One doesn’t have to dig too deep into legal organizations to find AI skeptics. AI is getting tremendous attention and significant venture capital, but AI tools frequently underwhelm in the trenches. Here are a few reasons why that is and why I believe GPT-3, a beta version of which was recently released by the OpenAI Foundation, might be a game-changer in legal and other knowledge-focused organizations.

GPT-3 is getting a lot of oxygen lately because of its size, scope, and capabilities. However, it should be recognized that a significant amount of that attention is due to its association with Elon Musk. The OpenAI Foundation, which created GPT-3, was founded by heavy hitters Musk and Sam Altman and is supported by Mark Benioff, Peter Thiel, and Microsoft, among others. Arthur C. Clarke once observed that great innovations happen after everyone stops laughing. Musk has made the world stop laughing in so many ambitious areas that the world is inclined to give a project in which he’s had a hand a second look. GPT-3 is getting the benefit of that spotlight. I suggest, however, that the attention might be warranted on its merits.

Why Some AI-Based Tools Have Struggled in the Legal Profession and How GPT-3 Might Be Different

1. Not Every Problem Is a Nail

It is said that when you’re a hammer, every problem is a nail. The networks and algorithms that power AI are quite good at drawing correlations across enormous data sets that would not be obvious to humans. One of my favorite examples of this is a loan-underwriting AI that determined that the charge level of the battery on your phone at the time of application is correlated to your underwriting risk. Who knows why that is? A human would not have surmised that connection. Those things are not rationally related, just statistically related.

This capability makes AI tools good at grouping like things together to facilitate users finding them based upon revealed correlations. Consequently, many AI applications are some variant of finding stuff better. It is what they do well. However, “finding stuff” is not a first-order problem in legal organizations. It is merely a means to an end.

The “end” in legal organizations is a document of some kind. Documents are their widget—the thing legal teams build. Finding information that is relevant to creating a document is helpful. Actually producing that document, though, is far more helpful.

Producing documents, it turns out, is something GPT-3 does very well. That is at the heart of its distinction from many other AI tools – its ability to produce sophisticated documents. At its core, GPT-3 is a text-prediction engine. It is designed to accept as input a string of text and from that input predict, from a statistical analysis of everything it has ingested, what text should come next. That process can be repeated recursively, so from a simple text string an entire document can be generated.

It does this through statistics and algebra, more or less. GPT-3 has read, essentially, everything—at least all substantive publicly available documents in huge portions of the internet, which at this point in history represents a material segment of all expressed human knowledge. Accordingly, it can predict, given some input of text, what text is statistically likely to come next. You can feed it a few lines, and it predicts the next. Moreover, early testers claim that you can instruct GPT-3 to write in a certain voice. Your document can be created in the voice of Hemingway, Shakespeare, or Barack Obama. Pretty cool stuff.

I think this is the breakthrough for legal organizations. GPT-3 isn’t just finding stuff for you; GPT-3 is making stuff for you. Certainly, other AI products add value—it’s not trivial that we have something that makes wrenches—but it’s another thing entirely that if you sell cars, you have something that makes a car.

2. With Data Sets, Sometimes the Juice Isn’t Worth the Squeeze

Most enterprises that have implemented AI tools confront the training dataset problem. Algorithms that were designed with enormous datasets depend upon such large datasets in operation. When such tools come out of the lab and into the enterprise, assembling the appropriate dataset is often a gating factor.

The issue in legal organizations is one of scale and effort. The volume of documents in most legal organizations, even large ones, are nowhere near the numbers for which AI tools were designed. In addition, vetting and assembling such datasets and authenticating a product’s performance after training on such collections can be extremely time consuming. In areas such as contract intelligence, tools that are trained on large, publicly available data, such as the SEC’s EDGAR database, can be an exception to this problem. These tend to work out-of-the-box on an organization’s contracts, which tend to be similar to the large public dataset. However, absent this predelivery training, it is frequently found that creating and monitoring the dataset is a bar to success in an organization.

GPT-3, however, has been pretrained on billions of substantive documents from large collections of publicly available documents. Given that GPT-3 is pretrained with a vast dataset, it is functional out-of-the-box for the purpose of generating documents. Early research suggests that it can be hyper-tuned on an organization’s own data, but it doesn’t have to be. This solves the primary challenge for business users in getting out of the gate with some AI tools.

3. Thinking Isn’t as Important as Doing

One criticism that has been levied upon GPT-3 is that it does not “reason” as humans do, so on occasion its output is absurd. That’s an accurate criticism, and the public conversation about GPT-3 is not short of humorous examples.

GTP-3 is a statistical engine, without the reasoning ability of humans or the yet-to-be-created “strong AI.” People frequently ask whether an AI will pass the Turing Test (meaning would it fool a human into thinking he or she were interacting with another human). Although that is a useful shorthand for measuring an AI’s reasoning ability compared to humans, it doesn’t say much about its usefulness. In knowledge organizations where creating documents is a central activity, usefulness is judged by a tool’s ability to do that task, not its ability to fool someone about the source. For that purpose, GPT-3 appears to be well-suited. Although the absurd output that GPT-3 sometimes creates can be fun to see, the wrong turns are pretty obvious and unlikely to escape even cursory review. Most of us can probably point to some pretty absurd output from humans, too, but it’s hardly a reason to dismiss them as participants in the ecosystem.

What GPT-3 does is create stuff, rapidly, based upon a significant chunk of human knowledge. For all that doing, perhaps its lack of thinking can be forgiven.

