ALB Insights

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Welcome to ALB Insights, a weekly, ad-free premium newsletter that provides analysis and opinions related to the important news and trends in Asia’s fast-growing legal markets. With a mix of features, Q&As with key figures, and profiles of some of the hottest firms and service providers, this is a must-read for anyone interested in gaining a deeper understanding of the region’s legal industry. ALB Insights will be sent free to our existing subscriber base during the initial six-week trial. To subscribe, please email taranjit.kaur@thomsonreuters.com.

This week’s newsletter features the following:

• In-house Q&A: Microsoft's Jeff Bullwinkel
• 'Novel structure': Taylor Vinters on its unique Singapore combination
• A showdown in Indonesia: How Freeport's row over its mining contract escalated  
• ALB Hot Startups: Legistify

In-house Q&A: Jeff Bullwinkel
 
Jeff Bullwinkel, Microsoft's associate general counsel and director of corporate, external and legal affairs, Asia Pacific and Japan, recently spoke to Raj Gunashekar on why it's "an amazing time" to be a lawyer in tech, what major industry developments are influencing his work, and how he handles the tech giant's legal team.

How is being an in-house lawyer at Microsoft different from that of other companies? 
 
Bullwinkel: I have worked in-house only at Microsoft, but there are several things that I think make the in-house experience at Microsoft unique and very exciting. 
 
The first is that we have a broad remit and work on a wide portfolio of issues. CELA encompasses not just Microsoft’s legal department but also our corporate and external affairs functions. So while there are lots of people on the team involved in traditional lawyering, others are busy engaging government leaders on cutting public policy issues, fighting cybercrime, and even driving the company’s philanthropic activities. The variety is endless and there is never a dull moment. 
 
Second, at Microsoft, we are fortunate that our internal business clients really value the work that we do. We are viewed as strategic partners to the business who do not just identify problems but also find solutions. Microsoft isn’t a place where our lawyers wait around for clients to knock on the door, seeking approval from “legal”. We have a seat at the table at the very beginning of key conversations that will shape our future business strategy and direction. 
 
Third, it is just an amazing time to be working as a lawyer in the technology industry and at Microsoft in particular. Our customers are embracing our cloud solutions at a breathtaking pace. But as they do so, fascinating questions arise regarding the laws and regulations that apply in the context of cloud computing – questions that are often without easy answers. With all of this variety and complexity, I feel that doing my job at Microsoft is like sitting in that fascinating seminar in law school that everyone was dying to get into, but was always oversubscribed. 

What are some of the major recent trends in your industry? In what ways have you seen these change or affect your role?  
 
Bullwinkel: As our customers increasingly adopt cloud technologies, the biggest change I have felt over the past few years is a shift in the relationship between our team and the legal and business professionals working for our customers.
 
As a major cloud provider offering solutions at every layer of the cloud stack – including infrastructure as a service, platform as a service, and software as a service – Microsoft sometimes feels like an extension of our customers’ IT departments. That fundamentally changes the dynamics of the customer relationship and creates a strong services mentality for all of us across the company, including in legal. 
 
Our customers and their in-house and external counsel have many good – and often difficult – questions regarding the laws and policies that apply to cloud computing. This is especially true for those in the public sector as well as financial and healthcare industries. Is the adoption of cloud allowed in the first place? If so, does data need to be stored on shore? Whose privacy laws apply? What happens when governments ask Microsoft as a cloud provider to turn over customer data? We have not only an opportunity but also a responsibility to offer sound answers to these questions. 

How would you describe your strategy for the legal team? 
 
Bullwinkel: We have an excellent leader in Microsoft’s president and chief legal officer, Brad Smith, and each year he drives a process that results in a set of global priorities for the department. These are aimed at driving our business forward and advancing Microsoft’s core mission – to enable every person and every organisation on the planet to achieve more. 
 
I work to create clarity for the team on how they can pursue worldwide priorities in their markets, to generate energy within the organisation, and to ensure we are holding ourselves accountable for specific outcomes that are concrete and measurable. As part of this, I try to ensure that our team has the resources and tools needed for success, be it through training in new areas or support from outside counsel.  
 
Ultimately, I hope for everyone on the team to feel empowered to execute our plans in [ways] that make sense in their markets, with a high degree of creativity and a willingness to take appropriate risks. 

To contact the writer, please email raj.gunashekar@tr.com.

'Novel structure': Taylor Vinters on its unique Singapore combination
 
Earlier this month, UK-headquartered Taylor Vinters announced it was combining with Singapore boutique Via Law through a one-of-a-kind cross-ownership structure to form Taylor Vinters Via. Matt Meyer, CEO of Taylor Vinters, talked to Raj Gunashekar about why the firm chose that route, and what the future holds for Taylor Vinters Via.
 
You have described the Taylor Vinters Via merger as a “novel cross-ownership structure.” Can you talk a bit more about this and explain why you thought that approach was the best option?

