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The Founder’s Quagmire: Finding The Right Share Formula – Morenike Okebu

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When you want to start a business, particularly a small one on a small scale, you will be faced with what I call the founder’s quagmire. You will have to decide whether you would own the business alone or whether you will give shares of your business to other people (partners). If you choose to give away shares of your business, you would need to decide how many shares you would give away and the terms upon which you would give them away.

First of all, you need to understand that there are rights attached to shares, particularly voting rights. The fact that you have the most shares in your company does not necessarily mean that you have full control of your company. Therefore, in determining how many shares to give away, you should also narrow down the number of people you give shares to as each shareholder ordinarily has a voting right.

At a company meeting, by virtue of your ordinary shares you are ordinarily entitled to just ONE vote. This means if your company has 4 shareholders with you owning 70% of the shares and the other three persons owning 10% each, there would be 4 members of the company with rights to 4 votes. If a decision you made comes to a vote and the 3 other members of the company vote against you, your decision would not stand.

Also Read: Coverdor: An insurtech providing digital insurance experience targeted at millennial and emerging generation

This is why founders should be reluctant to give away ordinary shares unless they have carefully chosen their partners. Founders should also ensure that they seek legal advice on the appropriate type of shares to give the persons they want to involve in their business. Shareholders agreements are useful in situations like this to ensure that the founder retains a certain level of control over the business and the decision making powers in respect of the company.

It is not necessary that all the shares you wish to give away to potential partners are given to them instantly. There are ways you can set conditions for vesting shares which would require the potential partners to reach milestones before the shares are vested in them. In the alternative, you can create different classes of shares within your business and only award a certain type of shares to the potential partners.

Before you give away shares of your business ask yourself these questions:

  1. How many shares do I want to give away?
  2. What type of shares do I want to give away?
  3. When do I want to give the shares away?
  4. How much control of my business do I want to retain?
  5. How many shares do I want to retain for future investors.

These questions will get you off to a good start in determining the correct ‘share formula’ for your business.

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Morenike Okebu is a qualified Legal Practitioner that graduated from the University of Sheffield at the top of her class. She has several years of experience practicing in leading law firm owned by a Senior Advocate of Nigeria and now owns her own business which focuses on solving the legal problems facing SMES and Start-ups called Reni Legal.

Email: [email protected]

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Legal Business

The Business of Law and the Future of Law: A Convergence

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Lawyers are steeped in precedent. They love reusing past precedents, and this has extended to the practice of Law. Lawyers and law firms love the brick-and-mortar approach where exclusivity of technical knowledge, reliance on long experience and conservativeness of the profession is the bane and the leading mantra.

But things are changing. Two schools of thought are emerging: the ultra conservative older generation (perhaps?) of lawyers and the hungrier, savvier generation of lawyers who are willing to throw exclusivity of technical knowledge and the ultra conservativeness of the profession out of the proverbial window to be dashed to figurative pieces on the cobblestones.

Lawyers and law firms are descending into the battleground of marketing, strategy and market share equity gains over other firms, all of these things that were previously almost never talked about or whispered about in shocked whispers. And with good reason, too. Lawyers of the past saw the legal profession as just that: “the legal profession”. A new term has emerged: “the legal services industry”. I am an ardent supporter of the latter hypothesis.

Profession or Business?

The erstwhile boundaries between the legal services industry and other professional services has become a blur because of the speed and dynamism of business operations, the interdisciplinary nature and heft of professional services, and the incursion of alternative legal services providers-the ALSPs-into the core legal profession. We have the Big Four-the holy alliance of the leading Four professional services firms Deloitte, EY, PwC and KPMG-casting their sights and nets to the legal services industry as well. This goes to show that it is no longer business as usual.

“All this is emblematic of a changing legal industry- the by-product of the complexity and speed of business, shifting consumer needs, new skill-sets and elevated expectations of providers, and new buy dynamics. Law is morphing from a lawyer-centric guild to a customer-centric marketplace”, writes Mark A. Cohen, a law business analyst in a Forbes article.