Applications for GPT-3 Worth Exploring in Legal Organizations

Given that GPT-3 is good at generating documents, it’s easy to imagine applications of this technology in legal organizations. Almost any task that is document-oriented (except, presumably, those where the unique facts overwhelm all other aspects of the document) are good candidates. Here are a few that we will be exploring with our corporate legal department clients, which I suspect are representative of those that will make sense for other organizations:

• Powering intake systems. In our work with corporate legal departments, a common problem is managing the interaction between business units and the legal department. The requester wants prompt, accurate help. The legal department wants to provide that help while complying with headcount and bandwidth constraints. One aspect of the intake process can be providing immediate answers to common questions. GPT-3 can be part of that solution by providing contextual answers (rather than selecting from an inventory of stock answers like typical bots) as well as creating first drafts of documents. GPT-3’s ability to create answers and documents on the fly can enable chat and intake systems that users find useful rather than off-putting.
• Document creation. Creating first-pass documents based on what has been done before is not only powerful, it’s what humans already do. Early in my legal practice, a senior partner once told me, “We created a set of documents in the Garden of Eden and have just been modifying them ever since.” GPT-3’s garden is much larger; it can include your collection plus everything else. In addition, it analyzes 175 billion parameters, so it makes statistically valid decisions incredibly fast. One can imagine GPT-3 being part of the process that creates initial drafts of legal memoranda, contracts, policy manuals, HR documents, RFPs, and audit responses, among other things commonly created by finding and patching together prior versions of these documents by people.

Where We Go From Here

GPT-3 is not the only helpful AI tool at our disposal; however, it does represent a transition from making the raw materials of end products to making end products themselves. For legal organizations and other knowledge workers, that is a material change. In addition, the enormous dataset upon which it is pretrained removes one of the barriers to experimentation and implementation. GPT-3 has its limits, but frequently the first limit is our imaginations. In the case of GPT-3, stretching our imaginations might serve us well.

My company specializes in understanding what business capabilities can be enabled by all the cool new tech coming into the world. We believe that GPT-3 provides some new tools of value in a legal department’s arsenal and will be focused on assessing practical, impactful solutions, hopefully making better legal organizations in the process—once the world stops laughing, of course.

On September 24, 2020, Institutional Shareholder Services, Inc. (ISS) released the results of its 2020 Global Benchmark Policy Survey. This survey aims to solicit broad feedback from institutional investors, corporate executives, board members, and other interested constituencies on potential areas of policy change for 2021 and beyond. Key takeaways from the survey include:

COVID-19 Pandemic Response

• ISS’s policy guidance issued in response to the COVID-19 pandemic: 62% of investor respondents and 87% of non-investor respondents indicated that ISS should carry this or similar guidance into 2021 and continue to apply flexible approaches where warranted through at least the 2021 main proxy seasons.
• Annual meeting formats: Absent continuing COVID-19 pandemic health and social restrictions, almost 80% of investor respondents chose “hybrid” (combined online and physical) shareholder meetings, whereas 42% of non-investor respondents indicated a preference for in-person meetings, with virtual meetings used only when there is a compelling reason (such as pandemic restrictions).
• Expectations regarding executive compensation adjustments: 70% of investor respondents indicated that the COVID-19 pandemic’s impact on the economy, employees, customers, and communities and the role of government-sponsored loans and other benefits must be considered by boards, must be incorporated thoughtfully into compensation decisions to adjust pay and performance expectations, and should be clearly disclosed to shareholders. 53% of non-investor respondents indicated that the COVID-19 pandemic is different from previous market downturns and many boards and compensation committees will need flexibility to make decisions regarding reasonable adjustments to performance expectations and related changes to executive compensation.
• Short-term/annual incentive programs: 51% of investor respondents and 54% of non-investor respondents indicated that both (1) making mid-year changes to annual incentive metrics, performance targets and/or measurement periods to reflect the changed economic realities; and (2) suspending the annual incentive program and instead making one-time awards based on committee discretion could be reasonable company responses to the COVID-19 pandemic, depending on circumstances and the justification provided.

Sustainability and Climate Change

• Director accountability to assess and mitigate climate change risk: Investor respondents indicated the following actions are appropriate for shareholders to take with respect to a company they consider to not be effectively reporting on or addressing its climate change risk: (1) engage with the board and company management about their concerns (92%); (2) consider support for shareholder proposals seeking increased disclosure related to greenhouse gas (GHG) emissions or other climate-related measures (87%); and (3) consider support for shareholder proposals seeking establishment of specific targets for reduction of GHG emissions, possibly including targets for reducing the carbon footprint associated with the company’s products and services (84%). 93% of non-investor respondents favored engagement with the board and company management as the most appropriate action, while other possible actions received significantly less support, and 75% of investor respondents indicated that they would consider a vote against directors who are deemed to be responsible for poor climate change risk management.
• United Nations’ Sustainable Development Goals framework: 44% of investor respondents and 49% of non-investor respondents indicated that the framework is an effective way for companies to measure environmental and social risks and to commit to improving environmental and social disclosures and actions.

Auditors and Audit Committees

• Auditor evaluation: 88% of investor respondents indicated significant audit controversies as the most relevant factor (other than the relative level of non-audit services and fees compared to audit-related services and fees) to the evaluation of auditor independence and performance, whereas 67% of non-investor respondents indicated significance/frequency of material restatements as most relevant.
• Audit committee evaluation: 93% of investor respondents indicated that significant controversies relating to financial reporting, financial controls, or audit should be a top consideration by shareholders when evaluating a company’s audit committee, whereas 97% of non-investor respondents chose skills and experience of audit committee members.