Meyer: Our objective in building the Taylor Vinters business in Asia has always been to do so in a truly integrated way. Integration needs to occur at an operational, financial and cultural level, but these are functional goals.

To build a successful business in Asia operating within the framework mandated by the regulators, we needed a shared vision and ‎a strong commercial alignment. Nothing achieves that more in our view than a co-ownership structure whereby the success of each entity contributes to the success of the other.

In this case, Taylor Vinters becomes a shareholder in Via, and Via becomes a corporate partner in Taylor Vinters. This removes the barriers to sharing clients, ideas and personnel and is the next best thing to a full merger. We think this focus on alignment and shared risk and reward is novel and authentic when stacked up against other franchise, joint venture and captive local firm models we see in the market.

Can you talk us through how the merger happened, including any obstacles that needed to be overcome?

Meyer:Like any commercial endeavour, the likelihood of success is increased when you find energetic and talented people who share your views of the world. ‎We spent well over 12 months looking for that shared vision and a strong cultural alignment. We are a different kind of firm, embracing innovation and very much on the front foot in a dynamic legal services market.

In Singapore, we know some excellent firms and individuals who we trust and respect but they are not approaching the legal services market like we are. When we met Bryan Ghows and Yingyu Wang at Via, we knew they were both people we could work with and had a business that could contribute to ours and benefit from the progress we had already made in our own strategic journey.

The greatest challenge was recognising that to truly make the venture work, we should surrender our Foreign Law Practice and transfer our existing business to Via. That step represents our collective commitment to making this work and building a successful vibrant Singapore law firm as well as a stronger Taylor Vinters in Europe and the U.S. We have now received approval to call the combined business Taylor Vinters Via and believe that is a true representation of the business we are creating.

Would you say demand is growing in Singapore for services from tech law firms? What is driving it?

Meyer:We have a strong belief that the Singapore market needs a focused firm committed at its core to supporting innovative and entrepreneurial business and people. Whether it's IP advice, funding, technology or M&A work, businesses that are innovative and [push the] envelope need support from equally entrepreneurial advisers.
There are other good firms with the right experience but ultimately, we think the best clients will choose a firm that isn't institutional in character. Rather, they will look for firms that innovate themselves and empathetically understand risk.

Our role is to advise and support entrepreneurial business in taking risks, [to] not straitjacket their commercial initiatives. We want to be the go-to firm in that space. Many fast-growth innovation businesses are evaluating Singapore’s suitability ‎as their platform for Asia. We are also seeing increasing numbers of local entrepreneurial ventures with strong money and investment flow between Singapore and key financial centres of the world. All of this activity underlines the need for firms like Taylor Vinters Via in the Singaporean entrepreneurial and technology ecosystem.

At the same time, the space is becoming increasingly competitive with a number of players emerging. What would you say sets you apart?

Meyer: Our core business involves innovative and entrepreneurial business and people who operate globally. We don't simply roll up our sleeves for a transaction from time to time. We offer a holistic approach. Everything we do is designed to help these ‎types of clients manage risk, make informed decisions, and create and leverage valuable networks.

What do the next couple of years look like for Taylor Vinters Via in Singapore as well as in the entire region?

Meyer: We have a road map which sees us building our local capability in Singapore, particularly in the IP, funding and commercial transactions spaces. We have enough opportunity to support investment and growth in these areas.

Most importantly, we need to create the integration which will ensure the Singapore team at Taylor Vinters Via becomes a key part of the advisory team for our wider client base in Europe and the U.S. ‎This is how we will build a successful Singapore law firm in the space where we operate.

To contact the writer, please email raj.gunashekar@tr.com.

A showdown in Indonesia: How Freeport's row over its mining contract escalated

U.S. mining giant Freeport-McMoRan warned recently that it could take the Indonesian government to arbitration and seek damages over a contractual dispute that has halted operations at the world's second-biggest copper mine. Marking a sharp escalation in the row, the government also said it would go to arbitration if no resolution was reached. Fergus Jensen ofReuters explains the situation. 

What is at stake for Freeport and Indonesia?
Freeport's 2016 copper sales from Indonesia were worth about $2.4 billion, up 130 percent since 1996. This year, its Grasberg mine is due to contribute around a third of Freeport's global copper sales of 4.1 billion pounds.

But despite being one of the largest taxpayers in Indonesia, Freeport's relations with the government have become strained, particularly as Southeast Asia's biggest economy has sought greater control over its natural resources.

Freeport and the government have been in talks on converting its 1991 mining contract to a new permit and have made some progress in recent years. Freeport has agreed to pay export taxes, higher royalties on copper, gold and silver sales, and to triple its smelter capacity and cut its concession size by more than half.

In January, however, Indonesia introduced rules that prevent Freeport from exporting copper concentrate until it adopts a new permit that would terminate its current contract and impose new terms, including some different than those already agreed.

Freeport's current contract is not due to expire until 2021, and it wants guarantees that its mining rights will not change before committing to $15 billion of investment to expand its Grasberg underground mining operations.
 
