforcement agencies have not relaxed at all. In fact, they have done just the opposite. 

With the federal government spending millions of dollars in support of Covid-19 testing and countless other funds in the fight against the novel coronavirus, it is no surprise that both federal and state authorities are turning their efforts toward combatting fraud related to the disease and those seeking to exploit and profit from the pandemic. The US Department of Justice (DoJ), US Attorneys’ Offices, and State Attorneys General are at the forefront of these efforts. For example, the DoJ has instituted a Coronavirus Fraud Coordinator at each US Attorney’s Office across the country. 

The DoJ has already begun filing health care fraud and kickback cases tied to shady practices related to the pandemic. For example, on April 28, 2020, the US Attorney’s Office for the Eastern District of Michigan charged a doctor for his alleged role in a health care fraud scheme which involved submitting false claims to Medicare for services which were never rendered. Specifically, the physician allegedly submitted false and fraudulent claims for high-dose intravenous vitamin C infusions to patients at risk of contracting Covid-19, especially those working on the frontlines, and to those who tested positive for the virus.

This increased oversight comes undoubtedly as a response to the exponential boom in Covid-19 testing and prevention. As of early May 2020, over 7 million Covid-19 tests have been taken in the US. Now, more and more people are submitting themselves to serology tests to determine if there are antibodies in the bloodstream indicating they were recently infected with the virus. With the increase in government watch coupled with the increase in virus-related testing, clinical laboratories providing Covid-19 test analysis must be cognisant that their marketing and compensation arrangements do not run afoul of the federal Anti-Kickback Statute (AKS) and the Eliminating Kickbacks in Recovery Act (EKRA).

Potential for enforcement

Those who regularly practice in the healthcare industry are familiar with the AKS, which criminalises fraudulent conduct and kickbacks or patient referrals where a claim for payment is submitted to a government program. However, a lesser-known, but potentially as troublesome means of enforcement is 2018’s EKRA. 

EKRA was passed as part of the larger Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act. It was primarily enacted to target abuses arising from the opioid epidemic. However, due to the broad statutory language, EKRA has the potential of having a much wider reach, especially when it comes to laboratories. 

EKRA prohibits soliciting, receiving, offering or paying ‘remuneration (including any kickback, bribe or rebate)’ in return for referrals to, or in exchange for using the services of, a ‘recovery home,’ ‘clinical treatment facility’, or ‘laboratory.’ Specifically, EKRA provides that: 

(a) Offence. – Except as provided in subsection (b), whoever, with respect to services covered by a health care benefit program, in or affecting interstate or foreign commerce, knowingly and wilfully –

(1) solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind, in return for referring a patient or patronage to a recovery home, clinical treatment facility, or laboratory; or

(2) pays or offers any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind –

(A) to induce a referral of an individual to a recovery home, clinical treatment facility, or laboratory; or

(B) in exchange for an individual using the services of that recovery home, clinical treatment facility, or laboratory … shall be fined not more than $200,000, imprisoned not more than 10 years, or both, for each occurrence.

Under EKRA, ‘health care benefit program’ includes ‘any public or private plan or contract affecting commerce, under which any medical benefit, item, or service is provided to any individual, and includes any individual or entity who is providing a medical benefit, item, or service for which payment may be made under the plan or contract.’ 

Through this broad definition of ‘health care benefit program’ EKRA applies to all payors, both private and public. This is in stark contrast to the AKS, which applies only to services paid for by federal programs. Therefore, a laboratory conducting virus or serology test analysis could be in violation of EKRA for receiving remunerations for referrals, even if the payments are coming from private insurance companies or from the patient themselves (out-of-pocket). This means that the vast majority, if not all, of Covid-19 virus and serology testing are likely subject to EKRA.

Further, while the definitions for ‘clinical treatment facility’ and ‘recovery home’ specifically reference substance use, ‘laboratory’ does not. ‘Laboratory’ is defined to mean ‘facility for the biological, microbiological, serological, chemical, immuno-haematological, haematological, biophysical, cytological, pathological, or other examination of materials derived from the human body for the purpose of providing information for the diagnosis, prevention, or treatment of any disease or impairment of, or the assessment of the health of, human beings.’ 

Based on this broad definition, both Covid-19 virus test analysis providers, as well as serological test analysis providers, would fall within the purview of EKRA. Therefore, EKRA may be implicated in all referrals for laboratory tests, regardless of whether the tests relate to substance abuse testing or treatment. 

Like the AKS, EKRA statutorily provides for a number of exceptions. However, EKRA’s eight statutory exceptions and ‘safe harbours’ are more limited in number and scope than the AKS’s in some instances. 

For example, under EKRA, a laboratory may not pay sales or marketing employees if such payments ‘vary by: 

(A) the number of individuals referred to a particular… laboratory; 

(B) the number of tests or procedures performed; or 

(C) the amount billed to or received from, in part or in whole, the health care benefit program from the individuals referred to a particular… laboratory.’ 

This is unlike the AKS, which generally exempts commissions/payments to bona fide employees of a lab. Therefore, generally accepted clinical laboratory business practices – such as paying sales employees on commission – arguably fall within the scope of EKRA’s remuneration prohibition.

A wide-reaching net

The government has not yet frequently utilised EKRA as a means of fraud prosecution. This is likely due in part to the fact that it was enacted in late 2018 and is still relatively new. Although the government has not regularly relied on EKRA as a means of prosecuting fraud, there is no time like the present for the government to tap into this under-utilised enforcement mechanism given the government’s heightened focus on healthcare providers and the increase in virus and serological testing in relation to Covid-19. Further, there will likely be a drastic uptick in EKRA claims when, not if, aggressive regulators’ counsel begin to capitalise off of the broad language of the Act. 

Knowing this, laboratories and other covered providers need to be aware of EKRA and its broad prohibitions when engaging in sales and marketing of their services. All potentially covered providers need to evaluate: 

  1. whether their services are covered by EKRA; 
  2. whether any of EKRA’s exceptions are applicable to their organisation; and 
  3. the compensation arrangements for their employees and outside vendors as they could be scrutinised and possibly considered payments for referrals under EKRA. 

Additionally, they need to re-familiarise themselves with the AKS and other applicable state anti-kickback laws to ensure they are complying with all potential enforcement opportunities. It is a matter of time before we see fraud prosecution through EKRA, and providers need to safeguard themselves from getting trapped in EKRA’s wide-reaching net. 

