From the producer… The achievements of this episode’s guest have been celebrated by the Council on Foreign Relations, Harvard Business Review, The Economist, The New York Times, Forbes and Wired. Joe is talking to the founder of P-TECH, and author of Breaking Barriers, Stan Litow.
They begin by discussing Stan’s early career – working for the mayor of New York City – which opened his eyes to issues in the education system. This stuck with Stan through roles in public service, the not-for-profit sector and into IBM – where he created “the private sector version of a Peace Corps”.
P-TECH is a global program that blends high school with higher education and on-the-job learning. It bridges the gap between employment and academic systems that lack the provision of workplace skills. These opportunities are available to all students, regardless of race or financial status, in a way that benefits the private sector as well as society. This episode is for lawyers who want to see change in the industry but aren’t sure where to start.
This week we talk privacy, piracy, and intellectual property. Before the lockdown, I sat down with Chris Mohr, VP for Intellectual Property and GC at Software and Information Industry Association.
Working at the heart of the US federal government in Washington DC, Chris tells us about life as a lobbyist on Capitol Hill and how he navigates the challenges posed by different global approaches to intellectual property. He also talks about the intersection between IP and privacy law and the Constitution, as most data is effectively speech for Constitutional purposes, there are fundamental conflicts when people’s privacy rights are at stake.
Chris and I chat about where AI might be taking us and what IP implications there may be, as they ponder whether machines are legally allowed to be inventors.
The Covid-19 pandemic is exposing long-standing societal inequalities that range from access to healthcare to access to childcare and place our society is under a microscope. One of the biggest challenges is getting stimulus funds to those who need it most, especially in those cases where the individual may lack access to a bank account.
Thomson Reuters technologist and futurist Joe Raczynski explores how the pandemic may end up being the catalyst that eventually solves the financial inequality gap for the unbanked population.
What does it mean to be underbanked or unbanked?
Joe Raczynski: Often employed interchangeably, the Federal Deposit Insurance Corporation (FDIC) classifies those people that underutilize their bank as underbanked, while individuals without any form of bank account are considered unbanked.
Cash is no longer king, and the underbanked and unbanked have struggled during the pandemic as paper and metal currency, their primary medium of exchange, has been dropped out of circulation. The paper money has been shown to carry diseases, further exacerbating a financial disconnect for the unbanked.
The single most salient dilemma, of course, is that the unbanked have less of an opportunity to build a good credit history, and as a result have less of a chance for reasonable loans.
What are some reasons a person wouldn’t have a bank account?
Joe Raczynski: There are a multitude of explanations for not having a bank account. The most challenging from a socioeconomic perspective, are those people without the means to save money. Another highly cited reason is that people simply do not trust banks. Their concerns orbit around the possibility of a bank folding or their money simply disappearing. These concerns are typically more prevalent in people who have experienced such issues in other countries.
Also, a smaller subset of individuals is actively avoiding a system that requires divulging personal information to open an account. These individuals may have more nefarious reasons to remain out of the system, however, and are in the minority.
This phenomenon shows up in certain ethnic communities. For example, African Americans have the nation’s highest rate of unbanked, at almost 17%, compared to other ethnicities. However, they have had a three-year decline in the number of unbanked households, according to the Federal Deposit Insurance Corporation (FDIC). About 14% Latinos are unbanked; and about 3% of whites, based on FDIC statistics.
What financial services do the unbanked use?
Joe Raczynski: While the unbanked are marginalized in a traditional financial capacity, alternative financial services and burgeoning technologies are enabling people to bypass this challenge. Some of these alternative financial services — such as check-cashing services or payday loans — often charge egregious fees and related costs that can be debilitating for an unbanked user. Other services — such as money transfers or the use of prepaid debit cards or gift cards — also pose their own costs and rates, but do offer users more options.
Finally, mobile apps like Square, Venmo, PayPal, and a host of others enable people to send money to others and buy goods and services directly, provided they have money in that app account.
If a person is unbanked, how could they receive Covid-19-related stimulus funds from the government?
Joe Raczynski: The initial phase of stimulus relief was strictly direct deposit for the banked and government checks for others. Recently, the prepaid debit card was used to assist the unbanked. This is the same mechanism that the Internal Revenue Service (IRS) uses for tax refunds; however, while these prepaid debit cards are helpful, they also pose significant risks.
Fraudsters have seized upon the anonymity of these cash-filled cards to steal from the government. In some cases, these criminals are filing up to 100 false personal income taxes via someone else’s social security number. These taxes are surreptitiously submitted with refund expectations, the refund is then loaded onto an untraceable prepaid debit card and sent to a ‘here today gone tomorrow’ P.O. box.
While the unbanked are marginalized in a traditional financial capacity, alternative financial services and burgeoning technologies are enabling people to bypass this challenge.
The rapid implementation of this form of tax fraud has outpaced many traditional fraud scams, and it is surmised that over the past decade, one-time drug traffickers now have opted into this scam instead.
What changes are taking place in the banking industry to appeal to the unbanked?