What is at the heart of the latest row?
The halt in January to Indonesia's exports of semi-processed ore exports came as part of a renewed push for miners to build domestic smelters and squeeze more from its mineral resources.

Miners like Freeport were given an option: exports could only continue once they replaced contracts of work with special mining permits.

A new permit would allow Freeport to apply for an early extension to its mining rights, but would also leave it open to prevailing rules and changes to taxes and other terms from which it is currently exempt.

The rules require Freeport to divest up to 51 percent of its Indonesian unit compared with 30 percent currently. So far it has divested 9.36 percent.

Freeport would also have to pay a dividend tax, 10 percent VAT and an export duty of up to 7.5 percent on copper concentrate exports.
 
What are both sides saying?
Freeport says the stoppage of its exports and attempts to enforce the new rules on taxes and divestment violate its contract of work.
According to Freeport, the new mining permit lacks the legal and fiscal certainty it needs, and that under Indonesian and international law its contract should be immune to changes.

The company said it is only willing to adopt the new permit once it has a stable agreement providing the same rights and the same legal and fiscal certainty it has now.

The government has said Freeport must comply with Indonesia's 2009 mining law, recent regulations and its 1945 Constitution, which in some cases have different requirements than terms set out in Freeport's 1991 contract of work.

Freeport's contract, for example, requires the company to only construct one smelter, while the government now says it must build at least one more.

The government has said it will seek a resolution that does not break the law and that honours Freeport's contract.
 
How has the row escalated?
On Feb. 17, the government issued a new export permit for Freeport, allowing it to export up to 1.1 million tonnes of copper concentrate over the next year while proposing a six-month window to negotiate fiscal terms.

Freeport has said it "cannot accept" the new permit that would require the termination of its existing contract at the end of this window, regardless of where negotiations were at.

After declaring force majeure on exports, Freeport said it had started laying off workers in Indonesia and that it had given a formal notice to the government of multiple breaches of its contract in a step towards arbitration.
 
What happens next?
Freeport's contract allows 120 days to "use its best endeavours to resolve the dispute through consultation and use of administrative remedies."

If this fails, conciliation or arbitration proceedings would be held in Jakarta, or another location if agreed by both sides.

If Freeport opts to terminate its contract, all contract properties would be offered for sale to the government at cost or market value, whichever is lower, but not below the depreciated book value.

If the government does not accept this offer, Freeport would have 12 months to sell or dispose of assets. All roads, schools and other immovable properties that are in public use would immediately become Indonesian property.

ALB Hot Startups: Legistify

ALB Hot Startups is a weekly series that looks at the most promising new legal tech companies in Asia. This week, we train the spotlight on Legistify, which helps connect clients with lawyers. By Raj Gunashekar
 
Firm name: Legistify

Year of founding: 2015

Located: Headquartered in Uttar Pradesh, India

Founders: Akshat Singhal and Ritesh 

What they do: It is a technology platform that helps users find, consult and hire top legal professionals. With an end-to-end case management support, Legistify connects users to the right lawyers who can meet requirements such as consultation on legal matters, drafting legal contracts, agreement review and legal process outsourcing in a confidential and hassle-free manner. The hand-picked lawyer panel deals with areas ranging from corporate and consumer matters to divorce and matrimonial issues.
 
Apart from their "virtual general counsel” legal solutions for corporates and SMEs, the startup also provides services to many NGOs and not-for-profits. They have a panel of over 1,000 lawyers from across 80-plus cities in India at the moment.
 
Markets serving: At present, it primarily focuses and serves the Indian market.
 
Capital raised till date: Undisclosed
 
Key clients: Startups, SMEs, MSMEs, and B2C customers aged between 25 to 50 who need regular legal assistance in various fields
 
How the idea came about: “While I was pursuing my engineering degree, I and a bunch of friends worked at a startup where we faced major legal hurdles in terms of paperwork and payments which debilitated the startup from scaling up. Personally, this had a huge impact on me and I decided to help out individuals and companies catering to their legal requirements like finding legal experts, offering legal aids and educating the masses,” says Singhal.
 
The journey so far: “We faced numerous huge challenges and ups and downs. Whenever there is a new obstacle, we come together and work as a team [to] overcome it. We are trying to revolutionise how things are done in the legal industry at an individual and on organisational levels. A lot of clients and startups reach out to us asking to help them and use our services. So far, we’ve helped 250-plus startups and more than 200 individual SMEs for their legal requirements. We’d like to make legal simple, accessible and affordable,” says Ritesh.
 
“We plan to establish a nationwide network with handpicked lawyers and build a community around it and increase our client base. In the next two to three years, we are targeting 3,000 lawyers across 150 locations across India.”
 
What clients say:
 
"Difficult to imagine, but Legistify is on the way to eliminate legal outsourcing nightmares. Not only was I surprised, but was awestruck with the ease they got us register the trademark. They have got me hooked for life." – Legistify user

To contact the writer, please email raj.gunashekar@tr.com.