Bart Daniel is a partner and Elle Klein an associate at Nelson Mullins Riley & Scarborough

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Pain and gain in pharma litigation

Bharati, please can you explain the challenges you face in bringing litigation in the pharma space? 

The approach to litigation in the pharmaceuticals sector is a little different from the approach taken in other industries. There are two main reasons for this. First, patents are territorial. A patent approved in the US may not get approved in India. From a business perspective, it is always important to keep costs low, which means you want a global product. However, our ability to sell the same product into different markets depends on being granted a patent. 

That is the first challenge: how do you create a global product in the pharma space? It is a question of balancing the commercial desire to market a global product with the territory-specific nature of patents which, even if granted, may have different scopes. Because the patent’s scope is different in each jurisdiction, one’s strategy might change from market to market. However, you do not want to claim something in one market that contradicts claims you have made in other markets. That is the strategic dilemma I face as IP counsel.

Layered on top of that is the big unknown for everyone in this sector: the Food and Drug Administration (FDA). One never challenges them; their word is final. But they are most unpredictable. If you file a product with the FDA you do not know when or in what form it will get approved, yet you have to file patents for that same product in other markets while you wait for approvals. It is a very dynamic situation and the strategic gambles must be well executed. 

Does your strategic approach fundamentally change when it comes to filing for patents or litigating in the generics space?

To a large extent, this is also driven by the structure of the generic pharma industry in the US, which is, of course, the biggest market for any business in this sector. Since 1984, the US has incentivised generics manufacturers to bring patent challenges with a view to bringing generics to market at an earlier stage and thus improving the range of treatments available to consumers. 

The incentive is to award anyone bringing a successful patent challenge with a monopoly lasting 180 days. During those 180 days only the brand, i.e. the defeated patent owner, and the generic manufacturer, the successful challenger, are on the market.

As a generics manufacturer, if you are the sole challenger and you are granted a 180-day monopoly you will make around $300m. In more than 95% of cases, the money that a generics company will make in those six months is several times what you would make in five years. Therefore, all generics businesses want to be the first one to take a shot at winning that monopoly. That’s what we all work for. 

With so much at stake, there must be a huge scramble once a challenger files. How intense is the competition among IP counsel at generics businesses?

Surprisingly, as recently as 2016 I was involved in challenges where we were the sole filer seeking to gain that 180-day monopoly! However, because the rewards are so large, the number of challengers is rising steadily. For example, in 2019 you would typically find around 25 others filing a challenge on day one, and sharing the rewards. As counsel, that changes the strategic calculations I must make. I may now be looking at a product that will be shared with more than 20 other filers and the rewards will fall in proportion.

Considering a successful challenge can make or break a company’s finances, do you take the approach of ‘spend whatever is necessary to win’?

Quite the opposite. The first law of most businesses is that they will not spend money unnecessarily. This is why the larger players in the Indian generics market, particularly those aiming to take a share of the US market, will have large in-house IP teams. This is an industry that controls [external] lawyers extremely well, and I’m sorry but that’s the only thing that works. You do as much of the work in-house as possible then hand it to a law firm to complete the final piece. If you do that properly then the cost of a matter will be a tenth of the sum you would pay a law firm. 

That’s the value of having an in-house legal team in this space. We can set the parameters quite tightly. We know the brand, the product and its value, and we pretty much know who our competitors will be. We can more or less predict what our market share is going to be and what our cost price will be because there’s a lot of discounting that happens in the space. We also know that very few products will sell for more than three years. That means we can act as a business team by taking all of that information and asking what the business case for a challenge is. If the business case is that in three years you’ll make $3m but you can see that you will spend $3.5m on litigation then it is a non-starter. If I devote time and resources to this my management is going to look at me, ridicule me, and then kick me out if I even consider spending one dollar of their money on pursuing the litigation.

Therefore, you have to start working from the very beginning on an IP strategy that is in sync with the business’s needs, but you also need to keep reviewing it through the litigation strategy to make sense of when it is time to settle. 

How do these settlements play out? Does one side renounce all claims on the patent or do you come to some sort of understanding?

Arbitration in the pharma industry is very different. It’s all about settlement. Over the past four or five years, the trend has been for companies to approach each other and say, ‘There’s no sense in fighting, let’s just settle’. But you settle somewhere midway. For example, if the patent is expiring in 2027, you meet halfway and ask to enter the market in 2023. Then it is a question of what you get in return. It could be a royalty, a license, or an upfront payment for avoiding litigation costs – that’s becoming the norm at pharma companies now because the business case for a challenge is changing and, consequently, the dynamics determining whether it is worth pursuing a dispute have changed.

Of course, at times you will also want to litigate to get to a position of comparative strength, but it’s always an informed decision. Litigation is important to get market share, but when we consider whether or not to litigate it is with an absolute eye for what we are spending and whether the return on that investment makes sense. My key performance indicator is how much I save, in percentage terms, over the approved budget for the fiscal year. That is how I get appraised. So while litigation is very important, it’s a question of how we can use litigation to get even more value for the business. 

Litigation is, in a sense, something we look forward to because it gives us something we can use as leverage to try gain concessions which can be used as differentiators in the market. 

It sounds like a market set up for litigation funders. Are they making a big play to support challengers?

Most of the big generic pharma companies have always funded their own cases because they want to keep control of the returns. What is interesting when it comes to third-party funding is that, because everyone wants to make a play for the US, there are a number of smaller companies trying to make a play for patent challenges. These companies may be well set-up with research and manufacturing but they don’t necessarily have the money to pursue litigation. In heavily regulated markets, such as the US and the EU, when you file a dossier on a patent challenge you can say with near certainty that litigation is imminent. You know that you are going to be sued, which means the smaller parties will start to scout for funding partners. 

There is a community in the US, whether venture capitalists or small firms that come together, who are willing to fund disputes that are on the smaller side – so from $5m to $15m for litigation – but they fund with the understanding that they will then own the asset, meaning the dossier, after settlement. Of course, they will then look to sell that asset. 

In the pharma space, third-party funding is a means of getting access to the asset so it can be sold at a higher cost. This is similar to taking care of the liability (i.e. the litigation). One settles litigation to get a confirmed date on which the market can be accessed. That settlement confers certainty, and that certainty increases the asset value, which is what the venture capitalist is looking at. The bigger companies don’t need this. Before entering a country they will run a business case which includes a litigation cost. 

