Law hasn’t always been regarded as the most technologically progressive field. Quite the reverse, really. Since the early 2000s, legal technology was mostly used for cost-cutting and efficiency purposes: streamlining complicated or manually intensive tasks to give clients more bang for their legal dollar. But rapid adoption in artificial intelligence, automation and blockchain tech aren’t just changing just the speed and efficiency of legal practise; they’re changing what the law can be.
"Blockchain technology is at the heart of this evolution"
“Whilst the use of technology to automate legal processes probably originated as a cost-cutting drive, the focus seems to have evolved in the last few years,” says Joni Pirovich, Special Counsel at Mills Oakley. “Our clients are experimenting with emerging technologies and they expect us to understand the technology so that we can get straight onto the business of advising and managing legal risk.”
Blockchain technology is at the heart of this evolution. In some ways it’s the most exciting new frontier of legal technology. AI may gather more headlines, like CaseCrunch’s famous algorithm that out-predicted human lawyers in 2017, but Blockchain can potentially revolutionise the foundation of legal process. It offers several virtues the law desperately needs: speed, reliability, security and transparency. Virtues which, if implemented correctly, could be worth billions (the legal tech industry set an investment record in 2018, up 713% from the year before).
What is Blockchain?
Blockchain, if you aren’t aware, is essentially a decentralised public ledger that records peer-to-peer transactions without the need for third party oversight. It operates on something called distributed consensus, which means all parties agree to the value of the transaction, and that value is unalterable, once recorded. Blockchain allows parties to contract and transact without expert oversight – in other words, without law firms.
“Legal advice is traditionally delivered through a law firm to its clients for a fee – a privilege that law firms have enjoyed for centuries without significant disruption,” says Pirovich. “However, at the heart of blockchain technology is the concept of decentralisation: that is, technology that removes the need to rely on a central entity or intermediary, like a law firm, for parties to transact with each other.”
Pirovich says we’re really just scratching the surface of what this technology can do. Hypothetically, it wouldn’t be hard to imagine a blockchain-based project where law firms contribute legal clauses or documents to a central library, which would be available for purchase by the general public. Law firms might generate a ranking based on use and public consensus. “If such a model takes off,” Pirovich says, “law firms that haven’t contributed and haven’t earned a good ranking may struggle to maintain reputation and relevance in the market.”
Faster, safer, more efficient
In the law, like in most other industries, time equals money. Quite literally, in this case, since most major law firms still subscribe to billable hours. If firms can do more work in less time, those savings flow on to their clients, giving the firm a competitive advantage.
Lawyers can use Blockchain technology, smart contracts and scripted text to streamline their transactional work, reducing the exorbitant amount of time it takes to prepare and catalogue standard law documents. This causes a flow-on effect which helps democratise the entire legal process: legal transactions suddenly cost less money, they take less time and require less consumer know-how. In some cases they can be done without lawyers all together.
It also makes this process more secure. Blockchain is the technology behind smart contracts (basically any protocol that digitally facilitates, verifies or enforces a contract). By using smart contracts, lawyers can engage with and share access to sensitive information in real time with authenticated parties. They can also quickly verify identities and safeguard against fraud. Because the blockchain ledger, once verified, is immutable, clients can rest easy knowing their data and documents (and the history of their access, use and update) maintain their integrity.
"legal transactions suddenly cost less money. In some cases they can be done without lawyers all together"
The future of blockchain
There are still a lot of questions around the use and governance of blockchain technology. Initiatives like CSIRO’s Data61 blockchain-based digital platform are a step in the right direction, and experts agree there’s enormous potential to make the law faster and more accessible, but not all commercial firms have jumped on board. At least, not yet.
Pirovich says blockchain technology will eventually divide law firms into tech-adopters and tech-sceptics – only one of which will survive in-market. “I think there are broadly two types of law firms,” she says, “those that just want to keep doing law as it has always been done, and those that are open to doing things differently. There will be a time when the first type becomes obsolete but it is hard to crystal ball gaze and put a finger on when time will be up for Old Law.”
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