Ari Kaplan recently spoke with Megan O’Flynn, an assistant general counsel at the International Swaps and Derivatives Association, and Doug Donahue, a partner in the finance practice at Linklaters in New York City, about ISDA Create—a collaboration between the ISDA and Linklaters.
They also discussed how developing tools with outside counsel can impact client expectations and ways that projects of this type can influence the attorney-client relationship.
Ari Kaplan: Megan, tell us about your background and your work at ISDA.
Megan O’Flynn: I am involved in a number of legal technology initiatives at ISDA, including our clause library project and the ISDA Create negotiation platform, which reflects our efforts to digitize and push derivatives contracts into the next generation of standardization and optimization for transactions.
Ari Kaplan: Doug, how does your practice incorporate technology to enhance client service?
Doug Donahue: I have always had one hand in technology while practicing over the past 16 years. During that period, I have been lucky enough to work with ISDA at the industry level, where in many cases we have dealt with large volumes of market participants being affected by regulatory change. Back in 2012, I was part of the team that helped develop ISDA Amend, one of the first technology solutions in this space.
Ari Kaplan: Megan, your legal department has collaborated on ISDA Create, among other tools, with Linklaters. What sparked that development?
Megan O’Flynn: ISDA has a long tradition of wanting to be at the forefront of helping the industry standardize and move toward optimization for their transactions. When people sign up to an ISDA, they traditionally think about the organization’s main master agreement contract, which has been around for about 30 years and primarily allows parties to agree to some standardized terms and customize others for the vast majority of derivative transactions that are on the market today. It also provides transparency and certainty with respect to how transactions function in the market. Looking at the next generation of ISDA’s role as the world moves towards a more digital future, particularly with items like DLT, blockchain and smart contracts, we started to think critically about ISDA’s role.
That coincided with regulatory changes in the derivatives market. For example, post-Dodd-Frank, more regulations became applicable to derivatives transactions. The implementation of initial margin regulations and the volume of documentation required of market participants to ensure that they had the appropriate documentation in place to allow them to trade led to the development of ISDA Create. Seeing the time crunch that market participants were facing in papering all of their relationships with all of their counterparties to meet the global margin requirements, we partnered with Linklaters first to help draft key documents in paper form. Then, we determined that we should help the market by creating a platform that standardized all of the negotiation aspects and streamlined discussions to enable counterparties to focus on the points of contention in the document and make it easy to agree. We continue to add more negotiated documents to the platform in order to allow market participants to have even greater flexibility and seamlessness in their transactions.
Ari Kaplan: Doug, how does developing tools like ISDA Create support the firm’s mission?
Doug Donahue: We are always looking for ways to become trusted advisers for clients, and the development of ISDA Create is consistent with that objective. We are aware of ISDA’s technology aspirations and have been helping the organization with its digital initiatives since 2012. To be able to deliver on this platform while supporting ISDA-related legal work positions Linklaters as a law firm that can not only provide legal advice but that also provides practical solutions to real-world problems for clients.
Ari Kaplan: Megan, how has legal technology transformed the work that you do?
Megan O’Flynn: It has holistically changed the way that I work and the way that I interact with the members of ISDA and the market more broadly. The ISDA Create negotiation platform is one of a number of technology initiatives that ISDA is pursuing. We create white papers that look at smart contract aspects in partnership with number of law firms. We work with Linklaters on a number of documents that are connected to ISDA Create and other technologies. We have also maintained a common domain model, which is a uniform, open-source language that can help teams represent transactions from beginning to end. There is also a lot of other work that I do that is more traditional, but this has transformed the way that we look at technology and potential efficiencies that we can help the market create. It has also changed the way I look at my job as a lawyer because when we draft new documents, we do so with an eye toward digitization and creating materials that are technology friendly. We now ask whether they are able to be coded and transformed into an output that can be regulation friendly in a technology centric format.
Ari Kaplan: Doug, who is involved in developing client-facing tools?
Doug Donahue: At Linklaters, we take a really collaborative approach. Our internal technology team, which we call Nakhoda, is made up of front and backend developers, as well as UI designers and product managers, and works directly with subject matter experts. For ISDA Create, Nakhoda worked with the entire derivatives team at Linklaters. The reason that combination is so effective is that we are looking to provide a product that is very usable. In the case of ISDA Create, lawyers give input to the design and development team to translate the experience on paper, i.e., in Microsoft Word, to the experience onto ISDA Create.
Ari Kaplan: Megan, how has your experience developing tools with your outside counsel impacted your expectations of what they’re capable of doing?
Megan O’Flynn: Prior to doing this project, I hadn’t engaged as much with a firm that had this technical capability. With respect to litigation, technology tools, such as those used in e-discovery, have been available for quite a long time so practitioners in those areas are much more familiar with law firms and outside vendors who handle this work. On the transactional side, however, that is not generally the case, so this experience has shown me that a law firm like Linklaters with an internal team like Nakhoda can create a seamless integration that helps a project move forward with minimal disruption. I certainly think that it is really important from an in-house counsel perspective to make sure that we have law firm partners that have that eye toward technology moving forward, particularly for transactional matters.
Ari Kaplan: Doug, how do you see your work with ISDA influencing future collaborative client-centric projects?
Doug Donahue: ISDA Create is really groundbreaking, as I believe it is the only online platform for sophisticated parties to negotiate and execute complex contracts. It has been awesome working with ISDA on this project, but it really is just scratching the surface of the opportunity that we see because the technology that has been built is a negotiation platform that can work for any documentation. I expect a push from clients to leverage a tool like this because it will provide greater access to their information.
Listen to the complete interview at Reinventing Professionals.
Ari Kaplan regularly interviews leaders in the legal industry and in the broader professional services community to share perspective, highlight transformative change and introduce new technology at his blog and on iTunes.