Have data and analytics changed the way challenges are filed?

I think my world is a little bit more defined because I’m working with patents. The tools that have helped me are few, but they are there. Now, one can access analyses of judges and the kinds of cases and rulings they have given. That can help you understand whether a judge is pro-patent or pro-generic. That information helps because you can then decide if you want to challenge jurisdiction or not. 

Other trackers we have are things like an invoicing system, which give us a complete analysis by the phase of the litigation. This helps us understand where we’re spending and where to get income from. 

So some of these tools help us to monitor and understand what the judges are doing, what the timeline for each court ruling is or the behaviour of plaintiffs that one comes across every now and then. It helps us take different strategy decisions and perhaps I will know if a particular strategy is open to settlement or not. However, there is no way to codify the tactics and strategies that help pharma companies succeed. It comes down to having smart counsel who know the space well and can act on instinct. 

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Olga Belyakova and Eva Talmacsi: Be brave and stay curious

What have been your greatest personal or professional achievements to date and why?

Olga: I believe my biggest professional achievement was, in fact, my decision to become a lawyer many years ago. After 20 years in practice, the profession remains my passion and for me, it is not only about prestige but also about the day-to-day intellectual challenges and unique opportunities to help clients.

Eva: Having had the opportunity over the years to advise on some landmark transactions in CEE and beyond, which shaped the landscape in the relevant industry sectors. From a more general professional perspective, never losing the ability to step up to new challenges and think outside the box.

What are the key issues facing CEE’s technology, media, and communications sectors? How is the firm responding to those challenges?

The 5G revolution is believed to transform our perception of connectivity and reshape the business beyond the TMT sector. CMS has recently produced a global Expert Guide to 5G which provides an in-depth analysis of the technology and its impact on other sectors. 

AI, robotics and machine learning are not only topics on which we advise our clients, but we also use those technologies in our everyday work across CEE.

Privacy and cybersecurity are also something that keeps clients awake at night, and we continue consolidating our in-depth expertise and practical experience on these issues in a number of region-wide guides and toolkits (including among others  Proptech Smart Office brochure; Data Law Navigator; GDPR eLearning) as well as providing 24/7 multi-jurisdictional support and hotline (CMS Breach Assistant app).

What are the firm’s ambitions for TMT in the CEE region? And what steps have been put in place to meet this?

The sector is a core in our strategy and our ambition is clear: maintain a leading position in the TMT space and offer innovative solutions for our clients. Many of our TMT experts have come from the industry and we often place our colleagues on secondments to the largest international TMT companies to make sure we stay ahead of the curve in major industry trends. 

Furthermore, being in continuous interaction with our clients and the wider industry is a vital element of our strategy and in addition to day-to-day assistance we provide support through our thought leadership pieces such as Cybersecurity challenge in Central and Eastern Europe report, Guide on Funding for films, television and other audio-visual works, and Expert Guide to 5G which all proved to be appreciated by our clients. 

What does innovation mean to you, and what are the key factors changing the way legal services are delivered?

Innovation is built into both the structure and strategy of our firm. At CMS, innovation means looking at what we do, how we do it, and then making it better. This could mean making changes that make our work faster, easier, happier, or more affordable – ranging from big, bold, market-changing ideas to small incremental improvements – they all count, as long as they make good sense for us and our clients. 

What initiatives, if any, does the firm have to mentor the next generation of female partners?

With 45% of our board comprised of women and over 32% of our partners being female, we are particularly passionate about driving gender equality with our people, our clients and in our communities. We have a large number of inclusive policies, initiatives, and programmes that underpin our commitment to developing the careers of all our people, including a mentoring scheme, regular female-focused board-ready workshops, online coaching, etc.

Are there any secrets to climbing up the ranks?

Olga: Professionalism should not be kept secret. To be recognised in the field one works in, communication is the core. People should liaise not only with clients – becoming their real business partner rather than just outside legal advisor – but, equally importantly, with their peers in the market.

Eva: Having a clear vision for your mid- and long-term objectives as a practitioner is key, but you can only achieve your goals within a supportive internal ecosystem and by continuously interacting with your clients and the wider marketplace in which you operate. 

How has the firm shaped your management style?

Olga: CMS’s culture is all about people. By encouraging innovation, new ideas, introducing the latest technologies and agile working, in my view the firm cultivates trust in people which I hope I have brought into my own management style.

Eva: I feel privileged to be able to work within a community which prides itself on being future-facing and innovative and promotes inclusion, integrity, and respect across the entire firm on a day-to-day basis. 

What would you say is the key to balancing a successful team?

Reaching a balance in successful team leadership assumes the combination of several factors, including: 

  1. creating a clear vision and realistic objectives for the whole team;
  2. keeping the team motivated, engaged, and valued by providing clear guidance, giving constructive and timely feedback, comments, and appraisals; and
  3. facilitating constructive and value-creating discussions within the team.

What’s the best piece of advice you’ve been given?

Olga: My ex-colleague once said to me that no one should be afraid of looking stupid by asking questions if something is unclear—even if everyone else in the room seems to understand the issue. Very often, people just wait for someone brave enough to voice the uncertainty and that can change the whole course of the discussion. 

Eva: Stay curious because curiosity keeps taking us down new paths.

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The business of patents

Your patent practice has grown significantly over the past few years, especially in 2018. How has this bolstered patent practice added to the firm’s existing strengths? 

Louis W. Beardell, Jr., deputy practice leader: Recent additions to Morgan Lewis’s patent practice in Chicago, Orange County, San Francisco, and Washington, DC have boosted our ability to offer clients exceptional client service across all areas of our intellectual property practice. Our new additions have deepened and broadened our technology and scientific experience, and we have added trial-ready teams, representing companies in the life sciences, technology, and manufacturing industries. The growth of Morgan Lewis’s intellectual property practice provides clear benefits to clients who look to us for patent prosecution and disputes services, as well as deep industry knowledge. The growth of our practice has strengthened our ability to offer clients a full range of patent services, from patent procurement and portfolio management to federal court litigation to International Trade Commission (ITC) and USPTO proceedings. Our new colleagues share Morgan Lewis’s commitment to teamwork, collaboration, and exceptional client service. Our recent growth has been a win for all of the lawyers involved and, more importantly, a win for clients.