 Mr. Cohen couldn’t be more right. If the dynamics of law practice has shifted from lawyers to the consumers, with the attendant result that legal services consumers now have an array of choices of legal services providers- smaller law firm boutiques, alternative legal services providers, or even managed services providers- to meet their legal needs at their price points. This effectively means that Law has morphed from a profession strictu sensu to a Business.

Lawyers can knock themselves upside the head with figurative batons, law school curriculum designers can huff at this thought, but it does not change that shifting dynamic which keeps shifting: Law is a Business. The sooner lawyers get themselves married to this new fact, the better.

Static Law or Interdisciplinary Law?

As earlier pointed out, lawyers are steeped in precedents and are literally averse to change mechanisms. However, with the swiftly changing gears of the business world, lawyers now more than ever, need to become thriving chameleons, changing as the business world around them changes. The dynamics of this active change requires leading in law through the deeper understanding of the larger business stratum.

To illustrate, banks are no longer just banks; they are now technological companies that provide a suit of agile services including but not limited to financial services. Oil and gas firms are no longer plain oil & gas outfits but “Energy firms” so they can reflect the shifting dynamics of business and pivot from one end of the business spectrum to another if need be, at breathtaking speeds.

To further illustrate, consulting firms are no longer just plain business consulting firms but are now “full-service professional service firms”, one-stop shops for large suits of professional service work covering the entire business operations of clients, from process improvement to change management, employee engagement advisory, to tech adoption and digital transformation . . . literally anything that will help them solve their clients’ business problems and bring about active change without the need for these clients to look elsewhere for any of the myriad services they need.

For law firms, how about becoming “consultants” instead of just plain lawyers? In the former role, a lawyer takes an all-encompassing pivot into the client’s operations. Little wonder lawyers are taking courses in Tech, Strategy, Management, Business, Enterprise Risk Management, all in a bid to become “insider” assets to clients and provide the best services they can render. Consulting firms caught on long ago. The leading professional services firms have bright lawyers in their employ and these lawyers are pivoting into Tax, Business Analysis, et cetera.

“We are building capabilities to deliver seamlessly across borders as a truly global legal service provider. The innovative, technology enabled and integrated nature of our services will disrupt the legal market as a whole,” Piet Hein Meeter, Deloitte Global Leader points out.

Perhaps the consulting firms are getting the idea right about interdisciplinary services more than law firms. They seem to have a better grasp of the larger spectrum of professional services needed to better serve clients while lawyers- in many cases- restrict themselves to just the “reactive” type of services they provide rather than the “proactive” type of services needed to aggressively manage functions.

Branded Focus?

What do lawyers want? What do law firms want? How do lawyers feel they can best meet client needs? The legal services itself is in constant disruption. Law firms are consolidating their forces to present stronger focal alignments when bidding for top client work (Aelex, Primera Africa Legal, TNP with its acquisition of Adebiyi Tax & Legal comes to mind). Some legal commentators are suggesting a relaxation of the Rules of practice for legal practice so as to enable “multidisciplinary participation” in legal work.

Conclusion

It doesn’t matter whether or not lawyers see the profession as a business or as a profession in the strictest sense of the word, but it bears noting that the legal services industry will keep changing. The Big Four are here, and they are offering what core legal services providers cannot guarantee: one stop shopping for professional services, including litigation support, mergers and legal advisory.

The breakneck speed of technological innovations has kept on propelling a forward push to tech adoption and alignment with professional services. As a profession, we have to move with the flow, or be overtaken and swept away. Law is a business and the future of the profession is hinged on a rethink of the practice models we are adopting.

Also Read: Erica Tavares: Passionate About A Greener, Better Future

Author: Kingsley Ugochukwu Ani is the head of digital media at Kabbiz, a law business development and law firm business analytics publication.

First published Kabbiz

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Legal Business

9 Inspiring Women in the Nigerian LegalTech Space

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Kelechi Achinonu, Founder Techlawyered and Technology Lawyer

In celebration of International Women’s Day, 2020, Techlawyered would like to share with you the stories of extraordinary women in Nigeria who are innovating in their various roles, while leveraging technology to improve the legal practice and access to justice.

