A Crash Course on Liquidation Preferences

Here’s a super helpful crash course on liquidation preferences (participating and non-participating), complete with worked examples by VC Investment Manager at rampersand, Eloise Watson.

For any curious lawyer (practising in corporate or perhaps dabbling in some investing), it’s one of the best explanations I’ve come across for an otherwise complex deal mechanism.

In Eloise’s words:

"Why do investors often insist on this term? There can be many reasons but, in my experience, the most well thought through reason is that it is a type of risk levelling. It ensures that if the founders do look to have a quick exit at a lower valuation, which might still be a good outcome for the founders who will get a few million each, then the investor is at least not losing money and will be able to get their money back."

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The Trick to Actually Remembering What You Learn

When learning something new, just when you think you can’t learn anymore, keep going - overlearn it.

At least that’s what the folks at Brown University found in a recent study.

In essence:

“when people learn something new and then learn a similar task soon after, the second instance of learning often undermines the mastery achieved on the first… "overlearning” prevents against this kind of interference, cementing the new information so well that the opposite happens instead. For a period of time after overlearning of the first task occurs, effective learning of the second task is blocked.“

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This Software Does in Seconds What Took Lawyers 360,000 Hours

JPMorgan have built a machine learning engine called COIN (Contract Intelligence) that breezes through the mind-numbing job of interpreting commercial-loan agreements that used to consume 360,000 hours of work each year by lawyers and loan officers.

Powered by Gaia, JPMorgan’s own computing cloud, the software reviews documents in seconds, is less error-prone and never asks for vacation.

According to its designers:

“the program has helped JPMorgan cut down on loan-servicing mistakes, most of which stemmed from human error in interpreting 12,000 new wholesale contracts per year.”

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Copyright Safe Harbour for Australia

Google’s Legal Director, Copyright—Fred von Lohmann sets out Australia’s case for a long overdue copyright ‘safe harbour’ for online services.

A well established principle in US law (and Europe), it’s one of the critical factors that made user generated content platforms such as Facebook, YouTube and Snap possible.

In his words:

“The proposed amendment to copyright law is aimed at solving a concrete problem: we don’t want copyright law to make it impossible to create innovative online services, just because a minority of users misuse those services to infringe copyright.”

Submissions closed in Feb. With bated breath, we wait…

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Transparency of Legal Services - Causes and Solutions

It's fair to say that the UK legal profession is now firmly on the competition watchdog's radar. And there are some worried faces in the room.

The CMA's beef with lawyers centres on the lack of transparency on pricing and service quality.

Lexoo UK Chief Executive, Daniel van Binsbergen reports on how new legal models (including Lexoo of course) are tackling these issues through fixed fees, technology and lawyer reviews:

"...the review system is not only popular with clients. Many lawyers are starting to truly like the idea. It is quite rare as a lawyer to get public credit for a job well done."

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General Counsel Awards Firm for Diversity Advancement

As one of the first Fortune 100 companies to publicly honour law firms for diversity, Coca-Cola has awarded its first General Counsel Diversity Advancement Award to Shook, Hardy & Bacon.

In the words of Senior Counsel and chair of Coca-Cola’s Diversity Council, John UyHam:

“The award acknowledges Shook’s consistent commitment to diversity initiatives both within the firm and throughout our profession.”

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Beefing Up Whistleblower Protections

Fed up with lagging behind international standards on private sector whistleblowing, the AICD have called for protections to be significantly expanded.

In summary, it supports:

• Extending protections to unpaid workers, accountants and auditors.
• Protections for disclosures made anonymously or through a lawyer.
• Replacing the ‘good faith’ test with an evidence-based test.

And doesn’t support (for now):

• Third party (e.g. MPs or media) disclosures.
• Financial incentives for whistleblowers, such as the so-called SEC ‘bounties’ in the US.

In the words of AICD Chairman, Elizabeth Proust (via The Australian):

“Too many times in Australia we’ve seen whistleblowers suffer the consequences of bringing corporate wrongdoing to light. Often the rest of us have benefited from their disclosure, either as a ­consumer or a taxpayer or a shareholder.”

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Microsoft is Overhauling How it Hires Outside Law Firms

Microsoft’s “preferred provider program” will undergo a significant redesign in the next 12-18 months to prioritise firms with expertise in specific practice areas rather than general services, and will experiment with so-called “affinity relationships”.

The new program will also aim to create direct connections between female associates and minority associates and Microsoft’s junior attorneys.

According to Lucy Endel Bassli, Assistant General Counsel of Legal Operations and Contracting:

“We’d like to shake up the traditional relationship of one managing partner to one senior attorney in our department.”

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What's the Civil Penalty?

If you geek out on civil penalties (and who doesn’t) here is one for you.

This engine lets you search 1,569,269 laws from 79 countries, extracts the civil penalties from those laws, converts them to USD and voilà!

For example, search “money laundering” and you’ll see 22 results from Australian laws.

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Reimagining Contracts

For anyone managing contracts, T&Cs etc, Meeta Gournay and her team at Nift have collaborated with NatWest to develop a platform to help customers understand what they’re signing.

Through a series of user-friendly annotations, quizzes, FAQs and clever design, users can verify their understanding, increase engagement, while giving you detailed analytics and an audit trail for each issued contract.

In the words of Alison Rose, CEO, NatWest Commercial and Private Banking:

“It’s important customers understand what they are signing so we wanted to find a way to encourage more people to read before they sign. Working with prehype to develop Nift has enabled us to bring an innovative product to market quickly whilst also helping us to improve customer experience and trust.”

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