Which were the main challenges you faced when growing your market share in the US patent market and how did you take them on? 

Beardell: The main challenge has been to get bigger, while maintaining the strong internal culture of collaboration and teamwork that are the hallmarks of Morgan Lewis. But I am pleased to report that we have met that challenge. On the litigation side, we have fielded trial teams that include legacy Morgan Lewis lawyers and new additions, and you would never know that the team members are not long-time colleagues. On the prosecution side, we shared some very important common clients with our new colleagues. For those clients, we now have larger, fully integrated client service teams that have enhanced existing relationships because we now have more lawyers with a deep understanding of the clients’ technology and products.  

What is the most valuable service a patent practice can offer its clients today? 

Beardell: Morgan Lewis wants to be every client’s best choice for their IP litigation, prosecution and strategy needs. Our ability to serve as a one-stop-shop for patent needs across the technology, life science, energy, retail, and financial service sectors is a great strength. We pride ourselves on the depth and breadth of our technical expertise, our industry knowledge, and our ability to field teams with the closest technical background required for any project.  

In how far do you anticipate the PTAB to change the patent practice landscape in the US? How will specialised boutiques and big firms, like yours, adapt?

Dion Bregman, post-grant proceedings working group leader: It wasn’t long after the America Invents Act (AIA) introduced Inter Partes Reviews (IPRs) in 2013 that almost every district court patent litigation had a corresponding PTAB proceeding. The only patent litigation forums where corresponding PTAB proceedings are not standard are so-called rocket dockets, like the Eastern District of Virginia and the ITC, both of which regularly proceed to determinations more quickly than the PTAB, and rarely stay proceedings to await PTAB determinations. 

Long before the introduction of the AIA, Morgan Lewis’s lawyers were handling adversarial proceedings at the USPTO, including appeals, reissues, and reexaminations. We have a long history litigating complex patent matters, including routinely arguing before courts and administrative panels and taking and defending depositions. These same skills were easily adapted to practice before the PTAB, which is why Morgan Lewis has one of the country’s top PTAB practices. In fact, our PTAB practice has been handling PTAB proceedings since their inception – having argued the second-ever IPR before the PTAB. 

Moreover, Morgan Lewis’s deep technical bench puts us head-and-shoulders above other large general practice firms that do not have the technical expertise associated with patent prosecution practices. Similarly, our highly skilled advocates routinely outmatch patent prosecution boutiques that are relatively new to true adversarial proceedings.   

Some litigation-focused firms did not embrace PTAB practice, which generates substantially less revenue on a per case basis. But Morgan Lewis’s focus readily embraced PTAB practice as a means of offering clients the broadest range of options to address their patent disputes.  

As the pendulum at the USPTO has swung from originally favouring the petitioner to now favouring the patent owner, the number of new PTAB petitions has declined. That said, February saw an uptick in new PTAB petitions (162), but March again dropped to an average of about 100 new PTAB petitions per month. Based on current world events, it is hard to predict what the remainder of 2020 will look like, but Morgan Lewis remains well-positioned to continue excelling at the PTAB. 

Which legal and technological developments do you consider to be the main drivers of change for patent practitioners? How do you adapt to them? 

Beardell: Litigation trends, including changes in venue rules, have made it all the more important for Morgan Lewis to have experience across various forums, including the ITC, the PTAB, and the federal district courts, with a particular focus on Delaware, California, New Jersey, and Texas. On the prosecution side, the first-to-file approach has motivated clients to file earlier in product life cycles. Clients also are opting to keep patent families open, allowing for new continuing patent applications as a hedge against PTAB invalidations. Finally, increased collaboration among institutions and business entities in the life sciences industry has driven the need for sophisticated due diligence and licensing services.  

As to technological developments, Morgan Lewis is continually upgrading our technology platforms and enhancing our work from home capabilities to ensure that we are available to clients, and can provide access to those attorneys and patent agents that are the best matches for a particular project. Our already robust remote working capabilities have provided a benefit to clients during the COVID-19 pandemic.  

How does your firm’s wide geographical footprint benefit clients of the litigation, prosecution, and licensing practices? 

Eric Kraeutler, practice leader: Morgan Lewis’s geographical footprint provides a clear benefit to clients. Our clients benefit from partners and associates in 31 US and non-US offices who truly practice as a single firm.  

Some of our most valued patent litigation relationships are with longstanding Japanese, Korean, and Chinese clients who engage us for their US patent litigation and prosecution needs. Our Tokyo- and Shanghai-based IP teams work closely with US-based lawyers to maintain client relationships and provide exceptional client service. For example, a team comprised of US- and Tokyo-based Morgan Lewis lawyers recently provided US patent prosecution training to more than 80 specialists employed in the IP department of a Japan-based global medical device client.  

Lawyers from our Washington, DC, Silicon Valley, and San Francisco offices lead our growing Korea IP practice, working closely with Korean law firms and visiting our Korean clients on a very regular basis.

Our trade mark practice is truly global. We manage portfolios and provide trade mark services to clients through virtually all of our US and non-US offices. In addition to our Morgan Lewis trade mark practitioners inside and outside of the US, we have relationships with trade mark practitioners from other firms in many jurisdictions.

In recent years, most of our licensing deals have included some cross-border aspects, and the firm’s attorneys and resources around the world serve as a huge benefit to meet our clients’ needs by providing excellent and prompt support on licensing matters.

Does the firm intend to expand its patent practice, especially its litigation footprint, in continental Europe, especially after Brexit and the UPC decision by the German Constitutional Court in March 2020?

Kraeutler: Morgan Lewis’ growth always has been based on the needs of our clients, so we will add strength where and when it is needed for client service. We are watching closely developments in Europe, including plans for the Unified Patent Court. It is unlikely that we will make significant additions to our patent practice in Europe until we have a better idea where things are going, but we are committed to having a strong IP presence in Europe to serve the patent, trade mark, and licensing needs of our clients.

How do your patent, trade mark, and copyright practices benefit from each other? 