Rahila Olu-Silas Ambassador, World Legal Summit (West Africa)

Biggest Success in LegalTech

Collaborating with Open Law Library Washington DC, a U.S.A based Not-for-Profit Organization to automate the process of Bill drafting, codification, and publication of laws in digital formats in Nigeria

What has been your biggest challenge in Legal Technology?

Researching the legal framework that will enable the adoption of Machine-Consumable legislation in Nigeria. This will enable emerging technologies to consume our laws through APIs and process them without the human factor.

What motivates you to keep going?

The possibility of change in the way legal services is delivered in Nigeria

Funkola Odeleye , Co-founder and CEO at DIYLaw.ng

Biggest Success in LegalTech

I am not sure we have hit our biggest success yet but being able to simplify legal services and topics and making them attainable and understandable comes close

What has been your biggest challenge in Legal Technology?

The problem that we are trying to solve is making legal services accessible and our biggest challenge is how to make it accessible for those without access to technology. It is an irony of sorts.

What motivates you to keep going?

The sheer number of jobs that are being created because people are able to launch their businesses through our platform keeps me going. Also, getting kind words and referrals from people who have used our platform is an affirmation that we are doing something right.

Also Read : Women in Tech: Interview With Anna Collard, Founder Popcorn Training – A KnowBe4 Company

Adejoke Are , Co-founder/Project Lead, The Flemer Project

Biggest Success in LegalTech

I run an organization – the Flemer Project – that helps indigent pretrial detainees conclude their matters in court as quickly as possible, by leveraging on the support of young volunteer lawyers who directly provide legal representation to these detainees.

Although we are never physically present in court to monitor the performance of our volunteer lawyers, incorporating technology into our solution has made monitoring and evaluating their work quite a seamless affair. Through this approach, we have been able to provide legal representation to almost 200 indigent pretrial detainees and to secure the release of 60 of them from prison.

What has been your biggest challenge in Legal Technology?

I don’t have any technical experience or skill in building technology platforms and this has been a drag on the development of a comprehensive technology platform needed to manage our overall operations.

What motivates you to keep going?

The passion of our young volunteer lawyers who go over and beyond to give their best to people who can never repay them, and the fact that our solution literally changes people’s lives by helping them regain their freedom.

Oluwatosin Amusan , Product Development Lead, Mylaw.ng

Biggest Success in LegalTech

Delivering legal services to customers via technology, from the comfort of their couch. The fact that my team and I were able to develop products and show value enough to earn the trust of customers who end up drawing on the products on mylaw.ng and coming back for more.

What has been your biggest challenge in Legal Technology?

Constantly answering the question “Is legal technology a viable sector in Nigeria”. Looking at it from a global perspective with 3 unicorns in legal tech this question does not surface in the international scene. However, In Nigeria, we have quite a number of legal tech startups who have to prove themselves 10 times harder, show double the traction required to prove that this is a viable sector.

What motivates you to keep going?

The refusal to settle for mediocrity. I make it a ritual to look back at works I have done in various facets of my life every six months, and without a doubt, I see the growth not just intellectually but in physical form. It is easy to get complacent with doing just what is required, but there is always room to improve and do better. No one changed the world by doing what just was required of them.

Faith Obafemi , Head of Strategy, Future-Proof Intelligence

Biggest Success in LegalTech

Establishing as a recognized expert in the blockchain space in less than 2 years. This has been a never-ending journey that has stretched me intellectually, financially, emotionally and otherwise. But, I have been better for it. I have met some of the most amazing persons on this journey. People who help broaden your horizon.

What has been your biggest challenge in Legal Technology?

Breaking/building a tech foundation. In the early days, things were just mostly Greek to me. But, the more I kept at it, the familiar it became and the easier it was to understand.

What motivates you to keep going?

Money! Hahaha, I know most people would’ve been expecting something knight worthy like passion to help others, desire to impact, etc. Well, why all that is great, it still requires money. I am yet to see a broke person help another or have an impact on others.  So, yes, money motivates me to keep going. Because, with money as a tool, I can achieve other things that I hold dear.

Rhoda Obi-Adigwe, Founder Wemora

Biggest Success in LegalTech

Our greatest success was when Hill gave us an award and a grant for our legal software which aids in the writing of will and creation of trust online. This was very inspiring to us knowing that our efforts were being recognized.

