Economic
Legal Outsourcing Made in the Startup Nation
The global legal industry has undergone a significant change over the past few years. A major feature of this change is the increased use of legal outsourcing by law firms worldwide. Legal outsourcing has a growing industry with a rapidly growing market share, an industry which has implications on the entire legal industry, with current market share of almost USD 8.5 billion annually.
According to recent surveys, about 60% of in-house legal departments of commercial companies use legal outsourcing in some way, which makes companies offering legal outsourcing dominant players in the law industry. This number is expected to increase significantly in the next few years.
The great success of legal outsourcing is not a surprise, mainly because it is profitable for all three sides of the transaction – benefiting the law firm or the legal department, the Alternative Legal Service Provider (ALSP), and the freelance lawyer.
The benefits of legal outsourcing are numerous. Firstly, outsourcing allows a law firm or in-house team to maximize efficient time management by outsourcing the less significant tasks and concentrating completely on the more important tasks. Secondly, with no overheads and with talented lawyers willing to work remotely on a freelance basis, it’s possible to roll back the savings to the client and increase their satisfaction by cutting costs. Extremely important is the indirect value of being able to take on large-scale projects because there is on demand personnel available immediately.
The incorporation of technology into the legal profession, the use of innovative, modern legal tech initiatives and out of the box thinking (automation, among others) – have brought a new modern work structure to the legal sector. They are shaping and changing the industry where temporary positions are prevalent, freelance work is the norm and organizations contract with individuals can be on a short-term basis. Technology cannot replace the legal profession, but it will allow legal outsourcing to be the default work method.
There are of course many downsides to legal outsourcing. A main problem that clients encounter is communication and cultural barriers. This problem is overcome when outsourcing to Israel due to the phenomena of “Aliyah” where people move to Israel just because they want to live there, even if it isn’t necessarily the greatest career move. “Aliyah” has led to Israel being a multi-national pool of lawyers, speaking different languages and qualified in different jurisdictions.
According to the Israeli Central Bureau of Statistics, 11,500 new immigrants came to Israel in 2017 in order to become Israeli citizens. Most of these immigrants are young people aged 25-34 years, and no less than 525 of them – 5% – are lawyers and accountants.
The growing demand for fluency in foreign languages is a huge advantage for those coming from abroad. The demand for lawyers in Russian, Mandarin, Ukrainian, German and French, and of course English, are rising along with the need for lawyers experienced in negotiations and transactions overseas – from the legal perspective but also from the cultural aspect. There are lawyers proficient in various languages, but also with different cultural orientation. Lawyers who have these traits are a huge asset.
Israel has a proven track-record regarding its law firms. Amongst Israel’s’ largest law firms’ clients are names like Google, Intel, Facebook, Microsoft, Amdocs, Citibank and more. Some of these law firms open an international branch outside of Israel, and since August 2012 (change of legislation), over 80 international law firms established a presence of some sort in Israel. This makes Israel a central player in the international legal arena.
The Israeli Bar Association has over 80,000 registered attorneys, and the country is ranked first in the world in the number of lawyers per capita. Next is the United States, with only half the number of lawyers per capita as Israel. That is another reason that makes Israel fertile ground for legal outsourcing. Nowadays, regarding legal outsourcing, Israel is considered as one of the highest-quality, legal outsourcing countries in the world.
This overrunning of the market means that salaries for the average lawyer in Israel are quite low compared to their colleagues in the UK or in the US. The average Israeli lawyer is paid about a fourth of what his US counterpart is, what makes it possible to find plenty of cost-effective talented attorneys who are taking their position in the legal outsourcing world. Employing lawyers in Israel allows foreign law firms access to top lawyers, trained in their jurisdictions now living in Israel while billing them at a much lower rate. In a word – labor arbitrage.
On this background, LawFlex was founded three years ago and is now Israel’s first and biggest legal outsourcing firm, offering a different way to practice law. It is a way in which family and career can both be significant parts of life. LawFlex currently has a pool of close to 300 highly-skilled, independent lawyers. Many of them moved to Israel just because they wanted to live in Israel, and LawFlex provides them with a true professional opportunity to do so by offering quality legal solutions for short-term legal assignments at a competitive rate.
Law firms across the world use LawFlex to grow their workforce, maximize their resources, and minimize their costs, and the company continues to grow around the world, recently by expanding to Asia and the Pacific.
A home of professional, experienced lawyers qualified in a variety of jurisdictions, with knowledge in an assortment of legal fields and fluent in several languages, Israel is indeed a legal outsourcing oasis. Lawyers who previously worked for premier law firms in Europe or in the United States are available at much more cost-effective Israeli price standards.