Kraeutler: With 200-plus IP lawyers, Morgan Lewis has one of the largest IP practices of any full-service law firm in the world. The size and breadth of our practice provides a significant benefit to clients because we readily can assemble teams that combine skills and experience from multiple IP practice areas. For example, the Morgan Lewis team that represented clients in the Converse ‘Chuck Taylor’ trade dress case in the ITC included lawyers with decades of experience in ITC practice, as well as an experienced team of  trade mark litigators, with particular expertise in consumer surveys. More recently, we obtained a jury trial win for Gavrielli Brands in a case in which Gavrielli alleged design patent infringement, trade dress infringement, and false advertising arising out of a competitor’s sale of copycat products that emulated Gavrielli’s well known Tieks® ballet flats. Again, the Morgan Lewis team included lawyers with skills across our trial, patent, and trade mark areas. 

On a different level, our patent, trade mark, and copyright practices benefit from one another because we have a culture of collaboration that leads to personal relationships and information sharing across practices. The best referral source a lawyer can have is someone in his or her own practice group. We have a terrific group of partners who know and like one another, know each other’s practices, and stand ready to direct clients to their colleagues with the most appropriate skills and experience for a matter.

How will the increasing importance of data as an asset impact the patent markets? 

Kraeutler: There are at least two aspects to your question. The first aspect has to do with delivering client service. ‘Big data’ is an area of tremendous innovation. Our clients constantly are developing new and innovative solutions to data collection, data-based analytics, data management, and data mining. Many of those solutions involve innovative software, so we are focused on how to protect new inventions in light of the US Supreme Court’s Alice decision, and how to challenge patents when clients are unfairly accused on infringement. 

The second aspect has to do with the business of patents. The LegalTech industry, including such businesses as Lexmachina, Juristat, PatentAdvisor, and Docket Navigator, already collects and analyses huge amounts of data. But the industry is only beginning to scratch the surface in terms of using big data to drive patenting strategies and transactions. Big data has the potential to provide useful tools to measure patent value, and to obtain data-driven insights about patenting strategies. We aspire to be a leader in harnessing these developments for the benefit of clients.

You are known for your longstanding commitment to diversity and inclusion. Are there any benefits that the patent practice has benefited from more than other practice areas because of that commitment?

Kraeutler: Diversity provides clear benefits to clients. Our patent practice is particularly rich in diversity. Our lawyers, patent agents, and technical specialists come from many backgrounds, races, countries, and ethnicities. Some are immigrants and many are second generation Americans. Many of the benefits are obvious. When a firm promotes diversity, it enlarges its potential talent pool, helping it to identify and recruit the very best scientists, engineers and lawyers. Many of our clients are non-US companies, so having lawyers that align with our clients in terms of language and business culture can be a plus. On the litigation side, we have made great strides in recent years promoting, recruiting, and retaining women to lead and participate in our trial teams. Clients, judges, juries, and arbitrators have responded positively to the changing look of our trial teams.

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Javier Menor: Some of our own lawyers don’t realise the strength of our brand

How would you define the firm’s culture? How is it introduced to new hires?

For us, the firm’s culture is a culture that has clear components: the vision presented to Baker McKenzie employees has a strong global perspective, which has the international vocation innate in Baker McKenzie’s DNA, combined with a strong component of local implantation. The presence and expertise of the domestic market is one of the keys that we have in our culture and that we project to all Baker’s lawyers. This is especially the case in Barcelona taking into account that the firm has been with a strong presence and consolidation in the local market for more than 30 years.

You’ve been with the firm since 2015. Would you say the managing partner role or a senior firm leadership position was something you aspired to?

Truth is that I did not aspire at all to a managing partner position; when I joined Baker McKenzie I joined desiring to help and collaborate with all my colleagues and assist our clients. When the possibility of occupying the position of managing partner arose, I accepted it as a recognition of my colleagues towards the work done and with the idea of ​​helping to cement Baker McKenzie’s project, which is something that I am passionate about.

In the months since you have taken on the managing partner role, what changes have you made already, or what changes do you plan to make?

The main change we have made is orienting and structuring the office management around specific projects, internally or externally. These projects are always led by a partner and have the support – depending on each project – of the marketing team, or HR team, as an example. I would say that we have introduced a change in the firm’s management culture, with this orientation around very specific and concrete projects that pursue common objectives: first, to increase the firm’s leadership position and strengthen its position as a law firm and, second, making work at Baker McKenzie a continual improvement every day for colleagues and employees.

How much time do you spend on client work versus your managing partner responsibilities? And how do you balance them?

Seeking balance is, without a doubt, an important challenge since I did not want to stop advising my clients and I enjoy that close working relationship with them that I have been developing throughout my career. At the same time, undoubtedly, day to day, the management of an office requires extraordinary dedication and commitment, being aware of the issues and fronts that arise. Despite not having left my clients, it is true that, due to management responsibilities, part of the team also gradually assumes more responsibility in this area and is always positive as people acquire more experience. Being a managing partner and combining it with working with clients means that reconciling both tasks requires a great commitment on my side, but it is something I do with great pleasure.

Since becoming managing partner, what has surprised you the most within the firm itself and/or externally in the wider legal market?

What impresses me most about our firm is how internalised the entire Diversity & Inclusion policy is. When you are outside Baker you perceive it and when you enter within Baker McKenzie you notice it even more. Once you have the possibility of working as a managing partner it is when you realise that it is within the DNA of the entire organisation and it is something that makes us very different from other firms. 

Externally, I would tell you that we have a market positioning that is much better perceived than what we ourselves sometimes believe. When you talk to people from other firms, you realise that the market presence of the firm, the reputation of the brand, and the image projected abroad by the attorneys of Baker McKenzie is stronger than some lawyers sometimes think.

What are the challenges of running a global office in a market characterised by local players?

The challenge is to maintain the perfect balance between global or international clients and at the same time being protagonists in the local market. I think the challenge is finding the balance between giving advice to national and local clients, on many occasions with a long history as clients of the local office, with the ability to offer international perspective and differential advice to global clients that need it and that seek the benefit that a firm like Baker McKenzie provides. 

We must not overdo the international angle – which could cause us to lose impact on national operations – nor dedicate ourselves exclusively to the most domestic customer that would harm our differential value as a global firm with an unparalleled international implementation. Finding that optimal balance is, in my view, the challenge we have in this area.

You were the first global law firm to set 40:40:20 gender targets. How close are you to this ratio in Spain and what steps are you taking to further this?

