Global law firm Norton Rose Fulbright and offshore specialists Carey Olson have revealed they were the legal advisers on the groundbreaking Northern Trust/IBM private equity blockchain deal in Guernsey, which Artificial Lawyer covered last week.
The deal is significant because the use of blockchain tech within a private equity fund could change the legal needs of stakeholders.
This is because much of the administrative and day to day legal documentation needs of funds could be reduced by the shared ledger capability provided by blockchain. I.e. paperwork of a regulatory or transactional nature would not need to flow through a third party, such as a law firm, but instead would remain visible to all permissioned parties, with any changes automatically and instantly taking effect across the blockchain.
Another key aspect to the deal is that this is an example of law firms advising on technology that could reduce the demand for legal work, at least for ‘process level’ matters.
Such a trend may seem counter-intuitive, but a growing number of law firms are tuning into the fact that disrupting lower value work with technology is something the clients are demanding. In which case, it is perhaps better to be at the front of this trend and position the firm as a high value adviser that wants to help clients, rather than trying to hold onto the lower value matters that new technology such as blockchain will impact.
The blockchain solution allows the Guernsey-based fund to transfer ownership stakes and be managed, serviced and audited throughout the investment lifecycle on a transparent platform offering ‘one version of the truth’ to participants who gain access via secured means.
The Norton Rose team advising on UK and other international legal aspects of the deal was led by partner Imogen Garner, who co-heads the firm’s FinTech regulatory practice, and included Albert Weatherill, Marcus Evans, Lara White and Judy Harrison.
Carey Olsen, led by partners Tom Carey and Mark Dunster and including counsel Richard Field, advised Northern Trust and Unigestion, which controls the Guernsey private equity fund, on all Guernsey law aspects of the launch.
Imogen Garner said in a statement: ‘There have been many exciting advances in the financial technology sector and in particular in the area of blockchain. We were delighted to work with Northern Trust on this innovative project in the private equity space.’
As explored last week, this is the first commercial use of the technology with a private equity fund, in this case one domiciled in UK Crown Dependency and offshore centre of Guernsey.
Northern Trust said that the move was because although private equity as a means of investment was still very effective, a range of operational inefficiencies in running funds held them back. Part of these inefficiencies, in the view of Northern Trust, was the need for certain legal tasks that slowed down fund management and investment activities.
Peter Cherecwich, president of corporate and institutional services at Northern Trust said: ‘Current legal and administrative processes that support private equity are time consuming and expensive.’