Economic
Tackling Non-Tariff Barriers: African Continental Free Trade Area (AfCFTA) Trading in East Africa Region
“Tearing down these trade walls is key to regional integration in the continent.” – Ms. Pamela Coke-Hamilton.
Traders within the East Africa region should be elated with the African Continental Free Trade Area (AfCFTA), which came into force in January 2021. Prior to the commencement of the AfCFTA, many traders haddifficulties engaging in cross-border trade within the region due to non-tariff barriers. For example, dealing with roadblocks and hectic custom procedures, restrictive licensing processes, certification challenges, uncoordinated transport related regulations and corruption. Understandably, non-tariff barriers (NTBs) are construed to mean restrictions that are put in place that make importation and exportation of products really costly. It is worth noting that NTBs often arise from laws, regulations, policies, private sector business practices and they are used to protect domestic industries from competition.
In order for East African traders to fully enjoy the benefits of AfCFTA, it is imperative that NTBs are eliminated. All hope is not lost as there is a groundbreaking online mechanism of eliminating NTBs. Notably, African Union in collaboration with UNCTAD came up with a simple and user-friendly website which allows traders to report NTBs they encounter when trading within Africa. As a result, governments are required to respond and eliminate the said barriers. It is against this backdrop that this paper seeks to analyse how to tackle non-tariff barriers in the wake of AfCFTA trading. Further, it seeks to provide recommendations to the massive challenge that NTBs pose on intra-African trade and integration.
AfCFTA Protocol on Trade in Goods
Annex 5 of the AfCFTA Protocol on Trade in Goods provides for mechanisms of identifying NTBs, institutional structures for their progressive elimination within the AfCFTA and reporting and monitoring tools for NTBs. This begs the question: What obligations do AfCFTA state parties have with respect to ensuring elimination of NTBs?
Annex 5 to the Protocol establishes a reporting, monitoring and elimination mechanism where privatesectors can file complaints on specific trade obstacles. The complaint is then forwarded to the responsible state party to give its feedback on the complaint and resolve it expeditiously. Additionally, through the reported NTBs, improvements are made to the national and regional trade policies.
Government Obligations
State parties are required to appoint national NTB focal points to help resolve NTBs. The NTB focal points are thereafter trained in using the online tool, how to receive NTB complaints in real time and how to resolve the barriers within the set deadlines. Notably, the focal points will receive email alerts whenever a trader lodges a new complaint or a government comments on an ongoing case.
Goodwill from governments is an essential ingredient for successful elimination of NTBs since the AfCFTA mechanism is built on stronger foundations. In addition to the national focal points and public-private National Monitoring Committees, an NTB Coordination Unit will be created in the newly established AfCFTA Secretariat in Accra, Ghana. The NTB Coordination unit will monitor barriers and progress towards their resolution. Furthermore, state parties will be required to ensure that an NTB sub-committee meets regularly to assess progress and challenges.
Creating Awareness in the Private Sector
State parties need to create awareness about the online platform to the private sector. This is owing to the fact that the NTB mechanism is available to all and sundry: micro, small and medium-sized companies, informal traders, and youth and women business operators. Through the AfCFTA NTB mechanism, all stakeholders have equal voices since the platform is transparent. Additionally, internet connectivity should be available at smaller border crossings so that informal traders do not face any obstacles while trying to make NTB complaints through the platform. Worth mentioning is that in places where there is no internet access, an offline short-messaging-service (SMS) feature will also be rolled out in the medium term.
Procedure for Elimination of Non-Tariff Barriers
State parties must exhaust the existing online notification NTBs channels before escalating a complaint or trade concern to the AfCFTA level. However, there are additional procedures in resolving disputes. For instance, where a state party fails to resolve an NTB after a factual report has been issued and a mutually agreed solution has been reached, then the AfCFTA Secretariat and an appointed Facilitator will recommend dispute settlement.
Appendix 2 of the NTB Annex outlines mandatory processes and deadlines. For instance, an NTB complaint must receive
an initial response within a period of 20 days. Moreover, if no resolution has been found after 60 days, then the parties should request for an independent facilitator to be appointed. If coming to a resolution isproving difficult, then parties can take the matter for dispute settlement.
Despite these deadlines and procedures being crucial, small traders could be in need of a quick solution to the NTB on the ground. Looking at the Tripartite region online mechanism and the speed at which NTBs have been resolved, traders should have faith that they will receive swift assistance.