In Barcelona, we are in a frankly spectacular position. We currently have 67% of women amongst our lawyers, which is data to be very proud of. Furthermore, at the partner level, 38% are women and women currently lead 100% of all professional functions (COO, marketing, HR, office management). I am sure that by 2025 in Barcelona 50% of the partners will be women. The reality is that I believe that the current level of women at Baker McKenzie in the Barcelona office places us in a leadership position amongst international firms and it reflects the work that the firm has carried out, for years, in this field.

What initiatives, if any, does the firm have to mentor the next generation of female partners?

Considering we were the first global firm that had a global chair (Christine Lagarde) it is easy to guess that we are committed to these policies for a long time. In fact, we have, for years, many initiatives to encourage lawyers in their professional careers. In the case of Barcelona, ​​until less than a year ago Montserrat Llopart has been our managing partner, which has also received several awards for being a female reference in the sector.

I would highlight some of Baker’s initiatives that we carry out to mentor the next generation of female partners. The HeForShe movement, the Make it Happen program for the promotion of female leadership, the role models program, the LIFT (leaders investing for tomorrow), where women are assigned in senior positions, a sponsor who supports you through a strategic role that allows them to access greater opportunities during their career, or the Christine Lagarde Award that recognises members of our firm who have demonstrated extraordinary leadership and a passion for defending diversity and gender inclusion.

I personally believe that these initiatives are relevant and very important, and, at Baker McKenzie we believe in the importance of having the right initiatives in place. However, more importantly, we have the numbers that support and endorse the initiatives that we carry out. If you look at the Baker McKenzie case and, specifically, at the Barcelona case, as I mentioned earlier, the figures confirm that we believe in this commitment and we are able to demonstrate it with concrete events of female presence. In short: at Baker we carry the initiatives to promote female talent in our DNA, as we believe in it we execute these policies naturally, we accompany it with initiatives and programs and, in the end, all this gives a result that – as can be seeing yourself with the facts and figures – it’s spectacular.

What do you think your role is in advancing the firm’s D&I efforts? How does the firm stand out in the Spanish market in this area?

Beyond the reinforcement and empowerment of the female presence, Baker McKenzie is a firm especially dedicated to supporting all types of groups, such as LGTBI, where we are very proactive and we fight towards the integration of these groups in society at least – at the same level as within the firm. Here it has long been very natural and we have initiatives to facilitate this process and support them to express their preferences naturally. In fact, we are proud to be recognised by Stonewall as one of the best companies to work for LGTBI people. We sincerely believe that we are referents in the Spanish market in D&I policies and this can be observed in our initiatives and, mainly, our results.

Do you think law firms have further to go on diversity than in-house legal teams?

Despite the example we are trying to project from Baker, I am very afraid that in-house legal teams today are more diverse than most law firms are. We are firm believers that the firms have yet to make a great effort to balance this. We at Baker already work to lead that effort and we want to be the example for our competitors on what can be done to improve this reality.

Finally, can you tell me what you are most proud of in your career to date?

I would highlight three factors: the first one that lawyers who have worked with me for the last 10 or 15 years are now partners in different law firms and, in that process, I am especially proud to have assisted them and been able to be their mentor to take this step in their careers that are now so successful.

The second is that a large part of the clients I work with are clients with whom I have been working for more than a decade; I think it reflects a dedication, loyalty and good professional work on my part towards them of which I am proud

Finally, I think that we are making a positive impact on all of us in the market by building an exciting and very beautiful project, such as the one that Baker McKenzie has as a firm. Being able to contribute my effort and dedication, along with that of the other partners and colleagues, is something I am especially proud of.

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Move watch: Spotlight on Scott Wilson, DLA Piper

Can you tell me about your background and experience prior to joining DLA Piper?

I was a partner at a prominent US litigation firm, Boies Schiller, for six years before I joined DLA Piper. Prior to that, I served as senior advisor and special counsel to the New York Attorney General, which was a formative experience. It gave me insight into how law enforcement agencies make decisions at the highest levels and collaborate with one another in both civil and criminal cases. It also gave me trial experience and time on my feet in court. Since then, my practice has focused on representing companies in state and federal government investigations and complex commercial litigation.

What was important to you when moving firm and what factored into your decision to join DLA Piper?

My practice has become increasingly cross-border, with respect to government and internal investigations and commercial disputes. With offices in more than 40 countries, the global platform that DLA Piper offers felt like an ideal fit. And our white-collar group has incredible coverage across the US, with experienced former prosecutors out of top US Attorney’s Offices like Jessica Masella in New York and Jon King in Chicago. 

In addition, having handled high-profile investigations in the world of sports for the past six years, I was also attracted to DLA Piper’s marquee Media, Sport and Entertainment practice and the opportunity to collaborate with experts like Ed Hanover, who recently served as FIFA’s first Chief Compliance Officer.   

How are you settling in? And what, if anything, has surprised you the most since joining the firm?

The incredible depth and variety of my partners’ knowledge and experience never cease to amaze me. I’ve barely begun to plumb the depths. If a client has a problem anywhere in the world, help is usually just a quick email or phone call away. We draw on each other’s experiences in a way that allows us to add value and cover areas no other firm has as a core focus.

What was not exactly a surprise but rather further confirmation that I joined the ‘right’ firm is the fact that, shortly after I arrived, our US chair-elect, Frank Ryan, and global co-chair for the Media, Sport and Entertainment sector, Peter White, enlisted me to help stand up a dedicated disputes team for the sector. Firm leadership saw an opportunity to bring together a small group to capitalise on our overlapping and deep experience for the benefit of our clients.

From those you can disclose, what do you think is the most interesting (or challenging) case or client matter that you have worked on?

Most of my government-facing practice flies under the radar. To give an example: I once was brought in to represent a technology company in a data privacy investigation that had been pending for a year and had escalated to the point that the government was demanding an onerous settlement. That far into an investigation, it can be tough to move the government off its view on liability. Usually, you’re just negotiating for leniency in the outcome. But after delving into the case I saw there was an argument that the statute allegedly violated did not apply to the client’s business in the first place. After we submitted a white paper laying out the argument, the client never heard from the government again. 

As a young partner, you have been very successful to date in your ability to earn the confidence of high-profile clients. What do you attribute that to? And, in general, how much do you think it comes down to personal efforts versus the firm you work at? 