What has been your biggest challenge in Legal Technology?

Our biggest challenge to legal technology is cultural and traditional bias. People are still skeptical to include their personal and private details online making it difficult to prepare legal documents for them. This fear also arises from the fact that the country has no stringent data policy laws.

What motivates you to keep going?

The legal tech space is evolving and we are beginning to see most traditional things done online like the CAC providing platforms for business registration, so our motivation is to keep pressing knowing fully well that these changes and policies will soon affect our own part of legal IT.

Yinka Bada , Lead Product Manager, LawPavilion Business Solutions

Biggest Success in LegalTech

One of the things I can consider as part of my biggest success in legal technology is two-fold:

i. My involvement in conceptualizing and facilitating the development and continuous improvement of software solutions that solve challenges around Practice Management, Legal Research and Legal Drafting for lawyers and judges, hence improving their efficiency by making it easier for them to do more in less time than usual. I’ve been working with a team of bright minds to continuously improve the leading Electronic Law Reports platform; the only one with Legal Analytics, and most cited in courts by top lawyers, and judges of both the Court of Appeal and Supreme Court.

ii. Leading and mentoring at different times,  young and aspiring Product Managers and Software Engineers  to passionately seek to identify the pain points in our justice delivery system, and  proffer innovative solutions

What has been your biggest challenge in Legal Technology?

What I can consider as a challenge for me in legal technology is the huge amount of time, efforts and resources it has taken over the years to build and communicate the value of legal-tech solutions to the conservative legal industry; the sweet thing, however, is that this same industry is now embracing technology fully, and even asking for more

What motivates you to keep going?

The joy of facilitating an accelerated (albeit gradual) access to justice in Nigeria-  the possibility of having the practice of law and ultimately, the dispensation of justice continually become technologically improved for more efficiency and effectiveness.

Nankunda Katangaza , Co-founder, African Law & Tech Network (ALT Network)

Biggest Success in LegalTech

I guess my biggest success in legal technology was in following my hunch that there was a need and interest on the part of African legal professionals in technology and what it could do for the legal sector and creating the ALT Network to kick-start that conversation on the continent. The ALT Network has grown to over 150 individual and business members over the past two years and has a thriving community and activities across the continent which I could not have predicted when we set up the platform!

Engaging with the fast-growing African tech community has brought incredible insight into the legal and regulatory needs of tech disruptors across all sectors. I am delighted that the Network has quickly grown into a valued pan-African interlocutor in the discussion between lawyers, technologists, and regulators to build effective, responsive and progressive frameworks for tech growth in Africa.

What has been your biggest challenge in Legal Technology?

My biggest challenge is also one that can be described as a ‘first world problem’ in that it is the challenge of opportunity and time – so many opportunities, not enough time! In the short couple of years, it has been around, ALT has attracted a significant following and interest from across the African legal and tech sectors.

Law cuts across each and every area of personal, public and commercial life and as such, ALT and its membership have a role to play across the continent from influencing public policy to creating tools for delivering access to the law to all. Finding the time to explore and follow all the possibilities and requests alongside a full-time job does keep me up at night!

What motivates you to keep going?

I have to say that the energy and enthusiasm of the ALT members is more motivation than anyone could ask for! Each day brings a new member. Each week brings a new idea and opportunity in a different country from an existing member so there’s never a quiet moment.

But more than anything, the prospect of bringing together people and entities from across the continent who are all driven by the same thing – to create and build prosperity for all Africans through innovative tech use and creating an enabling legal environment for success. It has also been amazing to meet so many Africans working in different sectors and industries and to collaborate with some of them.

Our recent partnership with Africa Digital Heritage, for example, to explore the legal issues arising in tech and the preservation of African cultural heritage was eye-opening and inspirational. I look forward to ALT continuing to be at the heart of similar collaborations and conversations over the years.

Also Read: Women in Tech: Interview With Elaine Wang, Cloud and Software Solutions Director for Rectron

Odunoluwa Longe, Country Director, Acceleration (West Africa) at HiiL

Biggest Success in LegalTech

My greatest success is seeing the entrepreneurs succeed. Success here does not just entail in competitions but in the ecosystem as well.