Language (non-tariff) barriers
Different traders speak different languages and for instance a Swahili- speaking truck driver from Tanzania may want to lodge a complaint about the number of import documents required when delivering cotton fabric to Rwanda. That complaint would then need to be sent to French-speaking Rwandese officials, raising a possible language barrier.
The NTB online tool mitigates potential language difficulties with a plugin that automatically translates complaints from English, French, Arabic, Portuguese, Swahili and 12 other African languages into the official language of the receiving country.
Conclusion
As East African traders envisage the end of the COVID-19 pandemic or at least its receding soon, their hope is that AfCFTA will be an encouraging stimulus for Africa’s development. The groundbreaking online AfCFTA NTB mechanism is a good starting point. Suffice it to say, it will need considerable improvement before a rules-based, expeditious and binding arrangement will be in place. The absence of private complaints to a judicial forum remains a deficit. This is owing to the fact that complaints are dealt with on an ad hoc basis. This will not bring about permanent and systemic solutions. Instead, it will provide legal certainty, further predictability and establish binding precedents. The AfCFTA NTB mechanism is ahead of the curve globally. It is an innovation the world will want to watch closely to see what it can learn from Africa and the AfCFTA.
A market anomaly
Historically, investment in health issues that exclusively or disproportionately impact women has been scarce. Only 4% of global healthcare R&D funding has been allocated to women’s health, even though it represents an economic burden of $500 Billion – and women are 51% of the world’s population.
At the root of this disparity, there is an educational gap about women’s health, as well as a pervasive lack of women in top leadership roles. This lack of representation – and therefore decision-making power – spans across research institutions, venture capital firms, corporate boardrooms and politics.
The rise of Femtech
Over the last decade, the number of women leaders and start-up founders, especially in tech, innovation and science, has been steadily growing. This growth goes hand-in- hand with their increasing purchasing power, which has fuelled the rise of ‘Femtech’: a new market in which technology is used to put women’s health needs at the top of the global agenda.
The word “Femtech” was coined in 2015 by Ida Tin, CEO and Founder of period tracking app Clue, to label a market which originated at the intersection of three trends: the growth and consolidation of the tech industry, advances in the feminist movement, and a shifting healthcare landscape, with individuals starting to behave more like consumers than patients. Tech innovation, equal rights movements and changes in consumer practice have converged to meet women’s health needs. This emerging technological field includes medical devices, digital platforms, and tech-enabled products focusing on fertility, pregnancy, maternal and hormonal health, parenting support, menopause, and cancer prevention – as well as sexual and reproductive health and pleasure.
Economic activity and awareness have been steadily growing over the past ten years. Across the globe, female founders have put their heads down to question, innovate and redesign: they have improved and tended to the physical, financial and emotional journey of women who seek fertility treatment; they have democratised access to maternal care; they have built software tools to help women track and understand their hormonal cycles; and they have created software solutions aimed at making parenting and work-life management more seamless.
However, only when Femtech was estimated to become a $50 Billion category by 2025 did the world really start to listen. Within the last 12 months, funding allocated to Femtech start-ups reached $1 Billion in total. There were also several early successes. Feminine hygiene start-ups ‘This is L’ and ‘Sustain Products’ were acquired by P&G and Grove Collaborative respectively. Last Autumn, fertility benefits company Progyny had a successful IPO. Finally, in early 2020, maternal health telemedicine and benefits platform Maven hit a record when it announced its $45 Million Series C, the largest round ever raised by a female founder in Femtech – a round that boasted celebrity investors (and public advocates of the gender equality movement) like Mindy Kaling and Reese Witherspoon.
In the UK alone, Elvie, the start-up behind the pelvic floor trainer and innovative wearable breast pump device, raised $42 Million in a Series B. Additionally, CVC Capital Partners acquired over 20 speciality women’s health assets from Teva Pharmaceutical Industries Ltd, a US $703 Million deal that culminated
in the establishment of global specialty pharmaceutical Theramex, a company solely committed to supporting the health needs of women. Headquartered in London, the company markets a broad range of innovative, branded and non-branded generic products across 50 countries around the world. The company’s women’s health portfolio focuses on contraception, fertility, menopause and osteoporosis and includes key brands such as Ovaleap®, Zoely®, Seasonique®, Actonel®, Estreva® and Lutenyl®.
The activity generated by Femtech’s start-ups and businesses has spawned an entire economic ecosystem. For instance, Johnson and Johnson has been co-sponsoring innovation summits with a focus on women’s health, and P&G Ventures, having expressed strong interest in menopause and the “ageing well” segment, has recently partnered with Vinetta project to source its next billion-dollar women’s brand from the community of entrepreneurs.
What next for Femtech?
