Australia’s Gilbert + Tobin wants to be a key player in the market for transactional work, and that means differentiating itself with standout expertise in emerging business structures and models that are transforming the M&A market, says fintech and blockchain partner Peter Reeves.
“You cannot just transact commodities anymore. Not every business is the same. You can’t undertake an M&A transaction that just says we’re going to trade this business for that business or conduct this transaction and the widget is the widget. It’s just not like that anymore,” he said.
Australia is a highly competitive jurisdiction for transactional work among top-tier firms and many hope to advise on these new business structures and ways of transacting. But the most important differentiator between firms won’t be responsiveness, relationships and performance, Reeves says. It will be expertise in these emerging business models, such as Web3 and DeFi.
This is why Gilbert + Tobin has brought together experts from a range of legal disciplines, forming a tech and IP group to help clients exploit the opportunities and manage the risks in this rapidly evolving market.
Reeves leads the payments, fintech and blockchain practice at the firm, which has evolved over the past few years. It started out advising on the regulation of investment platforms, investment products and schemes and fractionalized property. But as blockchain emerged, the firm started advising on that, too, as well as on tokens and initial coin offerings.
Exposure to these types of projects and technologies has made Reeves wonder about future business models and the role of DeFi. Short for decentralized finance, DeFi allows individuals to transact without traditional intermediaries such as brokerages, exchanges or banks, and instead rely on blockchain for settlement. It is considered the financial layer of Web3, the next iteration of the internet.
“You can’t really understand markets, blockchain, tokens—understand what they are or are not—unless you understand the existing regulatory frameworks that we have,” he said.
However, an understanding of technology within law firms is becoming equally important.
“The technology standpoint becomes important because you then move more heavily into the creation of the business models, of the platforms. And to transact those—to understand those and how they are built—that brings us back into the technology territory,” Reeves said.
This is the basis of Gilbert + Tobin’s strategy in building its tech and IP group, which brings together lawyers with expertise in technology, intellectual property, fintech and Web3.
“You cannot say you understand the future of fintech and Web3 and those business and economic models without having people who understand the technology, who understand property and competition,” Reeves said.
Reeves says it’s important that a firm develop leaders in the market to keep clients informed as they face the usual day-to-day transactional activity and also the competitive landscape for new products from the viewpoint of a blockchain or Web3.
So far, the use of these new business models in transactional activity has been limited. But when they occur, lawyers are needed. While some may eliminate the use of traditional financial institutions, Reeves expects an ongoing role for lawyers.
“Whatever happens from a regulatory standpoint, whatever definitions start to apply and whatever other requirements start to be brought into play in relation to fair and efficient markets and consumer protection and stability in financial markets … there will be a time where lawyers need to participate in some way,” he said.
In most cases, regulation hasn’t caught up to the technology, but Reeves said this shouldn’t stop clients from considering how it might play out. While there isn’t yet any certainty, clients shouldn’t do anything “blatantly stupid.” They should be making informed decisions about how to manage their relationships with regulators as they develop projects. Even if the law isn’t clear, regulators’ concerns and objectives are.
In law firms, lawyers have generally understood what their colleagues are working on, even if it is at the cutting edge of innovation. But Reeves says not all lawyers understand his work.
“You often find yourself in a discussion around justifying what this is all about. It is hard because you’re not ending up having the conversations you want,” he said. “You’re not only trying to grapple with the regulation and how the regulation may unfold and what it should look like and try to contribute to that, but you’re also grappling with that sentiment. It’s a layer that you wouldn’t normally experience in law firm life as a lawyer in a transactional firm.”
However, young lawyers get it and are gravitating toward IP and technology practices, based on the expectation that they will evolve and be part of the future.
And like most areas of the law, competition for talent is fierce. Law firms are competing for staff with companies that are participating and even immersed in these new areas. And unlike law firms, they don’t rely on billable hours and can offer better pay.
And these lawyers are attracted to the fast-track opportunities companies offer.
“They also take a piece of the action early on in their career. They’re not waiting to be however old it is to be a partner and owner of a business. They become part of the business,” Reeves said, adding that if law firms want to compete in this space, they will have to rethink what they offer lawyers with this type of expertise.
“I’m thinking about development differently. I’m thinking about what is remuneration in the context of exposure to projects,” he said. “This is something that comes up in all the law firms that have advised closely in this space.”