Most people are now aware of Bitcoin, the modern electronic currency operating outside the conventional auspices of state control. However, only few of the people are aware of the technology of blockchain underlying, which has a huge potential to revolutionize the provision of legal services, regulatory enforcement and compliance. In few of my previous posts, we have seen the technology in terms of education and the way it is beneficial for the student database management. For this article, I chose to consider the same but in legal sector. This is because block chain’s effects cannot be denied in the recent legal scenario as it is expected to transform the legal services structure to a great extent.
While it was Bitcoin that hit all the headlines first, there has been a more recent recognition that public database which Bitcoin was built on, Blockchain can be applied for far more than simply a currency, as any kind of data can now be shared on the ledger. Major global businesses, startups and banks have started to invest millions of pounds and dollars into discovering the possibilities of developing this novel technology for customized purposes.
Block chains emerged in one of the latest forums on the “newest and coolest” legal tech at the annual LegalTech conference held in New York. However, it is not the first time it has been presented as a transforming legal technology. In June, Shawn Amuial and Joe Dewey, associate and a partner respectively, at Holland & Knight, announced that blockchain technology can immensely change the ways lawyers practice. The widespread adoption of block chain technology can have great impact on how lawyers, or at least significant number of lawyers, work. Amuial and Dewey stated that in a block chain dominated future, transactional lawyers might draft contracts resembling how the developers code software applications.
Blockchain is expected to push the boundaries of conventional legal services. The technology has taken forward the smart contracts, where contracts can be executed on the basis of fulfillment of conditions logged on the shared database. Working on the basic grounds of “if conditions A, B and C are fulfilled, X can be the result” examples of contract that seem suitable initially include titles registries, trusts, wills and shareholder agreements. For instance, a trust could be arranged to pay out automatically to the defined benefactors when a casualty is registered. Contracts saved on the block chain become easily accessible by those that are entitled; they are not lost in a filing cabinet. The potential legal implications include cost reduction, enhanced automation in legal sphere, less litigation and higher certainty level.
The potential impacts to traditional legal principles and models are evident. If we think of the way technology has quickly transformed how a wide range of business is executed from the introduction of Netflix. Uber, social media, Twitter and the internet generally, to the rise of the Amazon and the fall of retail, there can be no reason why legal services should be an exception to these changes.
Indeed, the use of such shared ledgers with all the benefits presented above and myriad other potential uses, which are just on the cusp of being discovered, might sound too great to be true. As like any information space, this is based on the accurate information being uploaded in a trust-worthy way. There would always be those wishing to keep their transactions offline and in the real world, this human element leads to confusion and often ambiguity, errors are committed, checks and balances are not executed properly.
For such reasons, the development and maintenance of such systems must be carefully handled. The efficiency of technologies would always be challenged by those having both good and bad intentions so, while the transformation is inevitable, there would always be litigation and contention, rule breakers who need enforcers and regulations to curtail them.
At this point of time, what is clear is that as technology and its implications go ahead, lawyers, bankers and regulator must keep pace accordingly. The potential underlying blockchain is evident however, it remains to be viewed if it results in seismic change.