Board Composition

• Racial and ethnic diversity:
  • 73% of investor respondents and 36% of non-investor respondents indicated that all boards should disclose corporate board members’ self-identified race and/or ethnicity.
  • 61% of investor respondents indicated that boards should aim to reflect the company’s customer base and the broader societies in which they operate by including directors drawn from racial and ethnic minority groups. 53% of non-investors indicated that while board diversity with respect to race and ethnicity is desirable, expectations may reasonably differ based on many factors, for example local laws, company size, geographic location, and other factors.
  • 85% of investor respondents and 92% of non-investor respondents favored engagement with a company’s board and management team to encourage the inclusion of racial and ethnically diverse directors.
• Independent board chair: 85% of investors indicated that an independent board chair is their preferred corporate model, while 48% of non-investor respondents indicated that there was no single preferred model for board leadership.

The world is rapidly changing and so is the legal profession. The term “VUCA,” meaning Volatile, Uncertain, Complex, and Ambiguous, was coined in the military and has been adopted to describe business conditions in rapidly changing markets. Today, we are witnessing VUCA on steroids.

Change requires leadership. Although lawyers often hold leadership positions in our society, they have not been taught to lead.[1] Some leaders may be born with innate leadership capabilities, but there is evidence that leadership skills rooted in change and transformation can be taught.[2]

Law schools increasingly have begun teaching about leadership and consider it to be a fundamental lawyering skill. In 2018, the Association of American Law Schools (AALS), the field’s professional academy, created the Section on Leadership. How can practicing lawyers who graduated prior to these recent changes embrace leadership? One way is through leadership coaching.

What Is Leadership Coaching in Law?

Leadership coaching is a tool that supports the development of leadership as a core legal competency, building on critical thinking skills and supporting lawyers’ analytical creativity, well-being, and capacity. It is a distinct form of coaching based on a confidential relationship with a trained professional coach who helps a lawyer enhance his or her performance. To be clear, we use the term “leadership coaching” here instead of “executive coaching” because executive coaching originates in the business world, and lawyers might not be executives.

Working with a leadership coach can help attorneys not only learn what is required to lead effectively, but also how to implement those skills in practice and incorporate them into their work. Leadership coaching offers an opportunity for lawyers to manage change (both internally and externally), consider best practices, explore and adopt new approaches, and address mindsets and/or behaviors that may no longer serve their interests. Through coaching, attorneys can gain a new perspective and reframe issues, which often generates creative solutions and helps identify what gets in the way of accomplishing their goals.

When businesses first began to adopt coaching as a human resource tool decades ago, it was often perceived as remedial—a way to “fix” a poor-performing employee or as an exit strategy. Soon, however, executive coaching became identified as a way to help business leaders “up their game,” analogous to professional athletes. Today, it is estimated that 60 percent of Fortune 500 CEOs have coaches.[3]

The legal field has been slower to adopt coaching than other analytic professions that attract smart, linear thinkers, such as engineers and business and finance professionals. Although becoming more common over the last several years, the use of leadership coaching remains less prominent within the legal profession than in the business world.

As lawyers who are also professionally trained leadership executive coaches, we have coached a wide array of lawyers, from law firm partners currently in leadership roles and those identified as rising leaders, to lawyers serving as in-house counsel, in government agencies, and leading nonprofit organizations, to attorneys in business, management, and policy roles. We have seen similar themes reflected among many lawyers’ leadership goals. Those themes include:

• motivating and incentivizing;
• delegating the way a task is accomplished;
• providing and receiving constructive feedback;
• evaluating and supporting performance;
• supervising, training, and accountability;
• managing workplace conflicts;
• mentoring and sponsoring effectively;
• diversity, equity, and inclusion; and
• retention and replacement.

All of these skills are required for successful leadership.

The Challenges of Law Practice

In almost any field, leadership is at the core of getting things done. A great idea is just that unless it’s acted upon. Moving from thought to scalable action requires generally more than one person and often a team. To get from strategy to operations, from planning to implementation, and from policy to practice requires not just intellectual capacity but leadership acumen.

Billed as a “learned” profession, lawyers pride themselves on their intellect and sometimes scoff at “management”—a core component of leadership—as busy work or an administrative chore to be avoided that does not require real skill and that is separate from their “real” work. The fact that success in private practice is measured by billable hours and the size of a portable book of business exacerbates those tendencies, but lawyers who work in-house, in government, or in public policy often display similar attitudes.

Businesses, law firms, government agencies, and nonprofits all depend upon leaders who can successfully manage complex systems, adapt to internal and external changes they cannot control, and inspire other people to take responsibility. Such challenges often push smart, talented attorneys—who are used to being successful in their work—outside of their comfort zones.

This lack of comfort with leadership and strategy is evident in lawyers’ interactions with their clients. General counsel and their teams are expected to go beyond managing risk to actively support their company’s strategy, but in a recent survey only 55 percent of CEOs responded that their chief lawyer acted as a strategic business partner and was considered a valued member of the company’s leadership team.[4]

How Do Leadership Coaches Help Their Lawyer Clients?

Even highly intelligent and accomplished attorneys do not typically sprout new skills overnight. Without judgment and in a confidential environment, a leadership coach works with lawyers individually to help them more accurately understand how they are perceived, experiment with different approaches, provide feedback, offer resources, and help tailor a model they can own.

Typically engaged to work over a period of months, a leadership coach helps lawyers identify what they want to change or what success might look like in a particular area—questions lawyers are not often asked to consider. A leadership coach can then help them articulate specific goals for professional growth and development, identify an action plan, and hold them accountable for making progress over time.