Joe Raczynski: The single most significant change is the recent proposal of the federal government to issue FedAccounts within the next several years. This possibility would mean that anyone with a mobile phone would have a digital wallet, and money could be transferred from the government to an individual in moments. A person could also use their FedAccount to send money to anyone else, or even to a business with ease.
While that alone is significant, this new digital wallet will likely enable greater use of cryptocurrency, control of personal identity, and the ability to store other property digitally via asset tokenization.
Outside of the government-sanctioned digital wallet and currencies are a pending wave of private companies issuing cryptocurrency that the unbanked could seek out and use as new forms of money. For those civil libertarians among the unbanked who wish to remain outside of future government-issued digital currency, they could rely on Bitcoin, Zcash, Monero coins, or any number of other cryptocurrencies. Some of these cryptocurrencies have at their base, Zero Knowledge Proofs (ZKP) that permit completely anonymous transactions without personal information. While this could help the libertarian unbanked, it creates some headaches for anti-money laundering professionals that will likely be chasing fraudsters in this area very soon.
What final tips can you share to help the underbanked or unbanked?
Joe Raczynski: While I still believe that opening an account at a trusted bank that has low to no fees is the best option, the hope of the FedAccounts is very promising for the unbanked. The idea that a simple digital wallet with digital dollars can allow you to bypass banks and credit card processers could be very appealing.
In a similar scenario, the door for Bitcoin and other cryptocurrencies continues to slowly open. A future fluidity of increased financial ease of exchange for the unbanked is coming into focus, and a host of new options and services are arriving now, which will enable the unbanked to be better positioned for financial inclusion.
General counsel (GCs) across the United States and the United Kingdom have varied approaches to the current market conditions, according to recent surveys. Interestingly, at the center of the debate is how alternative legal service providers (ALSPs) are utilized and perceived compared to traditional law firms.
Not surprisingly, many GCs felt that individual client needs ultimately superseded the ALSP v. law firm rift when looking at the legal landscape beyond the Covid-19 pandemic.
In the second of a four-part global webinar series, The Uncertain Decade, Legal Geek again brought Mark Cohen, CEO of Legal Mosaic, and Prof. Richard Susskind to dissect what clients want and need now and breakdown the hope and hype of ALSPs. (You can read about the first webinar here.)
The survey responses from GCs about how they’re managing their own in-house legal teams caused some eyebrow rising. While the “worry of people, cashflow, and uncertainty persist; the newness of remotely running the team, advising the business, and getting law firms responses, have been quite successful,” said Susskind.
Survey results saw general counsel in both the US and the UK in ominous accord — a majority on both sides of the Atlantic described the level of change from this current crisis as “significant or massive.”
In another revelation from the survey, UK GCs noted that ALSPs fell short of expectations during the crisis, which contrasted Cohen’s findings of GCs in the United States where law firms fared poorly and ALSPs flourished. The two panelist grappled to find just rationale for the variance, eventually settling on possible cultural differences. “Maybe the US is more pragmatical about the relationships,” Cohen suggested, adding that ALSPs in the UK can be subcontractors of law firms where in the US they are often more organic, outside of the Big Four.
Finally, the survey results left the GCs on both continents in ominous accord — a majority on both sides of the Atlantic described the level of change from this current crisis as “significant or massive.”
More for less
The idea of getting more quality legal service for less spend is a central theme repeated by Susskind and Cohen, underscoring their overarching thesis for the webinar: Legal operations are paramount. Cost cutting has become table stakes; and now it falls upon the chief operating officers (COOs), to devise new business models, direct and enable innovation, and reluctantly, ruminate about the next calamity. “Legal expertise used to be the primary focus,” Cohen explained. “Now business acumen and technological tools used by operations can help clients.”
Indeed, legal organizations have to reimagine the art of the possible and transform, he added. While the end goal is an elated client, there are far more fluid paths combining “less expensive people using better technology” to achieve that, said Cohen.
A polling of webinar attendees on desired topics of discussion, pivoted Susskind to deliberate on the impact of start-ups on the legal landscape. A few years ago, a few hundred emerged, now there are a few thousand legal technology businesses. Bluntly, he stated that most of these companies will not last as each try to be the next Amazon.
What did surprise him, was the primary focus for these embryonic upstarts, as the majority of these companies endeavor to solve law firm back office functions, Susskind said, adding that the amount of effort focused on helping the client is actually pretty low.
Cohen agreed, saying much can be done in this space to focus on helping those in need of legal services. “There is far too much law for those who can afford it, and far too little for those who can’t.”
Both panelists spent a significant amount of time on the question of whether most ALSPs were more hype or hope. For example, Cohen sees the outgrowth of ALSPs as a byproduct of unmet market need. Since the 2008 crisis, ALSPs have led with a different DNA. More business than law firm, they breathe process design, project management, and technology to help their clients. This corporate model, which has “come of age” in the last few years, is providing legal services which are better, faster, cheaper, and more customer-centric, explained Cohen.
