Latin America is prone to complex legislation, heightened regulation and excessive costs associated with it. Besides, multilatinas and multinationals must often cope with strict global compliance rules, particularly in the financial sector.
All of this creates a suitable setup for the blossoming of legaltechs, or regtechs – startups and tech-based companies focused on providing solutions to help enterprises stay in compliance with legislation.
The legal segment itself is directly impacted by new technologies and increasingly moving away from the analogue environment.
In Brazil, the local association of lawtechs and legaltechs (AB2L) was founded in 2017. One of its objectives is to connect the key players involved in the ecosystem, such as fintechs, law firms, legal departments and service providers.
Currently, AB2L lists close to 140 legaltechs/regtechs in operation in the country, the majority of them providing solutions for legal departments or for office management.
There are also dozens of legaltechs and regtechs dedicated to analytics solutions, to automation and documentation management and to mining of public data.
Recent legislation on data protection, such as the European GDPR and Brazil’s LGDP, which was approved in 2018 and takes effect after an adaptation period in 2020, are seen as two important boosters of the legaltechs in the South American country.
“This is a growing market. The new Brazilian data protection framework and the European GDPR have been key drivers for different solutions in this segment. Here at the office we’re developing a specific platform for data protection compliance,” lawyer Rafael Pistono, expert in telecommunications, entertainment and technology at law firm Vinhas and Redenschi, told BNamericas.
The Mercosur-EU deal, announced last Friday, sets a series of technical regulations and standards that will have to be matched by both sides, opening up new opportunities for legaltech and regtech companies in supporting businesses with conformity requirements.
The segment has also attracted a lot of interest from traditional players in the IT industry, spurring M&A moves.
Brazilian IT solutions firm Neoway, for example, created a new unit last month called Neoway Legal, after buying legaltech LegalLabs for US$26mn.