Patrick Dwyer is a corporate and financial services lawyer at Dwyer Harris. He has over 20 years’ experience in Australia and the United States in top tier law firms and in-house roles. At Dwyer Harris he works with clients ranging from multinationals to start-ups. Patrick specialises in financial services regulation, corporate transactions such as acquisitions, fundraising and joint ventures, and commercial agreements. He has a special interest in fintech and blockchain technology. He was a General Counsel at GE, leading the legal team for its home lending and insurance businesses in Australia. Patrick also practised law in New York with an international firm for a number of years, where he worked on mergers and acquisitions, capital markets and asset finance. Patrick holds a Bachelor of Laws with First Class Honours from the University of Technology, Sydney and a Bachelor of Arts with First Class Honours from the University of Sydney and is a member of the Financial Services Committee of the Law Council of Australia.
We had the pleasure of sitting down with Patrick recently to discuss key challenges and opportunities facing the industry today.
You can find the full Q&A below.
What are some of the key trends and developments facing in-house counsel that are having an impact right now?
The trend is towards lawyers working in-house. In New South Wales, for example, the percentage of all solicitors in the corporate sector rose from 6.7% in 1988 to 19.9% 2015, a threefold increase. This is changing the balance between law firms and their business clients, boosting the buying power of clients.
We are also seeing new business models for legal services, driven by the need to be more cost effective to stay competitive and by client service demands. The old ‘leveraged’ law firm model with a high ratio of employees to owners is designed to maximise owner profits rather than client service.
In-house lawyers now have a wide range of legal service providers to choose from, with many smaller firms being able use technology to provide the same expertise as big firms at much cheaper rates. There are significant opportunities for in-house counsel to deliver major cost savings for their clients.
How do you see technology and innovation shaping the role of in-house counsel in the future?
An ever-increasing burden of regulation creates work opportunities for lawyers. That is, up to the point when businesses realise they need to manage this cost smarter by finding technology solutions rather than hiring lawyers. Compliance costs in the financial sector are propelling initiatives known as ‘regtech’ which I think over time will automate many legal and compliance functions both in the financial sector and beyond. Some in-house roles will become like IT specialists where the lawyers will use or manage a range of powerful information technologies to generate legal services.
What are some key pieces of information in-house counsel should know related to blockchain and cryptocurrency?
The first thing to know – which is obvious I think – is that there is a huge amount of hype about blockchain and crypto, and we have yet to reach ‘peak hype’. The second thing is that behind the hype, there is really something to be excited about. Blockchain technology offers the prospect of trusted ledgers which don’t rely on a single central authority. The potential applications run across many industries. Cryptocurrencies provide a medium of exchange that does not need government backing. These technologies can revolutionise how we live, work and trade in a similar way to what has happened with the internet and smartphones, if they are allowed to develop without too much interference.
Are there any current issues or trends in financial services and fintech that you think some in-house counsel tend to overlook or underestimate?
One of the big changes on the way in the next year will be the new ‘design and distribution obligations’ for financial products regulated by the Corporations Act that will require people offering products to have a plan setting out their target market, to comply with the plan and report to ASIC when they don’t. ASIC will also be given a ‘product intervention power’ to stop you selling a product even if you haven’t broken the law. I think these developments will be a new overlay of government control in the financial services sector, and their impact on the ability to do business has not been fully appreciated.
What’s one tip you can recommend to in-house counsel faced with finance law issues?
When it’s a regulatory matter, seek out expertise.
How is the evolving landscape of finance law shaping the role of the in-house counsel?
Finance law used to be mainly about voluntary transactions between people – making loans, taking deposits, buying insurance, and so on. Today it seems to be mainly about obeying regulations. The in-house counsel’s role in a finance business has become more of a policing function and less of an enabling function, in my view.
Do you have any tips for in-house counsel when dealing with financial regulators?
While you should never forget that the regulator has different interests to those of your client, you should be respectful, civil and co-operative. Because there is so much financial regulation, it gives the financial regulators a lot of discretion as to how they will enforce it - so it helps to get along with them.
Are there any trends or issues coming in the future that you think in-house counsel should keep on their radar?
I expect that the use of artificial intelligence (AI) will grow exponentially; in the finance sector, for both advice and transacting. There are plenty of legal issues to consider, such as human responsibility for, and control over, AI. And of course another application of AI will be in legal services!
We are awash with data, and therefore data privacy and data security, which are already front of mind for in-house counsel, also need to be kept on the radar.
You can hear more from Patrick at the 11th Annual In-House Counsel Conference: Innovate or Perish seminar, being held on Wednesday 07 March at the UNSW CBD Campus, Sydney.