The definition of “good leadership” varies but consistently includes nuanced judgment and emotional intelligence (EQ).[5] Indeed, numerous studies site EQ as the factor that sets CEOs apart from their peers who demonstrate similar technical skills, accomplishments, and knowledge.[6] Dismissed by some as “soft skills,” the term proves to be a misnomer in that it frequently proves much harder to learn, particularly for linear thinkers who pride themselves on their expertise and intellect.

Leadership coaching is ideally suited to help an individual develop EQ. Leadership coaches regularly help clients become more self-aware, recognize “blind spots” in how their behaviors and comments impact others, and develop a broader range of tools to more effectively accomplish their objectives.

Coaching Produces Higher ROI in Professional and Leadership Development

Pressed with client demands, lawyers are often quick to ask what the return on investment (ROI) is for any time devoted to professional or leadership development. Knowledge alone is insufficient to produce high ROI. Following even a well-received development program, most participants are likely to proceed with “business as usual” once they return to their desks.

Rather than presenting a one-size-fits-all set of best practices to a group, a leadership coach can help curate models, frameworks, and practices that are likely to be a good fit not only for a specific situation, but also a specific lawyer. Whether part of or separate from a professional development program, leadership coaching involves lawyers trying out new approaches and practices, gathering data on what works for them, and developing new tools to more effectively produce desired outcomes.

Leadership coaching within the legal profession provides an opportunity—in ways that training programs cannot—for attorneys to develop the skills they need to step up and lead effectively. Lawyers without such skills typically remain sidelined from decision making, called in at the last minute to ensure compliance rather than develop strategy, or left to “wing it” in leadership roles with lower odds of success.

Why Is Leadership Coaching Particularly Important for Lawyers Now?

A new world is emerging, and lawyers will no doubt help to craft it. A worldwide health pandemic and the ripped scab of systemic racism in the murder of yet another victim in a long line of police killings of unarmed Black people have rocked the globe. Widespread unrest continues in the midst of uncertainty around elections, a growing economic crisis, and unemployment rates not seen since the Great Depression.

All of these events illuminate the importance of diversity, equity, and inclusion (DEI). Simply put, diversity requires representation of people from different backgrounds—age, class, ethnicity, gender and gender identity, race, physical ability, sexual orientation, political beliefs, and beyond. Indeed, an expansive form of leadership, termed intersectional leadership, embraces diversity in all of its forms.[7]

Beyond reflecting diversity, inclusive environments value participants, enabling a sense of institutional belonging and access.[8] A metaphor is apt: diversity is being invited to the party; inclusion is being asked to dance.[9] Equity is a hallmark of the environment within the dance hall that allows inclusion to thrive.

Unfortunately, law firms, businesses, and many other institutions have long struggled with issues of DEI without measurable success. Leadership coaching can help lawyers move into positions of power to address DEI and develop new strategies to improve that record.

Creating and managing an inclusive workplace is a leadership skill. Developing cultural competence and consciousness, envisioning what success looks like, examining how behaviors support or undermine those goals, trying new approaches, and soliciting feedback to assess impact are all coaching strategies that produce improved outcomes.

In the shift to a post-pandemic world, change will accelerate across generations as millennials and Gen Z integrate systems and structures designed by Baby Boomers and Gen X. Broader dissemination of leadership coaching throughout the legal profession can help equip lawyers at all levels to lead effectively and develop a society of greater access and belonging.

[1] See Deborah Rhode, Lawyers as Leaders (1st ed. 2013)

[2] See generally Herb Rubenstein, Leadership for Lawyers 153–83 (2d ed. 2008).

[3] What Is leadership Coaching?, NEXT LEVEL LEADERSHIP COACHING, http://www.nextlevelleadershipcoaching.com/what-is-leadership-coaching/ (last visited Sept. 14, 2020); see generally Roland B. Smith & Paul Bennett Marrow, The Changing Nature of Leadership in Law Firms, N.Y. ST. B. ASS’N J. 33, 37 (Sept. 2008).

[4] Phillip Bantz, CEOs Wish Their General Counsels Were Better Business Partners, Corporate Counsel,  Aug. 10, 2020.

[5] See Stephen P. Gallagher, Coaching in the Law Firm Setting, 55 Prac. Law 35, 39 (2009).

[6] See generally Lawrence R. Richard, Personality Matters, 60 Or. St. B. Bull. 37, 40 (1999) (citing Daniel Goleman’s work on EQ and his book Working with Emotional Intelligence, which focuses on the role emotional intelligence plays in the workplace and argues that EQ factors account for over “90 percent” of leaders success).

[7] See Anthony C. Thompson, Stepping Up to the Challenge of Leadership on Race, 48 Hofstra L. Rev. 735, 740 (2020); see also Anthony C Thompson, Dangerous Leaders: How and Why Lawyers Must Be Taught to Lead (1st ed. 2018).

[8] Leah Teague, Elizabeth Fraley & Stephen Rispoli, Fundamentals of Lawyer Leadership (Wolters Kluwer, forthcoming, 2021).

[9] Janet H Cho, Diversity is being invited to the party; inclusion is being asked to dance, Verna Myers tells Cleveland Bar, Cleveland.com (Updated Jan 11, 2019; Posted May 25, 2016).