What has been your biggest challenge in Legal Technology?

My biggest challenge has been finding businesses that are solving justice problems and are focused on doing the same. A lot of people do not realize that justice is beyond just legal tech, It should be more focused on people gaining access to services that actually help them solve their problems.

What motivates you to keep going?

I am motivated by the need to help entrepreneurs and see them succeed.

Please join Techlawyered to celebrate these Wonder Women of Legal Tech.

Article By: Kelechi Achinonu

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Legal Business

Law Firms: Any Vision For Your Practices?

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The age-old dispute whether Law is a noble profession or a business has been long laid to rest. Law firms are set up for the practice of law and to render legal services, just as hospitals are set up to render medical services. However highlighting the importance of the administrative and business aspects of the law profession does not diminish its nobility. There is the professional aspects and the business aspects of the law. Only a well-run business can be an efficient and successful professional firm. Law is both a noble profession and a multi Dollar business.

The Financial reports (2018 gross revenue) of a few law firms sufficiently attest to this fact -Kirkland & Ellis USD 3.76 billion, Latham & Watkins USD 3.39 billion, Baker & McKenzie USD 2.9 billion; DLA Piper USD 2.84 billion, Dentons USD 2.42 billion. Wachtell, Lipton, Rosen & Katzs’ turnover in 2018 -USD 763 million; $6.530,000 in profits per equity partner. Kirkland & Ellis profits per partner $5,037,000; Latham & Watkins $3,452,000, DLA Piper$1,757,000

The sizes and corporate structures of these firms also underscore the importance of the business and administrative aspects of law practice. In the UK despite the uncertainties of Brexit and the much touted impending recession, The Lawyer (a UK based legal research magazine) – reported that well-managed law firms continue to thrive in their practices and benefit from new opportunities in the UK. The research magazine published the 2019 gross revenue of 200 top UK law firms – DLA Piper was at the top of the list with a revenue of £1.946 billion, followed by Clifford Chance £1.693billion, Linklaters £1.628billion, Allen & Overy £1.627 billion, etc.

Coming home to Nigeria, though we are bereft of statistics on law firm, the financial value of a few reported legal transactions sufficiently proves that law is both a profession and a business.

The Business of Law

From the business of law perspective, a law firm is made up of a group of people working together to deliver legal services for profit. A law firm is a vehicle formed to earn profits that will increase the wealth of its owners, all stakeholders and the community in which it operates. A law firm is an organized effort or activities by lawyers working togther to provide legal solution with the intention of building a going concern, an enduring entity.

From the business of law perspective, a law firm is a professional service that must be taken to the market (consumers); therefore it is subject to the market forces of supply and demand. Consequently sound technical knowledge alone – howbeit in Latin and English (Certiorari, Ad litem, Habeas corpus etc.), legalese, wig and gown, the gavel, and other sacred ornaments of the legal profession alone does guarantee the success of a law firm.

A Law firm should be run on sound business skills, knowledge and practices to ensure its financial sustainability. No law firm can survive and thrive without the combination of multi-disciplinary skills and professionals – which the changing aspects of law practice today demands.

Front or Backend?

Every business has a frontend and a backend. Law is no exception. There is the professional aspects and the business aspects of the law practice. The professional aspects – constitutes the frontend and the business aspects constitutes the backend. Is the frontend of a business more important than its backend? Can the backend be overlooked or compromised without consequences? In business, the quality of the backend heavily impacts the frontend.

What constitutes the backend of a law firm? The “messy little details” like Human resources – people or talent management, recruitment, retention, training and development, welfare, compensation, performance management, career progression and development, succession planning. Office Acquisition, facilities management, space planning and ergonomics.

Strategy – visioning, policy formulation, goal setting, mission and objective.  Procurement, Logistics, operations, file management. Library and knowledge management.

Business/client development – value proposition, branding, website, social media, market collateral – brochures and newsletters.

Finance – budgeting, profit drivers, pricing, fee setting, billing and collection, cashflow management, tax, insurance, cost control and internal audit.  

