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13 January 2020

cee overview - start-up & venture capital services/technology & digitalisation

Tech is gold! Digitalisation is tech's major trend / Start-Ups in CEE

Technology is everywhere. It is the gold or oil of our time, and digitalisation is technology's major trend. It has never been more important. This was particularly true last year, and will be even more so in the upcoming year.

We have always been frontrunners in technology matters. Because of the importance of technology for our clients and due to the legal complexity that technology matters bring along, we have sharpened our focus on technology & digitalisation matters by establishing a dedicated, firm-wide technology & digitalisation group in early 2019. In that sense, technology has brought us (closer) together.
The group's focus is on advising clients comprehensively on complex legal questions in technology & digitalisation-driven matters, by implementing a one-stop shop across CEE and by deploying lawyers that share an affinity for technology.

The group was and is dealing with a diverse group of technology matters. Most prominently:

  • Blockchain: distributed ledger technologies such as blockchain promise (or claim to promise) a worldwide disruption of financial and real property markets, fund raising and project financing (initial coin offerings and security token offerings) and other applications and businesses.
  • The future of mobility: The global automotive industry is working on autonomous driving solutions which will change the way we experience mobility today. Also, due to flexible and efficient car sharing solutions and other mobility providers, such as e-scooters and e-bikes that can be rented everywhere from your smartphone, the traditional ways to travel have changed and will continue changing in the future. Such change will however also need to be accompanied by appropriate laws and regulations.
  • FinTech: FinTech start-ups are challenging the traditional financial services industry. No other industry is facing a bigger threat by start-ups. Large banks will need to shape their business models and re-think traditional ways of servicing clients to keep pace.
  • Digital Platforms and Marketplaces: Many business models depend on digital platforms, such as Uber, one of the largest multinational transportation network companies which does not own a single taxi; AirBNB is one of the largest online marketplaces for arranging or offering lodging and tourism experiences, and does not own any real property; Flixbus, a company offering intercity coach services in various European countries and the United States, does not hold any stakes in busses, nor does it employ any bus drivers; Tourradar, the Austrian tour booking platform, does not organise a single tour or other tourist event. Said companies (and many others) run platforms and/or marketplaces for third-party services/products rather than offering the services themselves. However, this is also not necessary from a user's perspective, since the platforms offer a valuable service comparison, unified information on products and services and single point of contact for users. As a consequence of their success, many platforms are under increasing scrutiny by politicians and regulators who tend to protect traditional business models rather than allowing innovation as it happens.
  • Cyber security: Technology does not only bring growth, benefits and convenience, it also brings risks. Attacks by hackers or phishers and other criminals impose serious threats to private and public institutions. Cyber security thus becomes increasingly important and clearly will increase in terms of awareness (and investments into protection, such as cyber insurance policies) over the next periods.
  • Artificial Intelligence (AI): Will lawyers (and other businesses) all be soon replaced by AI systems? We don’t think (and hope) so, but it is clear to us that AI will have an influence on the way we will work. For instance, handling large volumes of data will be possible (in an efficient way) by utilising AI (machine learning) tools. The use of AI will, however, bring many legal questions, such as who owns IP created by AI? Who is responsible for decisions of an AI system, e.g. if AI is used to support court decisions. AI ethics will also need to be discussed and defined.
  • Digitalisation: Overall, digitalisation is continuing to be a main driver for change of processes. It requires a sophisticated IT infrastructure, a variety of digital applications and performing networked systems and data. A digitalisation project requires – on top of various legal issues, such as data protection, IP and labour law questions – the mastering of the overall change process (and as we all know: culture eats strategy for breakfast).
    Beside our client work, Schoenherr has teamed up with other law firms in Austria and founded the Legal Tech Hub Vienna (LTH Vienna). The unique initiative that brings together friendly competitors with a joint goal, will lead the legal industry into a digital future, while ensuring that our clients' needs are of primary concern.
    The LTH Vienna operates an accelerator programme for legal tech companies (start-ups and SMEs) which allows participants to directly work with market leading law firms on developing legal tech tools and solutions. The first batch of the programme was already a success with litigation tool developer "MISO" scooping the first award on demo day. Currently in its second round, we look forward to continuing to work with the new start-ups and our friendly competitors on legal tech matters that will make clients' and law firm's lives easier.
    The LTH Vienna's collaborative approach does, however, not stop at the accelerator program: Its Cloud Computing Working Group is heavily engaged in fine-tuning Austrian bar regulations to make the legal industry fit for using cloud computing and storage tools while at the same time preserving privacy and security of client data.

Start-Ups: The start-up world is booming, with more and more start-up activities in CEE

The start-up world is booming, with more and more start-up activities in CEE. For instance, in countries like Serbia or Romania, start-up hubs and events seem to mushroom, and governments seem to become aware that fostering start-ups may bring an economic boost to their countries. And CEE is best suited to fostering start-ups because of many technology-focused geographic areas, such as Cluj (Romania) or Novi Sad (Romania). Also, other countries like Poland, Czech Republic, Croatia and Bulgaria see a lot of start-up activities and, most importantly, investments into start-ups.

Start-ups also influence legal developments. In Poland, for instance, a new company form was recently introduced, the simple joint-stock company ("SJC"). The SJC was introduced in response to market needs and difficulties that start-ups face with incorporation, capital raising and liquidation.



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