Insurtech companies continue to expand their reach into the Latin America market, particularly in Brazil, Mexico, and Peru. Insurtech, defined as the combination of insurance and technology, develops and leverages new digital tools to optimize the insurance business. Latin America affords an attractive environment for insurtech companies to develop innovative business models including new distribution channels and systems to compare insurance products and provide services to insurance companies. The fact that the insurance industry in Latin America is highly regulated, combined with the absence of regulatory frameworks specific to insurtech, explains, in part, why insurtech has experienced slow growth to date, representing roughly only 6% of all start-up fintech companies in Latin America. Recognizing insurtech’s potential benefits, insurance regulators in Latin America have begun to explore how to facilitate modernization of the insurance sector through the use of new digital technologies without compromising consumer protection. 

Brazil, the leading insurtech market in Latin America, recently offered a regulatory sandbox to a limited number of insurance companies supervised by the Brazil Insurance Superintendent (SUSEP). The sandbox is designed to enable testing of new products and services and to encourage development of new ways to provide traditional insurance services. SUSEP adopted Circular No. 592 on August 26, 2019, authorizing “on demand” insurance policies, thus permitting issuance of policies with flexible terms affording coverages on a monthly, daily, or even hourly basis. These “on demand” insurance policies are sold by digital means, thus allowing insureds to turn coverages on and off. This has opened the door to basic insurance for mobile devices, bikes, motorcycles, and other personal valuables such as smartphones and tablets. These regulatory changes reflect SUSEP’s intent to adapt to the increasing use of smart phones by consumers and to usher in the digital insurance era, which, in turn, hopefully leads to more affordable products.

Although not specific to insurtech, Mexico adopted a law to regulate financial technology companies (Fintech Law) on March 9, 2018. The Fintech Law was designed essentially to promote financial technology models such as crowdfunding or electronic payments, or virtual assets such as bitcoins. While it predates adoption of the USMCA, the Fintech Law suggests that Mexico was anticipating USMCA requirements with respect to the handling and sharing of customer data, prohibiting discrimination against foreign fintech companies. The Fintech Law would also enable Mexican fintech companies to provide services in other countries. The USMCA is designed to enhance and facilitate the offering of insurance services by licensed suppliers, which, in turn, likely would promote the insurtech industry by making it easier for companies to obtain approval for new insurance lines (except personal and compulsory insurance).

The Fintech Law demonstrates that legislators in Mexico may be flexible in devising future regulations to address insurtech in a similar way. Until then, insurtech companies are subject to the existing legal regime, the Law of Insurance Companies and Bonds (Mexican Insurance Law), and Regulations and Circulars issued by the National Commission of Insurance and Bonds (CNSF). Article 214 of the Mexican Insurance Law, for example, specifically permits insurance operations and brokering activities to be provided by electronic means.

Although Peru has not adopted an insurtech law, the Banking and Insurance Superintendent (SBS) has promulgated regulations that address the sale of insurance products by digital means. The Marketing of Insurance Products Regulations, adopted by Resolution SBS No. 1121-2017 (“Marketing Regulations”), allows insurance companies to promote, offer, and sell products by phone, internet, or other distance (i.e., rather than “in person”) systems, including digital marketing through social media. The Marketing Regulations also enable operation of digital insurance policy price comparison systems. Likewise, the Supervision and Control of Insurance Intermediaries Regulations, adopted by Resolution SBS 809-2019, allows insurance brokers to use distance communication systems (i.e., phone, internet, applications) to offer and sell insurance products on prior notice to the SBS. Insurance companies and insurance intermediaries using these digital tools must guarantee that the information provided to prospective policyholders complies with the security, confidentiality, and transparency principles provided in the General Law for the Financial and Insurance Systems and the Organic Law for the Superintendent of Banking and Insurance for the sale of insurance products.

The SBS is working on a proposal to amend the Marketing Regulations to allow the marketing of insurance products through “marketers” or “bancassurance” by traditional or digital means. Marketers are individuals or companies contracted by insurance companies to facilitate the sale of insurance products. By virtue of the marketing agreement between the marketers and the insurance companies, marketers become representatives of the insurance companies in connection with the sale of insurance products.

While insurtech would facilitate growth in the insurance market in numerous countries in Latin America with increasing insurance penetration, such as Colombia, Argentina, Ecuador, Panama, Costa Rica, and Chile, these countries have not yet adopted laws or regulations addressing insurtech. Thus, in these markets, start-up insurtech and technology companies are subject to existing legislation governing insurance companies and insurance intermediaries in connection with their operations. The absence of specific regulations, however, has not prevented companies from venturing into innovative insurance schemes including new distribution channels, price comparison tools, and aggregation methods in these countries. Clearly, legislation is not far behind.

To foster insurtech development, the International Association of Insurance Supervisors (IAIS) has established working groups as platforms for the exchange of information and sharing of experience in this area, but ithas not yet issued recommendations regarding insurtech regulation. IAIS guidelines would undoubtedly encourage regulators to expedite appropriate regulations governing insurtech. This, in turn, would promote and protect this new industry, which is encountering very receptive markets in Latin America.

Discrimination on the basis of race is a fundamental human rights issue. The UN Universal Declaration of Human Rights (UDHR) proclaims that all human beings are born free and equal in dignity and rights, and that everyone is entitled to all the rights and freedoms set out therein, without distinction of any kind, in particular as to race, color, or national origin. The preamble to the International Convention on the Elimination of All Forms of Racial Discrimination (ICERD), adopted by the UN General Assembly in 1965 and entered into force in 1969, includes a reaffirmation that discrimination among human beings on the grounds of race, color, or ethnic origin is capable of disturbing peace and security among peoples, and the harmony of persons living side by side even within one and the same state. Article 5 of the ICERD calls on states to undertake to prohibit and to eliminate racial discrimination in all its forms within their borders and to guarantee the right of everyone—without distinction as to race, color, or national or ethnic origin—to equality before the law and enjoyment of an expansive portfolio of rights, including, among other things, the right to equal treatment before the tribunals administering justice as well as political rights, in particular rights to participate in elections and equal access to public service. Article 5 also obligates states to protect economic, social, and cultural rights, including the rights to work, to free choice of employment, to just and favorable conditions of work, to protection against unemployment, to equal pay for equal work, and to just and favorable remuneration.