Throughout 2020, investors, thought leaders and founders have sought to tap into Femtech’s full growth potential. Rather than continuing to focus on the female reproductive journey (and related health concerns), the sector can provide the lens through which we further appreciate how disease impacts women differently.
For example, symptoms of heart disease in women are different from those of men and are more likely to be misdiagnosed. Depression is more common in women (1/4) than in men (1/10). Also, women are seven times more vulnerable to autoimmune diseases and are two to four times more likely to experience chronic fatigue.
There’s a market for educational resources to depart from the current approach of separating and isolating health problems. Instead, user-friendly holistic treatment options that treat the individual as a functional system can facilitate diagnosis and manage symptoms, enhancing the general quality of life.
Additionally, there is a tremendous opportunity to develop tech solutions aimed at increasing treatment access in rural areas and developing countries. The Femtech movement is progressing into a more intersectional territory, where it seeks to understand how to make healthcare services and therapeutics more attuned to the specific needs of the female physiology.
Investing in a Fairer Healthcare System
Women’s health has traditionally been considered a niche market, despite the
fact that women make up half the population, manage the majority of household income, and handle a good portion of the healthcare needs of their families. Some have explained this anomaly as the result of gender biases, with a predominantly male investment community struggling to understand the value proposition, empathize with the problems, or make an accurate assessment of how much women would pay for solutions.
Education and awareness continue to be instrumental in Femtech’s growth. However, companies in the space find fundraising challenging, not least because educating investors about women’s healthcare and its market potential is one of the leading causes of deal cycle friction. This highlights the glaring gap in our education system in areas of women’s sexual and reproductive health.
While highly lucrative deals remain within familiar circles, a shift in the wider investment community is occurring, driven by female and diverse funders who early on identified the value in the sector and are putting their money to work. The same women who drive demand for these products – those who seek a more personalized, more convenient, and more effective healthcare experience – are increasingly willing to invest their money towards a better future for women’s health.
Whilst the impact of the pandemic on health-tech innovation and investment remains to be seen, one thing is certain: this ‘niche’ sector has established itself as one of the most disruptive health-tech markets of the decade.
Economic
“Uber” Uber: the far-reaching implications of the Supreme Court’s decision in Uber BV & Ors v Aslam & Farrar
On 19 February 2021, in a unanimous judgment, the UK’s Supreme Court dismissed Uber’s final appeal againstthe decision of the London Central Employment Tribunal made following
a preliminary hearing, that the Claimant drivers fall within the definition of “worker” set out in s.230(3) (b) of the Employment Rights Act 1996 (“ERA”). In doing so, the Supreme Court upheld the Tribunal’s finding that the Claimants worked under an implied contract with Uber London pursuant to which they undertook personally to provide transportation services for Uber, which is neither a client nor customer of any profession or business undertaking carried on by the Claimants.
There had been no written contract between Uber London and the drivers. Uber London held the private hire vehicle (“PHV”) operator’s licence in respect of Uber’s London operations. As a result, Uber London, and not the drivers themselves, nor Uber BV, the Dutch parent company with which the Claimants did have written contracts, bore the statutory responsibilities of accepting and fulfilling PHV bookings, and ensuring that any vehicle provided by it for carrying out such booking is a vehicle for which a PHV licence is in force, driven by a person holding a PHV licence. In view of that regulatory context, personal service had never been in dispute; Uber did not permit drivers to share driver accounts on its app, which would, no doubt, have made it difficult for Uber London to ensure that it complied with its statutory responsibilities.
Hence the employment status aspect of the case turned entirely upon the question of whether the Claimant drivers had undertaken to provide transportation services “for” Uber London or whether, as Uber contended, Uber London acted as a booking agent for them, assisting them to conclude separate contracts with each of their passengers.
This question meant that the Supreme Court had to consider whether and how the ordinary principles of contract law and agency law apply to the world of work, and to apply the common law tests for employee status, particularly the tests of control and integration, but with an understanding that “The basic effect of limb (b) is, so to speak, to lower the passmark, so that cases which failed to reach the mark necessary to qualify for protection as employees might nevertheless do so as workers” (Byrne Bros (Formwork) Ltd v Baird [2002] ICR 667 at [17]). There has been no determination that Uber drivers do not achieve the ‘higher passmark’; Messrs Aslam and Farrar had simply not pleaded this.
The Supreme Court’s dismissal of Uber’s contentions in relation to these matters has implications far beyond the lives of the Claimants, and indeed the lives of Uber drivers more generally.
