24
Empowering the future of legal decision-making LexPredict 2012-2016 @lexpredict www.lexpredict.com [email protected] From Law of the Sea to Legal Underwriting Professor Michael Bommarito CEO, LexPredict Illinois Tech - Chicago Kent University of Michigan

From Law of the Sea to Legal Underwriting: FinLegalTech

Embed Size (px)

Citation preview

Page 1: From Law of the Sea to Legal Underwriting: FinLegalTech

Empowering the future of legal decision-making

© LexPredict 2012-2016

@lexpredict

[email protected]

From Law of the Seato Legal Underwriting

Professor Michael BommaritoCEO, LexPredict

Illinois Tech - Chicago KentUniversity of Michigan

Page 2: From Law of the Sea to Legal Underwriting: FinLegalTech

2

(drinks on me)Inspiration and Context

First Recorded Insurance(ca. 1000 B.C.E.; translation)

First Catastrophe Bond/ILS(1997)

1. Excluding bottomry and respondentia under Babylonian law.2. Figure 7.5 from Alternative Risk Transfer, Erik Banks (Wiley Finance), pp. 126.

Page 3: From Law of the Sea to Legal Underwriting: FinLegalTech

3

(equitability without price)Codified Risk Transfer

1. English translation from Opinions of Paulus, a Roman jurist ca.2. For more on the Osaka, cf: https://goo.gl/PE2X5O

First Recorded Insurance(ca. 1000 B.C.E.; translation)

“It is provided by the Lex Rhodia that if merchandise is thrown overboard for the purpose of lightening a ship, the loss is made good by the assessment of all which is made for the benefit of all.”

Page 4: From Law of the Sea to Legal Underwriting: FinLegalTech

4

Computational Law

Leibniz(De Arte Combinatoria, 1666)

Ethereum & Solidity(2013)

1. For more on Leibniz’s journey and I Ching, cf: Leibniz: An Intellectual Biography: Maria Rosa Antognazza.

SOLIDITY

=

Page 5: From Law of the Sea to Legal Underwriting: FinLegalTech

5

But when?

Today

?

The Future

Page 6: From Law of the Sea to Legal Underwriting: FinLegalTech

6

(including, but not limited to)Types of Hazard/Risk

Liquidity“you” don’t have funds on hand (or ability to convert assets to funds) when you need them

Longevity“you” live longer than expected

Mortality“you” die unexpectedly

Counterparty“you” have assets or cashflows tied to another party’s solvency and behavior

Geopolitical“you” have assets or cashflows tied to a region or political entity’s institutions and behavior

Natural Catastrophe“you” have assets or cashflows tied to mother nature (and even father sky)

Page 7: From Law of the Sea to Legal Underwriting: FinLegalTech

7

(“legal” flavors)Types of Hazard/Risk

Counterparty

Geopolitical

Employment

Litigation

Regulatory & Compliance Intellectual Property

Page 8: From Law of the Sea to Legal Underwriting: FinLegalTech

8

(on the one hand)Types of Hazard/Risk

EmploymentWorkers Comp.

LitigationProfessional

Liability

Page 9: From Law of the Sea to Legal Underwriting: FinLegalTech

9

(and on the other)Types of Hazard/Risk

1. Left to right: Myles Jack ($5M), Jaylon Smith ($5M), Ifo Ekpre-Olomu ($3M).

Page 10: From Law of the Sea to Legal Underwriting: FinLegalTech

10

Why the Disparity? common wisdom(s)

Risk Transfer

Frequency of Events

Severity of Events

Event Models

Data Availability

Data Consistency

Data Quantity

Moral & Morale

Page 11: From Law of the Sea to Legal Underwriting: FinLegalTech

11

(really?)Why the Disparity?

1. Placement slip for the infamous passage of the HMS Titanic.

Lloyd’s Subscription Room(engraving, Thomas Rowlandson, 1809)

Page 12: From Law of the Sea to Legal Underwriting: FinLegalTech

12

(really?)Why the Disparity?

1. John Speed, ca. 1630.2. Van Den Keere, ca. 1610.

Page 13: From Law of the Sea to Legal Underwriting: FinLegalTech

13

(“cult of the expert”)Syndicate of One

1. Placement slip for the infamous passage of the HMS Titanic.

Maritime Hazards, ca. 1800

Legal Hazards,ca. 2016

Page 14: From Law of the Sea to Legal Underwriting: FinLegalTech

14

Why the Disparity? common wisdom(s)

Risk Transfer

Frequency of Events

Severity of Events

Event Models

Data Availability

Data Consistency

Data Quantity

Moral & Morale

Cultural

Page 15: From Law of the Sea to Legal Underwriting: FinLegalTech

15

(“cult of the expert”)Syndicate of One

1. Placement slip for the infamous passage of the HMS Titanic.

Decision-Making Science,ca. 2016

Legal Hazards,ca. 2016

vs.

Page 16: From Law of the Sea to Legal Underwriting: FinLegalTech

16

(“cult of the expert”)Syndicate of One

1. Placement slip for the infamous passage of the HMS Titanic.

Page 17: From Law of the Sea to Legal Underwriting: FinLegalTech

17

(“cult of the expert”)Syndicate of One

1. Diagram generated from LexSemble/LexPredict Dispute Analyzer.

Page 18: From Law of the Sea to Legal Underwriting: FinLegalTech

18

Outside Counsel Internal Staff Algorithm

(a legal ensemble)Syndicate of Many

Partners AssociatesLabor

Litigation

Wrongful Termination

Model

Page 19: From Law of the Sea to Legal Underwriting: FinLegalTech
Page 20: From Law of the Sea to Legal Underwriting: FinLegalTech

20

Outside Counsel Internal Staff Algorithm

(a legal ensemble)Syndicate of Many

Partners AssociatesLabor

Litigation

Wrongful Termination

Model

Page 21: From Law of the Sea to Legal Underwriting: FinLegalTech

21

(a legal ensemble)Syndicate of Many

Page 22: From Law of the Sea to Legal Underwriting: FinLegalTech

22

Context

Today

?

The Future

Page 23: From Law of the Sea to Legal Underwriting: FinLegalTech

23

Goal

Colossus 2020-I A(First US Legal-Linked Security)

1. Wood engraving of the Colossus of Rhodes, Sidney Barclay, ca. 1875.2. For contrary thoughts on securitization, cf: https://ssrn.com/abstract=2320030

3. Bonus: Colossus Mark 1 was also the first GP digital computer.FIN

Page 24: From Law of the Sea to Legal Underwriting: FinLegalTech

Empowering the future of legal decision-making

© LexPredict 2012-2016

@lexpredict

[email protected]

From Law of the Seato Legal Underwriting

Professor Michael BommaritoCEO, LexPredict

Illinois Tech - Chicago KentUniversity of Michigan