International human rights standards were originally written by states to create a framework and set of goals for governmental action, and it was often argued that such standards did not apply to the private sector. For many, the obligations of businesses with respect to the subjects covered by international human rights standards were limited to compliance with applicable national laws, even if those laws failed to meet international standards. However, as time has gone by, ideas have changed, albeit slowly, and there is now growing support for the notion that although the primary duty to protect human rights remains with national governments, businesses also have responsibilities to respect human rights in their operations. The preamble to the UDHR imposes duties to promote and respect human rights “on every individual and every organ of society.” In 2011, the UN Human Rights Council endorsed the Guiding Principles on Business and Human Rights, and Guiding Principle 11 provides: “Business enterprises should respect human rights. This means that they should avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved.” Importantly, the official commentary to the Guiding Principles endorsed by the UN Human Rights Council makes the following clear: “The responsibility to respect human rights is a global standard of expected conduct for all business enterprises wherever they operate . . . . [It] exists over and above compliance with national laws and regulations protecting human rights.” Businesses have also been called upon to contribute to the Sustainable Development Goals established by the UN, such as access to basic services, participation in decision making, full and productive employment/decent work, reducing income inequality, ensuring equal opportunity, promoting peaceful and inclusive societies, providing justice for all, and building effective, accountable, and inclusive institutions at all levels.

Unfortunately, despite all of the proclamations described above, as well as specific laws such as the federal Civil Rights Act of 1964, the United States and other states have failed to fully implement the ICERD, and racism remains one of the paramount human rights problems and threatens the livelihood and rights of millions of people in the United States and around the world.[1] In her book, Caste: The Origins of Our Discontents, Pulitzer-Prize-winning author Isabel Wilkerson wrote: “Our founding ideals promise liberty and equality for all. Our reality is an enduring racial hierarchy that has persisted for centuries.” She goes on to argue that racism in America is the byproduct of an unseen skeleton: a caste system that for centuries, even after the formal ending of slavery, has placed African Americans at the bottom rank in a societal hierarchy and repeatedly denies them respect, status, honor, attention, privileges, resources, benefit of the doubt, and basic human kindness. For her, the only way to fix the broken American house is to “tear out the plaster, down to the beams, inspect and rebuild the rotting lath” and “recast and reconstruct.”[2]

As is well known by now, the death of George Floyd, a black man, while he was in the custody of the Minneapolis police department on May 25, 2020, set off days of large public demonstrations against racial injustice all around the world, often accompanied by vandalism and looting as well as disproportionate police responses that escalated the tensions. As has often happened in the past when such incidents have occurred, businesses large and small were quick to issue statements through social media expressing their concerns about social justice and supporting the Black Lives Matter movement. Many large and well-known brands made commitments to contribute substantial sums to social justice initiatives and to support minority businesses. However, a law professor who studies economic justice at Emory University complained in The New York Times that: “Most of these corporate statements were put together by the marketing team that was trying not to offend white customers and white employees . . . . It’s complete B.S. It’s performative.”[3]

Others argued that the responses of a number of companies were “hypocritical” and “too little too late,” and pointed to examples of expressions of support for racial justice by large technology companies that appeared to be at odds with prior practices:

• Facebook being criticized for discrimination against black employees and lack of diversity in the workforce;
• Amazon calling for an end to “inequitable” treatment of black people, but long being criticized for low pay, poor working conditions, ignoring the complaints of workers (particularly during the course of the COVID-19 pandemic), and providing software to law enforcement agencies that has been misused in the racial profiling of black people (Amazon later announced that it would terminate its contracts with the police); and
• Google significantly rolling back its diversity and inclusion initiatives to avoid being perceived as anti-conservative.

Floyd’s death, which was quickly followed by the senseless killing of another black man, Rayshard Brooks, by a white police officer, was part of a seemingly endless series of high-profile violent events targeting African Americans (e.g., Ahmaud Arbery, Breonna Taylor, Eric Garner, Trayvon Martin, and others), and occurred during a health pandemic that has been difficult for every American, although there is evidence that the adverse impacts have fallen disproportionately on blacks and other people of color. For example, local government officials reported that job losses in New York City relating to the economic carnage of the pandemic have been much more dramatic among people of color—about one in four of the city’s Asian, Black, and Hispanic workers were unemployed in June 2020, compared with about one in nine white workers.[4] In answer to the longing among large swathes of the country to simply return to “normalcy,” i.e., the ways things were before the health crisis began, protestors and their supporters are signaling that the exclusion and disparity of the past will not be good enough and that the country and its businesses must brace and commit themselves to what will be a difficult but necessary path toward a “new normal” grounded in economic justice. In fact, the president of the American Psychological Association argued:

We are living in a racism pandemic, which is taking a heavy psychological toll on our African American citizens. The health consequences are dire. Racism is associated with a host of psychological consequences, including depression, anxiety and other serious, sometimes debilitating conditions, including post-traumatic stress disorder and substance use disorders. Moreover, the stress caused by racism can contribute to the development of cardiovascular and other physical diseases.

