9 Ways The Blockchain Will Change The Legal Profession
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The legal profession is built on tradition, history, and tomes of case law that fill libraries around the world.
The profession itself has evolved, and today, contract specialists argue over details and disputes that could all become a thing of the past as the world embraces the blockchain. It’s the firm foundation the legal profession needs to bring the law kicking and screaming into the modern age and give every modern lawyer the keys to the legal kingdom.
In fact, it’s already here. OpenLaw already offers a library of smart contract-enabled, templated legal agreements that lawyers can then execute through the blockchain. Integra Ledger provides a permissioned blockchain, which is already having an impact on contract law.
The Global Legal Blockchain Consortium is already looking to adopt standard systems around the world that could link the world’s legal minds. The legal industry is one of the driving forces in the Wall Street Blockchain Alliance and more than 25% of the world’s biggest law firms are members of the Enterprise Ethereum Alliance.
These non-profits promote blockchain technology and behind the scenes the legal profession is speeding into the modern age. So, it’s time for the legal profession to get on board or get left behind. Those working groups would be an excellent place to start.
Here are 9 ways that blockchain can change the legal profession forever.
Digitized, Instantly Available Case Law
Lawyers and interns still plod through books to find relevant precedents for each and every case. It’s duplication of effort on a grand scale and it’s one of the main reasons we spend so much on lawyers.
A digitized version of case law for criminal, civil, common and statuate would be a massive step towards streamlining the industry.
Converting all US case law on to the blockchain is a monumental task. The Law Library of Congress holds 2.9 million volumes of legal definitions and case law. Harvard Law School has the largest academic legal library with 2 million volumes. Neither one is even close to a full set and there are a plethora of new laws each and every year. The blockchain is built for this.
Goldman Sachs has already invested more than $15 million in Eigen Technologies, which uses AI to read, sort and digitize complex legal documents. It can even search for keywords in the massive Goldman Sachs contract library, so this could already be the basis of a ‘Google for Law’.
Thomson Reuters has subsidiaries FindLaw and the Westlaw Edge research tool powered by AI. Bloomberg Law and LexisNexis are trying to solve the same problem and find a way to drill through millions of case files in seconds. AI is certainly one part of the puzzle, but right now it’s digging through an disorganized pile of information. The blockchain could be the missing link.
It’s a clear cut example of how the blockchain, AI and the Cloud will combine to create a tour de force. In this instance, the blockchain is the ultimate legal library. It’s infinitely searchable in terms of data points, the results are instant and the AI can set to work analyzing the results on the Cloud.
In the end, AI itself could and should write a more effective blockchain to plug into, and mine for, information. Technically, the world’s library will become an ever-increasing vortex of information at that point, simply sucking in relevant information. It will also refine its own code in its spare time, which is Inception-level trippy.
The new giants in the legal profession will mine and process data, CSI-style. High-tech, forensic law is set to be a thing. We are set to see the emergence of a whole new support industry, high-tech for the legal profession, that creates the apps and software packages to drill down through history and effectively use that to make a case.
It would also help to ensure fair results by analyzing historical data, so you can expect to see this technology deployed on both sides of the legal and Law Enforcement divide.
Modelling cases based on past data could become routine for lawyers preparing for trial, and could help avert some trials altogether. It’s just one example of how the legal profession has to prepare for modern technology and treat blockchain law as a foundation of the future.
Smart Contracts Could End Many Disputes
Lawyers will be even more important in the age of smart contracts in big business, because once they are set in stone then the contract itself could pay for services, or complete regular transactions.
Payroll departments could be slashed as a simple confirmation that the job is done triggers the payment from funds that were ringfenced in advance. Enforcing agreements and sending in the debt collectors should be a thing of the past.
In theory, this should bring an end to payment disputes and people simply failing to pay their bills. Blockchain smart contracts could separate the money out at the start and deliver it once all the separate parts are satisfied, or in complex instalments.
That means we should be able to kiss goodbye to the ancient and excruciating practice of setting up ESCROW accounts, too. This is an antiquated system stemming from an understandable lack of trust. The digitzed blockchain takes human greed out the equation, by actioning transactions as soon as it receives the green light on completed work. That can be baked in to the system when the supervisor signs off each stage digitally.
If the conditions aren’t met on either side then the contract simply stops and human intervention is the next step. In theory, this should make contract and commercial law more about preparation than recovery.
Lawyers will still be an essential part of the process, possibly even more so, but the focus will be on writing the right contract in the first place, rather than dragging each other into court for failing to honor terms.
Buying A House Should Get Easier
When you buy a house, you step in to a dance of constant surveys, inspections and contracts. Delays are a part of life and buying a house can turn into a truly painful process. The local property office is a mass of paper ledgers, cards and deeds. The blockchain can change that.
Estonia and Dubai are already taking the land registry on to the blockchain, citing the tamper-proof nature of the records as the reason why. Australia has just bet big on a Stellar Lumen-based public records system with IBM as an official partner and the momentum is starting to grow.
The advantages of the blockchain are obvious. It’s hard to hack, records are basically tamper-proof and all of the house’s history and records can be made available, instantly. Inevitably during a house purchase, new inspections and surveys might be required. A simple blockchain app could initiate all of these through the smart contracts and keep rolling through the process.
If a negative report comes in, or there’s a problem, the contracts stall and humans get involved. But this method could reduce the number of contracts and papers crawling there way through the US Postal Service and slash the time it takes to buy a house.
Data Protection Minefield Should Come To an End
Put simply, data protection is a mess right now. Some American sites are forced to block European visitors for fear of reprisals and fines, following the GDPR implementation. Every week we hear of another data leak, and even the likes of credit reference agency Equifax have been hacked and lost hundreds of millions of people’s details in one fell swoop.