I’m grateful for the trust that a handful of CEOs and general counsels placed in me when I was fresh out of government. But the adage that companies hire lawyers, not law firms, is only partly true. Clients want to hire the right team, and I’ve been lucky to have great teammates. Coming to DLA Piper has connected me to an incredibly broad and diverse bench of subject-matter experts from which to assemble the right teams quickly and effectively for our clients.

How important is work-life balance to you and how do you maintain it?

For me, work-life balance means being opportunistic about downtime, especially when I have to travel for work – which is all the time. I look up opening hours for the local art museum when I land in a new city. But I love what I do and staying on top of new developments in my spare time doesn’t feel much like work. Believe it or not, I enjoy spending my morning commute on my phone catching up on the overnight industry press and asking myself, ‘Who needs to know about this or that?’ Making those connections often leads to new opportunities.

Do you have any specific plans for your practice? 

I studied law in Paris after my JD and have a special affinity for matters that cross civil and common law jurisdictions. One of the strengths of DLA Piper that clients find compelling is our ability to handle truly global investigations and disputes seamlessly. In that regard, I am particularly excited to collaborate with my investigations and compliance partners around the world, like Fabien Ganivet in France and Ricardo Caiado Lima (a partner at Campos Mello Advogados in cooperation with DLA Piper) in Brazil. I don’t know of any other firm that offers this kind of global teamwork.

Closer to home, DLA Piper attorneys have wide-ranging experience representing clients in significant matters before State Attorneys General, who increasingly are among the more aggressive government regulators in the US. Our team includes Jeff Tsai, who was a top deputy to the California Attorney General, and Matt Denn, the former Attorney General of Delaware. With my experience working in a senior position at the New York Attorney General’s Office and representing clients in state AG matters, I’m looking forward to contributing to and further developing the firm’s practice in this area.

What are the top three things clients expect from you, and how do you deliver on them?

Speed, accuracy, and good judgment. You have to keep pace with the client’s business or a regulator’s demands, without sacrificing care and quality in the advice you’re giving. In my experience, that takes organisation and painstaking preparation. It also requires a good feel for how the steps you’re advising a business to take will play out in the real world. 

Are there are trends you have noticed within your areas of practice, or any insights you can share?

A one-dimensional approach often is inconsistent with guarding the client’s interests. As the old saying goes, if you’re a hammer, everything looks like a nail. For example, some lawyers might look at document production to the government solely through the lens of cooperation credit, without stopping to consider the ramifications for civil discovery in potential follow-on litigation. Matters are getting more and more complex, and I’m happy to be at a firm with the resources to tackle multi-faceted problems from all angles and, in the process, provide first-rate client service.

Our interview of Mr. Wilson was conducted in early March 2020 and publication was delayed due to the COVID-19 pandemic.
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Charles Yi: Too much is never enough

Charles Yi joined Arnold & Porter’s Financial Services and Legislative and Public Policy practices in 2019. Prior to this move, Charles served as GC of the Federal Deposit Insurance Corporation (FDIC) between 2015 and 2019. Charles was not only the first person of colour to have served as GC of the FDIC, but also the first person of colour to serve as staff director and chief counsel for the Senate Committee on Banking, Housing, and Urban Affairs. 

How important is D&I in the legal profession to you personally? 

D&I is an important issue to me not just in the legal profession but in our society generally. I was born and raised in South Korea and immigrated to the US when I was 11 with no knowledge of English or American culture and no pre-conceived notions about race. 

After growing up in California, I found serving in the US army to be a deeply transformative and educational experience in a number of ways. D&I was one of them – it was the first time I lived and worked closely with people from different parts of the country and people of all races. And we worked really well together! 

While the army is not perfect, it taught me a lot about different people working together and contributing in various ways to forge a whole greater than its parts. I’ve taken those lessons with me throughout my career – and I believe in diversity because I’ve seen it work.

As the first person of colour to have served as GC of the FDIC and as staff director and chief counsel for the Senate Committee on Banking, Housing, and Urban Affairs, did this affect you within these roles?

Perhaps emblematic of the Asian American experience, nobody noticed when I became the first person of colour to serve as the GC of the FDIC and as the staff director and chief counsel of the Senate Banking Committee – not even me. To be fair, I saw myself as a leader for my entire organisation, not just a segment of it, so it is not something I thought about consciously. 

As I became more senior, though, I must have become visible at last because more junior folks would reach out to me for advice and mentoring. And I recognise that I had plenty of help myself throughout my career from good friends and colleagues, so I have tried to do my best to pay it forward and help those coming up the ranks behind me. 

How diverse were the teams you worked with in these organisations?

I think diversity has been increasing over time, but slowly. While the private sector in the financial services space has not been great in terms of D&I, the government in the financial services space (Congress, cabinet departments, and independent agencies) has been even less great. To their credit, D&I is something that people are paying attention to, and I am hopeful that the leadership of these organisations, both public and private, will draw on the strengths from all parts of our society.

Do you believe there is enough focus on ensuring that recruitment processes for senior roles within governmental and related agencies consider and encourage diverse candidates?

Growing up in the 80s, I remember the MTV ads that said: ‘Too much is never enough.’ I know that there has been and continues to be some degree of focus on D&I in the recruitment process for senior positions. But is it enough? There may come a time when people say there is too much focus on D&I, but all you need to do is take a look at the photos of any agency leadership to know that the time has not yet come.

Do you believe you have been discriminated against professionally or had to overcome obstacles due to the fact that you come from a diverse background? 

You can’t grow up as an Asian American and not collect some stories along the way… I’d be happy to share them with you over a beer sometime.

Given your various roles prior to Arnold & Porter (serving as staff director and chief counsel for the Senate Committee on Banking, Housing and Urban Affairs, as deputy assistant secretary for banking and finance at the US Treasury Department, and as counsel for the House Committee on Financial Services in addition to your last role at the FDIC), what do you think has been your greatest achievement to date?

From a substantive perspective, I’d say it’s being in the middle of everything during and after the financial crisis. I went to work for Congress just before the subprime mortgage crisis started bubbling, and was on the staff of the House Financial Services Committee working on the TARP legislation as the full-blown financial crisis hit. 