Related to all this is the reality that almost all of the wealth generated in the stock market during the technology boom that played out in the years before the pandemic flowed to white families, with The New York Times reporting that Federal Reserve data confirms that typical black households had only one-tenth the wealth of typical white households. The evidence is clear that the black community has realized little in the way of tangible benefits from pledges of equity from Corporate America, and that it is time for businesses to finally make a meaningful impact in an environment in which fewer than half of black adults in America have a job (due in part to the devastation to the job market caused by the pandemic), and those black workers that do have jobs make less money than white workers (due to the limited types of jobs usually available to blacks, i.e., low paying service jobs, and the failure of businesses to pay black workers the same amount as white workers for the same work). Exacerbating the crisis is the prediction that 40 percent of black-owned businesses are not expected to survive the pandemic, due mostly to the lack of business credit and personal savings that possibly could keep them afloat until conditions improve.

Darren Walker, president of the Ford Foundation, criticized the traditional and predictable response of companies in the face of racism in an article in The New York Times, saying: “The playbook is: Issue a statement, get a group of African-American leaders on a conference call, apologize and have your corporate foundation make a contribution to the N.A.A.C.P. and the Urban League. . . . That’s not going to work in this crisis.”[5] The same article led with the headline “Corporate America Has Failed Black America” and went on to read: “many of the same companies expressing solidarity have contributed to systemic inequality, targeted the black community with unhealthy products and services, and failed to hire, promote and fairly compensate black men and women.”[6] Writing in the Harvard Business Review, Mark R. Kramer noted that although taking a public position on social media supporting racial justice is laudable, and arguably overdue in many cases, he hopes that the tragedy in Minneapolis leads to actions rather than just words from businesses. According to Kramer, surveys indicate that most Americans want businesses to respond to the unrest by purging racism from the workplace, committing resources to help communities recover from the unrest, and establishing the social, economic, and political conditions necessary for a just society, and he argued that businesses have a duty to act:

We cannot pretend that most major corporations in America—and their shareholders—have not benefited from the structural racism, intentional inequality, and indifference to suffering that is behind the current protests. Corporate America and the Business Roundtable have an obligation to go beyond tweets and quotes by committing to an agenda that will advance racial equity in meaningful ways.

Although there has been sweeping and heated dialogue on the root causes of the economic and social problems confronting people of color and the consequences to society in general, many recall that they have heard a lot of this before, such as during the 1992 protests triggered by the acquittal of four white police officers who brutally beat Rodney King in Los Angeles, and worry that the compassion, anger, and energy will eventually drift away. Meaningful change takes a long time to occur in elected bodies and local police departments, particularly during a time when the country is so divided politically. However, businesses have opportunities to act quickly if they can remain focused on creating and executing solutions within their organizations and business relationships. Although the principal victims of systemic racism are people of color, it is a problem for everyone to the extent that it erodes the fabric of society. Moreover, as one observer in The New York Times noted: “racial injustice and discrimination are forces that corrupt the corporate mission and core values of a corporation.”[7]

Frustrated people in pain are tired of waiting for politicians to act and are looking to the businesses that provide them with jobs, goods, and services to take a leading role in creating a more just society. In the past, businesses have been reluctant to get involved, and the argument was frequently made that market forces would eventually solve race problems facing American companies; however, in an article published in The Economist, Walker dismissed this notion and called such views “naïve and in denial about the hold of racism on our culture, including our business culture.” In the same article, a consultant argued: “It’s utterly unrealistic for anybody to bi-furcate a societal problem . . . it’s also a business issue because business exists in society, with employers, customers, suppliers and stakeholders.”

Business leaders must seize the challenges and opportunities that have gripped society’s attention in the wake of the events of the first half of 2020 by taking a stand and making and fulfilling commitments to action across a broad spectrum of issues and contexts, including embedding equality, diversity, and inclusion in the boardroom, the workforce, and all aspects of organizational culture; achieving financial equity and security; bolstering community engagement; getting involved in the public square through advocacy for racial justice, and reimaging products and services.

Over the next few weeks, we’ll take a deeper look into many of these issues and discuss some of the practical steps that businesses can take to contribute to racial justice and equality and what you, as a business counselor, can do to assist them when they are your clients.

[1] A. Bradley, Human Rights Racism, 32 Harvard Human Rights J. 1 (Spring 2019).

[2] I. Wilkerson, America’s Enduring Caste System, N.Y. Times Mag., July 5, 2020, at 26, 33, 53.

[3] D. Gelles, Corporate America Has Failed Black America, N.Y. Times, June 7, 2020, at BU1.

[4] P. McGeehan, Calamity Looms in New York City Over Job Losses, N.Y. Times, July 7, 2020, at A1, A7.

[5] D. Gelles, supra note 3, at BU1.

[6] Id.

[7] Id.

[8] The great awakening?, Economist, June 13, 2020, at 49.

“Do not get lost in a sea of despair. Be hopeful, be optimistic. Our struggle is not the struggle of a day, a week, a month, or a year, it is the struggle of a lifetime. Never, ever be afraid to make some noise and get in good trouble, necessary trouble.”

