For my first post on the Andrews Robichaud blog, I wrote about the rapid growth and adoption of blockchain technology. Since then, the cost of a single Bitcoin (BTC) has risen to around $4000.00 USD and the number of cryptocurrencies in circulation has now exceeded 850. It’s hard to go an entire day without hearing about Bitcoin and Blockchain technology. So, if it is here to stay, how can blockchain technology support the legal profession?
As a quick refresher, Blockchain ledgers provide an immutable public record and are thus instrumental to increasing transparency and reliability. Transactions are often verified by disinterested parties, and their efforts are rewarded with valuable cryptocurrency, incentivising speed and accuracy.
As you can imagine, Bitcoin, a de-centralized digital currency, is just one example of how blockchain technology can be used. From a much broader perspective, the technology can be used anywhere something of value is being exchanged or an important record must be maintained. Companies like Nestlé, Wal-Mart and Unilever are working with IBM to explore how blockchain can help maintain accurate and up-to-date supply-chains. Deloitte, PWC, KPMG and Ernst & Young, each one of the Accounting “Big 4”, are exploring ways in which blockchain technology can help support its organization and its clients. In fact, even the banking sector, the very industry that early adopters of Bitcoin sought to disrupt, is beginning to see blockchain technology as an inevitable and vital part of its operations.
This brings us to the legal profession. With respect to intellectual property law specifically, contentious issues in IP are often decided based on a party’s ability to reliably assert ownership of a work at a given point in time. Distributed ledgers like Po.et, aim to provide content creators with an incorruptible digital timestamp to prove ownership and facilitate a reliable and cost-effective means of licensing their content through smart contracts. Smart contracts are digital agreements built on the blockchain, which automatically execute without the intervention of third parties or enforcement bodies (court systems). When condition X is satisfied, the smart contract automatically ensures that outcome Y occurs. As an example, consider a smart contract that only forwards payment for concert tickets to the seller, once the purchaser is able to verify the authenticity of the tickets (most likely on another blockchain specifically built for ticket authentication). Hmm, pretty smart indeed. This could significantly reduce the impact of contract disputes on small claims courts.
Law firms, big and small, can derive significant advantages for their clients through blockchain technology. From the IP and contract implications outlined above to more sophisticated asset and real estate transactions. The cost and time savings for clients could radically transform how some services are offered. The need for title insurance could disappear if title records were ported to a distributed ledger. Risky transactions could be avoided altogether if liens and encumbrances on an asset were publicly viewable.
Blockchain may still be in its infancy but its impact on the legal profession seems to have moved past the hypothetical stage. The security and transparency that blockchain could bring to legal transactions should be forcing practitioners to develop strategies on how to implement the technology in their practice.