Governance and structure. Information technology – Practice support systems; Computer hardware and software systems, Electronic privacy issues, Disaster management and Business Continuity Processes, Document and Knowledge Management Systems, Artificial Intelligence, disruptive innovation like the commoditsation of legal services Etc.

The Balancing Act

Many law firms struggle with balancing the professional and business aspects of running their practice.Law practice have some inherent peculiarities that may pose as road-blocks to running a successful business. For instance, law firms are usually populated with very intelligent, opinionated and individualistic professionals. Independence is highly prized by lawyers. This is not a bad thing in itself but it can make governance a nightmare. Also, law firms can have highly politicised internal structures and decisions are usually consensus driven, which again, can make governance a nightmare. After “all said and done,” nothing is usually done because lawyers can have a particular strong aversion to taking directions–and management and administration is usually about directing, planning, innovating. Law firms can be individual client focused, with power usually based on client/revenue generation which is dangerous for firm cohesion. Another threat to law firm cohesion is the argumentative, competitive. Adversarial and even sometimes combative tendencies of lawyers.

Further, law firms usually are short-term focussed, bottom-line focussed and with poor investment mindset. In addition, it has been observed that lawyers are usually risk adverse.Another peculiarity is that most law firms have few role boundaries. It is typical to find lawyers in firms who wants to be the accountant, admin manager and human resources manager at the same time. Even some partnerships do not have and respect clearly defined roles. Unclear roles is the recipe for confusion in business. Importantly, running a successful business requires a lot of creativity and nimbleness. Law firms however are usually bound by precedents, are conservative, intolerant of mistakes – are trained to detect mistakes, impatient and pressurized because of deadlines. All these stifles creativity which is essential for business sustainability.

From the Back Office

From the Back Office will be focused on Law as a business. My name is Joy Harrison-Abiola, I have spent 21 years at the backend of law offices and have made some very interesting observations. Also, through the years, I have had the privilege of interacting with non lawyer (some lawyers) colleagues both in Nigeria and abroad who like me have spent years at the backend of law offices. These very seasoned business support professionals have shared their frustrations, observations and war stories that have helped in my journey. So I will be showing on this page what constitutes the back office of a law firm and how it can be effectively harnessed to make a law firm successful and sustainable.

Also Read: How Tech Is Enhancing Recruitment: An Interview With Sandy Simagwali, Co-Founder Of Graft Africa

The Trouble with Vision

A few years ago, I visited the back office of the 11th largest law firm in Boston USA – Burns & Levinson at the invitation of its CEO. I spent a couple of days and had the privilege of sitting down with one of its founders and of course my question was about Vision. What inspired the setting up of the firm in 1960? The “old man” gave me some very interesting perspectives on how they have navigated the very rocky American law business terrain for 50 years holding unto their vision. What is vision? Is there a relationship between vision and law practice? Does a vision drive a law firm or not? Is vision essential to the survival of a law firm? Who gets the vision? Is it essential that the vision is written and documented somewhere for easy reference? Who drives the vision? How is a vision communicated? Is it possible for a law firm to operate without a vision?

What is the vision of your law firm? Where is your law firm going? How far do you want to take your law firm? What will the destination look like? How will you know when you get there? A vision is an inspirational and aspirational destination on the horizon. The trouble with vision is that it is the thing lawyers typically omit to do when opening their law practice. Law firms ignore to articulate a vision for their firm. You find vision in very few law firm websites or marketing collaterals.

Meanwhile, Vision, if well crafted contributes to your brand – it has a way of carving out an identity for a firm – what it does, what it wants to become and what it believes in. Another trouble with vision I have observed from the back office is that even when a law firm articulates a vision, the vision is not translated to a shared corporate vision. Most lawyers lack the skill or the will to do this.

Why is vision, mission, values and a strategy document vital in business? The short answer is that without these, there is no direction, or there are several directions and confusion and wastage of resources follows. A good vision articulate’s the firm’s ultimate goals and objectives in a way that inspires and moves the firm in a specific direction. Any law firm that ignores this will do so at its detriment. A law firm that is serious about growth and success will pay attention to corporate visioning.

Article By: Joy Harrison-Abiola, a leading legal management professional and the Practice Administrator of Adepetun Caxton-Martins Agbor & Segun- ACAS-Law

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