Project managers utilize data-centric analysis, to oversee risk management; and what was once thought of as a junior varsity, ALSPs should no longer be seen this way. In fact, based on Net Promoter Scores, these organizations can often prove their value empirically in serving their customer. UnitedLex and Axiom, for example, are poster children for this data-centric service model. Highly competitive, Axiom only engages with one out of every 20 lawyer applicants it receives, and practices law in more than 90 countries, though not in the US. Both companies leverage their corporate structures, allowing flexibility and reinvestment while dismissing the partnership model of law firms, said Susskind.
As they concluded their discussions, both Cohen and Susskind surmised that the focus will always be on the client of course, but how those clients are serviced has changed. Cohen reminisced that once “lawyers had to practice or leave,” but now they need to meld many different components together, such as technology, operations, and analytics.
Susskind ended with his impassioned beliefs on mindset shifts, suggesting that lawyers have to be open to new things, be entrepreneurs, musicians, and artisans. They should not assume that everything will look like it looks today.
Tomorrow’s lawyers must try to avoid their traditional mindset trap — that “the best is the enemy of the good,” said Susskind, adding that perfection at the cost of agility and creativity is no longer sustainable.
WASHINGTON, D.C. — The Government sector strives to ramp up its efforts to more widely integrate cutting edge technologies like blockchain, artificial intelligence, and the Internet of Things (IoT), it is running into a myriad of challenges.
Not the least among them, is separating the reality from the hype of these miracle tech solutions.
At Thomson Reuters 4th Annual Government Day, panel attempted this separation by focusing on blockchain, working to uncover the reality of this technology today for governments and cut out the hype of this innovative technology.
Government supply chain management
One area the panel focused on with blockchain is the tech’s potential to change supply chain management, offering a scenario in which a state or federal agency needs to identify the ground zero genesis of a fruit or vegetable foodborne illnesses. The newest proof of concepts utilizes a blockchain-enabled IoT supply chain management technology ecosystem that can save lives by greatly reducing the time it takes to track contaminated tomato from the salad bar back though delivery, distributers, wholesalers, to pickers and finally to the farm.
The panel also discussed how a Massachusetts-based farmer could partner with a technologist to track his tomatoes from vine to fork. The farmer uses IoT temperature gages from the pickers to the platers. This is an example of a public and private partnership where produce with clear data on temperature, handlers, and distributers can be audited through the entire supply chain, all supported on a distributed ledger.
Harnessing this collection of technologies, any listeria outbreak can reduce seven days of research to just seven minutes, ensuring that the U.S. Food and Drug Administration (FDA) have rapid response and control.
Another area the panel discussed included identity management solutions. Breeches to our own private information are commonplace. In fact, recently Facebook suffered yet another attack where 200 million users’ phone numbers were found in a publicly facing open database, including the number of Facebook CEO Mark Zuckerberg. (In case you are wondering, calling Mr. Zuckerberg’s phone number goes to a generic voicemail.)
Not surprisingly given the stakes, various federal agencies have been surveilling this space for some time. An emerging concept about how to prevent such breaches and other identity security mishaps in the future is taking form.
The panel also took up the “radical” idea that the U.S. Department of Homeland Security (DHS) could issue a new unique identifier to replace a citizen’s Social Security Number (SSN). In a major shift, this identifier would exist on a blockchain. This decentralize system would place the control of the identifying number into the hands of the individual, removing a central repository, which could be hacked.
Panelist Alan Cohn, a partner at Steptoe & Johnson, pointed out how this could more securely enable our current voting system, curtailing the chance of fraud and make voting easier for all.
Finally, the panel explored the shifting landscape of digital assets. Cohn said he expects a huge swing in the way we look at assets from a personal perspective and in how the government views it.
The panel concluded that with Facebook launching its own cryptocurrency, Libra, this process has been legitimized. The discussion amped up around what will happen next. I suggested to the panel that Libra could be dead in the water in the United States because of a heightened regulatory concern, but this blockchain-enabled asset cannot be placed back into the bottle. Indeed, with years of consternation ahead from regulators on Libra, companies around the globe will move forward, and the next organization to create what amounts to a world currency will be a messenger app which has 500 million users, Telegram. (Expect its launch before Halloween 2019.)
In all likelihood, governments around the world will be spooked by the immense power an app founded in 2013 will create. They will have a scalable, frictionless asset with features that could bypass anti-money laundering (AML) rules and Know Your Customer (KYC) regulations.
Panel moderator Jason Thomas, Manager of Innovation at Thomson Reuters, and panelist Gail Gottehrer, of the Law Office of Gail Gottehrer, noted that there is significant promise ahead with the intermixing of multiple technologies in combination with blockchain. Indeed, governments are beginning to adopt and adapt in this environment; and with a push from the private sector, state and federal agencies will continue to adjust.
The synthesis of technologies like IoT, AI, and blockchain will create processes which should stamp out farm- and distribution-based foodborne illnesses. New initiatives around the security of personally identifiable information through blockchain will place the control of information into an individual’s hands, removing central points of failure and reducing costly and damaging data breaches.
Lastly, one of the most significant changes ahead is the look and feel of our ownership of assets when everything becomes digital. The opportunity is immense, but so are the concerns around our government’s ability to counter AML as assets become increasingly liquid and frictionless across the globe.