After TARP I joined the Senate Banking Committee and was part of a small, merry band that shepherded Dodd-Frank through Congress from the very beginning all the way to the end. My experiences in government during the financial crisis left a deep imprint on me, and in some ways, I am reminded of my instructors when I was an army cadet whose worldviews were shaped by what they saw on the ground in Vietnam when they themselves were young soldiers. 

Now that you have moved back into a law firm, do you see a big difference in the levels of diversity between private practice and government legal teams?

I don’t see a big difference; while each type of organisation cares about diversity, it has its own set of pressures to do more. At a law firm, some clients are asking law firms to assemble diverse teams to service those clients. In government, some members of Congress are asking agencies about their levels of diversity. 

Do you think diversity within private practice has changed since you last held a law firm role at WilmerHale in 2007? 

As I said, I think there has been some progress – but slow progress. I suspect it will be an evolutionary, generational process but we should nonetheless keep at it and continue to focus on it.

What specific benefits do you believe you bring to Arnold & Porter?

In addition to my ability to crack jokes once in a while, I bring a unique perspective and set of experiences unlike anyone I know having worked at senior levels in Congress to draft legislation, and at Treasury and FDIC to implement legislation and enforce compliance. Although at times at the FDIC I was in the awkward position of having to explain/defend/disavow legislative provisions I had worked on as we were writing regulations to implement them (something I call having to eat your own cooking), I can provide insight from every angle when it comes to complying with legislation and regulation. 

Arnold & Porter claims to be ‘committed to cultivating diversity and inclusion in a positive and supportive work environment where all talent is supported and accorded dignity and respect’. How is this evidenced and is it something you have experienced already? 

I have indeed seen that people at Arnold & Porter do focus on D&I. In the time that I have been at the firm, I have noticed a commitment to D&I; people are treated with respect here and I am glad to be part of a positive environment. 

Thank you for your time. Any final comments?

Thank you for your focus on this important issue.

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Are there any decisions which AI should never take?

The legal press often features articles on AI replacing lawyers. Until recently, there has been much less focus on the question of how lawyers can help society to live alongside AI.

AI is unique because unlike any other previous technology, it can act autonomously. This means it can make decisions which were not pre-programmed by any human. This distinction was recognised by the Singapore International Commercial Court in Quione v B2C2. The first instance judge (whose observations on this point were upheld by the Court of Appeal in February 2020) described a traditional computer programme in vivid terms: ‘The algorithmic programmes in the present case are deterministic, they do and only do what they have been programmed to do… They are no different to a robot assembling a car rather than a worker on the factory floor or a kitchen blender relieving a cook of the manual act of mixing ingredients.’

By contrast, AI technology (the most popular at present being machine learning) is capable of independent behaviour. This feature was demonstrated in a series of games played between the AI programme AlphaGo and multiple world champion Lee Sedol, in the ancient board game, Go. In the thirty-seventh move of the second game, AlphaGo made a play which baffled those watching. Even its own programmers considered that it must have made a mistake. Several hours later, this turned out to be the winning move: essentially AlphaGo had formulated a strategy which no human had considered in the history of Go being played.

At present, laws generally govern choices made by humans. We, therefore, have gaps in situations where AI causes harm as a result of its independent choices, which may not have been predicted by its users or programmers.

Existing laws and regulations are not well designed to address decisions made by AI. At present, laws generally govern choices made by humans. We, therefore, have gaps in situations where AI causes harm as a result of its independent choices, which may not have been predicted by its users or programmers. Who should be liable if a self-driving car crashes? Or an autonomous surgical robot performs an operation badly? What standard should an AI be held to? Many legal principles reflect concessions to human limitations – for example, negligence uses the concept of the ‘reasonable’ rather than the ‘perfect’ person. Are such concessions appropriate in circumstances where an AI system is demonstrably more accurate than a human (though still not perfect)?

The ethics of AI has been gaining increasing attention. This involves two issues: how should AI take difficult decisions, and are there any decisions which AI should never take? There are many high-profile examples of AI failures: from the Facebook image recognition software which identified some black people as gorillas, to the Apple credit card which granted men far higher borrowing limits than women. Some of these issues may be solved by ensuring that the data input into the AI system is sufficiently representative of the real world. But this is by no means a panacea. 

From 2017 to mid-2019 there was a tendency for companies and other organisations to publish high-level sets of desirable features for their AI, which achieved publicity but had very little practical impact. These vague standards are now being replaced, or rather substantiated, by detailed checklists. Although the trend seems to be towards accepting a risk-sensitive approach to precautions rather one-size-fits-all rules, lawyers will need to play an important role in explaining and justifying an organisation’s decisions in this regard, internally and to third parties. 

One major technical difficulty is that AI decisions can be difficult to predict and explain. This is sometimes known as the ‘black box’ problem. Yet there is an international consensus that some form of explainability is desirable. GDPR requires that where certain automated decisions are made about a person they have a right to be provided with ‘meaningful information about the logic involved’. 

Fortunately, we are starting to see emerging best practices in terms of processes which can be used to ensure that AI is robust, reliable, and trustworthy. Some of the most detailed examples to date have been produced by the UK’s ICO in its draft AI Auditing Framework, Singapore’s Personal Data Protection Commission, as well as the World Economic Forum. Hard legislation on AI is coming too: the US has signified that it intends to support federal laws on AI, and the European Commission recently released a white paper setting our proposals for harmonised AI laws across the internal market. Likewise, China is also moving towards binding legislation.

Sophisticated regulators are unlikely to be impressed with organisations which have not adopted policies to govern their AI use. Just like environmental, anti-bribery, and data privacy concerns, AI regulation matter is fast becoming a serious issue for legal and compliance departments, as well as company boards.

The benefits of AI use are enormous, but the dangers in terms of liability, regulatory, commercial, and public relations risk are also growing. This, in turn, presents opportunities for lawyers of all kinds to advise clients on the best way to navigate these swirling currents. 

Jacob Turner is a barrister at Fountain Court Chambers, author of Robot Rules: Regulating Artificial Intelligence (2018), and a contributing author of The Law of Artificial Intelligence (2020). He has advised companies, regulators, and governments around the world on AI governance. Jacob lectures regularly on the topic, with recent engagements including Cambridge, Copenhagen and Singapore Management Universities, as well as the Dubai Judicial Institute and the European Commission.  Together with Simmons & Simmons and BestPractice AI, Jacob has recently launched a new AI advisory service.