-John Robert Lewis 

On September 23, 2020, an esteemed panel discussed how the COVID-19 pandemic is exposing and exacerbating existing social and economic inequalities affecting racial and ethnic minority groups in America, including higher infection and death rates, decreased access to adequate healthcare, increased educational achievement gaps, and higher rates of job losses. This panel included Chris Brummer, Professor and Faculty Director of the Institute of International Economics Law at Georgetown Law; Dave Clunie, Executive Director at Black Economic Alliance; Patrice Ficklin, Fair Lending Director at the U.S. Consumer Financial Protection Bureau; Jenn Jones, Chief of Membership & Policy at the National Consumer Reinvestment Coalition; Robin Nunn, Partner at Morgan, Lewis & Bockius LLP; Anthony Sharett, EVP, Chief Legal and Compliance Officer, and Corporate Secretary at Meta Financial Group and MetaBank; and Odette Williamson, Director of the National Consumer Law Center’s Racial Justice & Equal Economic Opportunity Initiative. ABA Business Law Section members can watch the panel for free CLE credit here.

The confluence of the current global health emergency, the economic crisis, and the Black Lives Matter protests has underscored the major inequalities that persist today. The demonstrably unjust treatment of Black and brown communities has shown Americans that insufficient progress has been made since the civil rights movement. The recent passing of two civil rights icons—Congressman John Lewis and Rev. C.T. Vivian—has caused many of us to reflect on the magnitude of their accomplishments and how much more there is to be done.

This country’s well-documented history of exclusionary policies has infected every sphere of our lives, legitimizing racism and creating structural barriers to equity. For instance, residential redlining, which was promoted by the Federal Housing Administration’s official policies, has led to persistent residential segregation. The implications of segregation are devastating and self-reinforcing: less access to good jobs, greater concentration of poverty and crime, underfunded public schools, lower levels of homeownership, poor housing quality, and increased risk of illness or death.

The ramifications of institutionalized racism and segregation returned to the headlines as COVID-19 has taken a disproportionate toll on minorities. As of the date of this article’s composition, there have been 6,343,62 confirmed cases of COVID-19 with 190,262 deaths in the United States.[1] According to the U.S. Centers for Disease Control and Prevention, there is increasing evidence that minority groups are disproportionately affected by the pandemic. While the fatality rate among white Americans rose only 9%, the fatality rate among Asian Americans, Black Americans, and Hispanics rose 30%, and the fatality rate of Native Americans rose more than 20%.[2] Financially, the pandemic’s toll may prove insurmountable for many minority families and communities. The ever-expanding wealth gap will impact Black families most as they have significantly less wealth to help protect them from the devastating effects of an economic crisis, let alone the ability to pass assets down to future generations. Due to the compounding effects of society’s treatment of our Black communities, “the median wealth for Black families in 2016 was an astonishing $3,557—about 2% of the median wealth owned by white families, which owned nearly $147,000 in the same year.”[3]

The stubborn persistence of these inequities requires renewed efforts and commitment. Our panel will discuss the role of existing legislation and what more can be done. The current legal landscape includes the Civil Rights Act, which sought to end segregation in public places, banned employment discrimination on the basis of race, color, religion, sex or national origin,[4] and became the archetype legislation for subsequent anti-discrimination laws that now permeate the financial landscape; the Fair Housing Act, which prohibits discrimination in the sale, rental, and financing of dwellings because of race, color, religion, sex, familial status, national origin, and disability;[5] the Equal Credit Opportunity Act, which prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or for receiving public assistance;[6] and the Community Reinvestment Act, which requires federal financial supervisory agencies to encourage financial institutions to help meet the credit needs of the communities in which they do business, including low- and moderate-income neighborhoods.[7]

Also at play is the United States Department of Housing and Urban Development’s (“HUD”) new rule addressing disparate impact. In August 2019, HUD published a Proposed Rule seeking to amend the agency’s interpretation of the Fair Housing Act’s disparate impact standard. While HUD stated that the new rule was intended to better reflect the Supreme Court’s 2015 ruling in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc.,[8] many business executives, civil rights groups, and legal practitioners believe that the proposed rule is a step backwards, making it more difficult for plaintiffs to prove unintentional discrimination. Despite this opposition, HUD finalized the new disparate impact rule on September 4, 2020.[9]

The disparities are abundantly clear, and now is time to recommit to social justice and do more.

This article is the result of the authors’ independent research and does not necessarily represent the views of the Consumer Financial Protection Bureau, the Federal Reserve Board of Governors, the United States, or Simmonds & Narita LLP

[1] WHO Coronavirus Disease (COVID-19) Dashboard, World Health Org., https://covid19.who.int/region/amro/country/us (last visited Sept. 11, 2020).

[2] As U.S. Deaths Mount, Virus Takes Outsize Toll on Minorities, Associated Press, https://www.modernhealthcare.com/safety-quality/us-deaths-mount-virus-takes-outsize-toll-minorities (last visited Aug. 27, 2020) (compared with an average over the last five years).

[3] Alissa Kline, How Banks Aim to Close Racial Wealth Gap: More Minorities in Leadership, Am. Banker, Jul. 12, 2020, https://www.americanbanker.com/news/how-banks-aim-to-close-racial-wealth-gap-more-minorities-in-leadership.

[4] See 42 U.S.C. §§ 2000e et seq.

[5] See 42 U.S.C. §§ 3601 et seq.

[6] See 15 U.S.C. §§ 1691 et seq.

[7] See 12 U.S.C. §§ 2901 et seq.

[8] HUD’s Implementation of the Fair Housing Act’s Disparate Impact Standard, 84 Fed. Reg. 42854 (Proposed Aug. 19, 2019).

[9] HUD Finalizes Rule to Align ‘Disparate Impact’ Rule with Court Ruling, ABA Banking Journal, https://bankingjournal.aba.com/2020/09/hud-finalizes-rule-to-align-disparate-impact-rule-with-court-ruling/ (last visited Sept. 9, 2020).