The decentralized nature of the blockchain is designed to protect and encrypt data so that it simply cannot be taken from under your nose. Hackers will always look to test that theory and nothing is 100% secure, not even the blockchain. But it is several orders of magnitude more secure than today’s encryption methods.
A blockchain-based system could verify vital information between subscriptions and government agencies, so your information can be locked away on the blockchain and simple verifications can be trusted. The blockchain isn’t going to lie to itself, so it can limit the amount of information it actually shares.
Simply put, that means you can sign up to an advanced service with a retinal scan, or a thumbprint, and the smart contracts will do the rest. It also means companies don’t have to hold your personal data and we can do away with the data protection legislation that has driven the business world slowly mad.
Right now, data protection is a hair-trigger lawsuit waiting to happen. The blockchain can solve this at a stroke.
No Lawyers Required?
We know, we said lawyers would be more important and they will be in the upper tiers of big business. The blockchain, though, could empower more people to do without a lawyer for basic tasks and take a template contract off the web.
In England, it’s not uncommon for people to sell their own house thanks to simple legal packs bought off the web. There’s no reason why the straightforward deals, and that includes selling a house, couldn’t follow a standard format on the blockchain.
Everything from inheritance through to your tax returns could go through on the blockchain, with a series of smart contracts firing back and forth to make sure the conditions are all satisfied. It could transform the industry and reduce processes that take weeks to mere minutes.
Lawyers spend vast amounts of time pushing straightforward pieces of paper back and forth. This repetitive, basic work creates friction, which costs time and money. It can be taken off their hands by the blockchain itself. Smart contracts can ensure that the paperwork is all in place, digitally speaking, and a lawyer can simply verify the deal if necessary. In time, it won’t be.
Blockchain Records Are Proof In Themselves
The tamper-proof nature of the blockchain means that contracts, dates, decisions and sales will be recorded for eternity. Disputes often arise over confusion, but the blockchain-based system will largely stamp that out.
All land registry details can be logged and rare amendments will be clearly laid out in a chronological order. It can be recovered at any time. Sales will be recorded on the blockchain and relevant payments can be automatically taken by the smart contracts. So, in theory, the blockchain itself is admissible in court and should be the first port of call for lawyers looking to settle a a dispute.
Estonia and the Middle East have led the way with government records built on Ethereum, but it’s almost inconceivable that the rest of the world won’t follow at its own pace. This should provide a secure public record, which can be accessed for the right reasons at the blink of an eye. It’s a friction-free society, or as close as we’re likely to get, from voting through to land sales. That creates a tamper proof record of your home, finances and more by default.
Disputes over land are more common in the developing world, where a blockchain-first approach to land registries could make for an affordable and viable system. India has vague land allocations that date back to the colonies and these cause friction and legal issues in the modern world. A simple, defined, blockchain solution will put an end to this and the country is well on the way after the 2017 conference ‘Blockchain for Property Governance.’
Never underestimate human beings’ ability to argue. Disputes are part of the human condition, but we can certainly slim them down with the blockchain.
Intellectual Property Protection And Micro-Transactions
The world of IP law is a minefield right now, but the internet could follow the music route. The idea is to make it so cheap and convenient to use an image or design that it makes more sense to buy it than steal it.
Micro-transactions are nothing new, but a blockchain-based internet, or simple app, could give the end user the chance to purchase designs for 3D printing, photos, videos and movies. Simple, frictionless payment systems will ensure that creators get paid for their work and the blockchain code could yet trace designs that weren’t paid for with the intricacies of the smart contract.
That would be a quantum leap forward for the creative community that has tried and largely failed to find solutions to the internet mentality of free content. A simple failure to fulfil the smart contract, by paying for the image or design, could cause a tracker code that then brings a follow-up charge.
Intellectual Property goes well beyond the web, too. Patents are exceptionally complex beasts and some lawyers have dedicated their lives to this one specialist sliver of law. Patent cases can drag on and they’re often subjective.
But if the patent system itself moved to the blockchain then you get a wealth of information from around the world with a mass of data points that could more easily settle a contentious claim. Copyright infringements should be easy to quantify, as well, thanks to clear blockchain records on production numbers and profit.
Blockchain Law Will Become Its Own Specialty
Legal firms that embrace the blockchain can position themselves as experts and reap the whirlwind in terms of business as mass adoption kicks in. The blockchain will need to be defined, specialist contracts will need to be put in place and big business will need custom work.
That’s a big money sector in the making and should be enough to entice any law firm to invest in their own blockchain and cryptocurrency services right now.
The International Legal Technology Association met recently and the blockchain was reportedly a bigger talking point than Artificial Intelligence. A panel concluded the blockchain could be the most important change to the legal system since the days of William the Conqueror.
In the end, baked-in blockchain compliance is the dream solution, so the system simply cannot function without complying with local regulations. The laws would become smart contracts. We’re not there yet, though, and that means that sharp and responsive law firms that focus on blockchain technology and cryptocurrencies should be in demand in the very near future.
No More Notaries Public?
The blockchain is capable of time-stamping and recording a document for eternity. It has to come from the right place to trigger the smart contracts and fraud is almost removed from the equation. So the days of the Notary Public are numbered.
It’s expensive to get documents witnessed and stamped, but sometimes it’s a necessary evil. The blockchain is a digital rubber stamp, so anything that takes a seal right now is heading for the chop. Wax on? Wax off.
The blockchain isn’t just too big to ignore, it is the future of the legal industry. Every law firm should be looking at the resources and moving their own operations on to the blockchain. It will bring all the benefits of a streamlined operation, and blockchain legal specialists could just be the stars of the next generation.
The author is not currently invested in digital assets.
All images courtesy Shutterstock