5 significant legal developments every entrepreneur should be aware of

Updated on 15 January 2016

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5 significant legal developments every entrepreneur should be aware of


The legal sector has in recent years had to play catch-up to the current fast-changing business environment.

The sector has had to find ways to regulate new industries such as the new shared economy and disruptive innovations such as Uber and AirBnB.

Other recent changes to the legal landscape was the introduction of new legislations such as the recently amended BBBEE codes as well as the Protection of Personal Information Act.

We sit with legal expert and entrepreneur, Andrew Taylor of LexNove, an online legal platform. He shares the legal developments that are likely to impact SMEs in the coming year and new legislation that may translate to more opportunities for entrepreneurs.

1. A move towards value-based and on-demand flexibility for legal services

There will be a gradual movement away from time-based, bill-by-the-hour legal services, to a more value-based, fixed price approach to rendering legal services.

Clients are beginning to demand certainty as to their cost exposure, and hourly rates simply do not provide such certainty.

A big movement being seen worldwide is toward freelance, on-demand, legal services, through disintermediating internet platforms such as LexNove.

DLA Piper, in this regard, one of the biggest law firms on the globe, has recently announced that it will be launching its own freelance, on-demand, lawyer program, to be rolled out in the UK during the course of 2016.

There will also be a movement toward more legal process outsourcing. This entails the more mundane legal work, such as the ordering of court documents and basic research, being outsourced by law firms to lower cost jurisdictions or companies that specialize in these more mundane tasks. This will entail a significant cost saving, as high priced lawyers will not be dealing with such grunt work, where 25 years of legal experience is really not necessary.

There will also be significant increases in the adoption of technology to speed up and increase the efficiency of legal services. A good example of this are the early in-roads being made in e-discovery for the purposes of litigation. This is not a novel concept in overseas jurisdictions but is at an early adoption stage in South Africa.

2. POPI gets its teeth

With the promulgation of the Protection of Personal Information Act 2013, it’s likely that the enforcement arm of the Act, the Information Regulator, will be appointed during 2016.

The Information Regulator will, in theory, enforce strict compliance with what personal information is collected from clients and 3rd parties by companies, and how such information is processed and utilized by the company. Companies will be required to specify exactly what personal information they collect, who they share such information with, and what that information will be used for.

3. Legal compliance requirement an additional burden for startups looking scale

As startups reach a point of inflection and begin to scale, there are still significant burdens and regulatory challenges for entrepreneurs.

The new BBBEE codes, for example, impose regulatory compliance burdens on all businesses above certain thresholds while issues such as VAT compliance as revenue related thresholds are met will continue to be pertinent for businesses in South Africa.

The particular legal nuances of each entrepreneur’s situation need to be considered, but, a firm grasp of the Protection of Personal Information Act will be helpful. In the event that the information regulator is appointed, the necessary changes to a company’s policy regarding the manner in which personal information is processed will need to be effected. This may also entail the amendment of client contracts, terms of service, privacy policies and the like, so as to ensure  compliance with the Act.

4. Affordable and accessible legal services

The movement toward on-demand, freelance, lawyers charging a more affordable rate, will allow entrepreneurs and start-ups, which have been unable to afford legal services until now, the ability to obtain quality legal services at a fraction of the cost.

This will enable the entrepreneur to concentrate on his/her core business, instead of attempting to hash together their own legal contracts and documents for example, and allow for an experienced on-demand lawyer to take care of such needs.

5. Opportunities for disruptive technologies

The first stage of implementation of the Competition Amendment Act is expected in 2016 and this could provide some significant opportunities for disruptive technologies and start-ups with a new angle of approach to existing markets, as the amendments manifest themselves in the market. Quite how this will happen, is a matter of some speculation.

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