Allen & Overy's Washington, D.C., offices/photo courtesy of Diego M. Radzinschi/ALM

Allen & Overy has decided to forgo the “old-fashioned” practice of creating stacks of documents to assist clients through a complex regulatory compliance process. Instead, they have created a streamlined web-based application.

This week, Allen & Overy released marginMAPP, an interview-based tool for small financial institutions to determine and document if they fall under certain U.S. and European commodity regulations. marginMAPP also allows an entity to determine how falling under the purview of regulations impacts all the parties involved in a transaction 

The tool, which leverages legal technology company Neota Logic's artificial intelligence engine to make its determinations, is the newest release from the firm's tech incubator Fuse and is accessible through aosphere, Allen & Overy's subscription-based online service offering available only to clients.

The product arrives as the 2020 deadline nears for small financial institutions, including hedge funds, pension funds, insurance companies and non-banks, to ensure if European market infrastructure regulation or U.S. initial margin rules apply to them and how that impacts specific counterparties.

The process of determining which regulations apply to an entity is complex as rules differ across various jurisdictions, said New York-based Allen & Overy partner and marginMAPP co-creator Deborah North. She and London-based partner and marginMAPP co-creator Emma Dwyer had previously shepherded large banks through an earlier compliance deadline to determine what regulations they must comply with. 

Dwyer said Allen & Overy had taken an “old-fashioned lawyer way” approach to counseling those large banks, which resulted in reams of paperwork detailing complicated compliance requirements. So Dwyer and North thought they could create a better streamlined approach. 

In September 2018, North recalled developing a table around the initial margin rule classifications, but after 10 pages, she realized it would not be useful. “It was just too unwieldy to send to clients,” North said.

Meanwhile, Dwyer was sitting in a Fuse presentation that featured software from Neota Logic, a member of Allen & Overy's Fuse cohort. Dwyer said she thought the machine learning leveraged by the tech company fit their project perfectly. 

Roughly seven months later, marginMAPP was up and running. Including Dwyer and North, three U.S.- and three London-based attorneys worked on the product by adding the legal and regulatory expertise to the program, while an internal Allen & Overy tech team and Neota Logic worked on the software.

Dwyer and North said marginMAPP was their first time working with Neota Logic. While they both noted the product required a lot of time to develop, they said it was worthwhile.

“I think it was rewarding,” North said. “You can use your real experience with legal issues and regulator issues that solves those or a small part of those issues. I think it can be extremely effective.”