In relation to the ordinary principles of contract law, what was fatal to Uber’s argument (based on its own circumstances) was the absence of a written agreement between Uber London and drivers. This left the Employment Tribunal to determine the nature of the relationship between the two, by inference from the parties’ conduct, considered in its relevant factual and legal context. The Supreme Court concluded, at paragraph 49, that there was no factual basis for Uber’s contention that Uber London acts as the drivers’ agent when accepting private hire bookings. In addition, without expressing a concluded view, the Supreme Court held, at paragraph 48, that an agency arrangement would not be compatible with the PHV licensing regime. The latter must surely have implications for all PHV operators who have heretofore treated their drivers as principals in and agency relationship with them (see Addison Lee v Lange & Ors [2019] ICR 63); licensing law may prevent this.
Of even greater significance was what the Supreme Court said about the relevance of the ordinary principles of contract to the world of work more generally. Uber had argued for primacy to be accorded to the written agreements such that the question of whether a person is a “worker” is approached by interpreting the terms of any applicable written agreements, at least as the starting point. Uber argued that this was the principle for which the case of Autoclenz v Belcher [2011] ICR 1157 was authority, and if not, it should be overruled.
In rejecting Uber’s argument, the Supreme Court not only affirmed its decision in Autoclenz; it went even further than it had in that case.
From paragraph 69 of its judgment, the Supreme Court explained the inherent illogicality of applying ordinary principles of contract law, unvarnished by the fact of legislative intervention, to the world of work. It said that doing so would give employers a free hand to contract out of statutory employment protections, a matter which had not been canvassed in Autoclenz; that case had instead focussed on inequality of bargaining power as the means by which traditional contract law could be side-stepped in the employment context in order to avoid injustice. But of Autoclenz, the Supreme Court in Uber said, “…the task for the tribunals and the courts was not…to identify whether, under the terms of their contracts, Autoclenz had agreed that the claimants should be paid at least the national minimum wage… It was to determine whether the claimants fell within the definition of a ‘worker’ in the relevant statutory provisions so as to qualify for these rights irrespective of what had been contractually agreed. In short it was a question of statutory interpretation, and not contractual interpretation.” Statutory interpretation required consideration of the statutory purpose which, in the case of the statutes relied upon by Messrs Aslam and Farrar, was “…to protect vulnerable workers from being paid too little…required to work excessive hours or subjected to other forms of unfair treatment…” ([71]) and that:
“Once this is recognised, it can immediately be seen that it would be inconsistent with the purpose of this legislation to treat the terms of a written contract as the starting point in determining whether an individual falls within the definition of a ‘worker’. To do so would reinstate the mischief which the legislation was enacted to prevent. It is the very fact that an employer is often in a position to dictate such contract terms and that the individual performing the work has little or no ability to influence those terms that gives rise to the need for statutory protection…” ([76]).
If the question were not one of statutory interpretation, the law would in effect be according Uber “power to determine for itself whether or not the legislation designed to protect workers will apply to its drivers” ([77]).
This is the truly revolutionary portion of the Supreme Court’s judgment. Though it has long been understood that the label which the parties give (or more commonly, the more powerful party gives) to the relationship is not determinative, it is now not even the starting point. Contrary to Uber’s contentions, it (and related written terms) is to be accorded no greater primacy, than any other aspects of the working relationship.
More specifically to Uber itself, the Supreme Court held (at [93] et seq.) that five aspects of the relationship between Uber London and drivers particularly highlight the substantial control Uber exercises over drivers, which demonstrates that the drivers are in fact working “for” Uber, within s.230(3)(b) of the ERA. These are that:
(i) the remuneration paid to drivers is fixed by Uber;
(ii) the contractual terms on which drivers perform their work are dictated by Uber;
(iii) while never required to log on to the drivers’ app, once they are logged on, drivers’ choice about whether to accept requests for rides is constrained by Uber; Uber controls information provided to the driver in advance of accepting a ride and Uber monitors drivers’ rates of acceptance of ride requests;
(iv) Uber exercises a significant degree of control over the way drivers perform their services including by vetting the types of cars drivers may use, directing them to passengers’ pick-up locations and from there to their destinations and using its rating system as an internal performance management tool;
(v) Uber restricts communication between drivers and passengers to the minimum required to perform any given trip.
As a result, the transportation provided by drivers is designed and organised in order to provide a standardised service from which Uber, and not individual drivers, obtains the benefit of customer loyalty and goodwill ([101]). That point exemplifies the significance of the Supreme Court’s judgment to the “gig economy” as a whole; how can any gig economy enterprise attract and maintain customer loyalty to its product or service other than through such standardisation? In turn, how can such service be provided without controlling the way workers undertake their work just as Uber was found to do?
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