Legal Tech: How Blockchain Can Easily Transform the Legal Profession
There is little doubt that most law firms and legal departments are burdened by massive amounts of paperwork. Keeping accurate historical records of each case can be time consuming and challenging given the size of the firm and the level to which technology is utilized. Blockchain technology has the potential to help resolve these issues as it can be integrated into almost any modern software application. This means that firms of any size, large and small can become a blockchain-enabled firm.
Known for its ability to store information in a transparent and fixed ledger, blockchain offers law firms a higher level of precision. With the use of blockchain technology, law firms are expanding their services further into the digital domain. Last week, law.com in their legal tech news, posted an article stating, “blockchain is poised to be a key driver of what many refer to as the fourth industrial revolution,” and while blockchain has seen success over the last decade due to bitcoin, “distributed ledger technology is now poised to move into mainstream applications and launch new opportunities in multiple markets.”
What is BlockChain?
Blockchain is one type of Distributed Ledger Technology (DLT). According to the World Bank, “Distributed ledger technology could fundamentally change the financial sector, making it more efficient, resilient and reliable. Distributed ledgers use independent computers, sometimes referred to as nodes to record, share and synchronize transactions in their respective electronic ledgers, instead of keeping data centralized as in a traditional ledger.” Distributed ledgers use independent computers (nodes) for:
- Distribution of digital assets, not through copying or transferring.
- Facilitating real-time access, made possible through the decentralization of the asset.
- Generating trust in the asset due to the preservation of changes creating transparency.
To better visualize this definition, imagine you have a digital document that isn't transferred or sent as a copy to others, instead the document gets distributed in a shared, synchronous method such as Google Docs. While blockchain technology is more complicated than this, it’s a good analogy in showing a decentralized distribution chain that allows for real-time editing and allows all included individuals the ability to access the document simultaneously. By making this possible, all modifications made are transparent to everyone who has access.
The bottom line is that blockchain will revolutionize technology in such a way that fraud and risk are significantly mitigated while permitting needed scalability.
How is the Legal Industry using Blockchain?
In a survey completed by PwC, it was revealed that 70% of surveyed law firms would utilize smart contracts for transactional legal services, 41% using blockchain for transactional legal services, 21% for business support and 31% for providing high-value legal services.
As blockchain technology continues to evolve in the legal industry, developers and scientists alike are discovering new uses every year. Currently given the stable and secure nature of blockchain, this form of technology is seen as a useful way for legal professionals to leverage technology in solving a variety of legal issues. Blockchain has multiple use-cases in the legal industry including: smart contracts, land registry, intellectual property rights, chain of custody, litigation, settlements and financial transactions.
In the foreseeable future, blockchain may change how law firms conduct a multitude of services. Everything from escrow management to contract and transactional processes are already adapting and leveraging these tools, including:
- Automated Settlements of Security Transactions
Imagine an automated process to handle ownership transactions through blockchain networks. Law firms regularly oversee and help process real estate and ownership share transfers for businesses, as this requires diligent attention to all compliance laws and awareness of current restrictions.
By using advanced technological tools, the human error factor can be eliminated because of blockchain protocol codes. Routine change of ownership transactions can be automated by blockchain networks in the future, such as transferring real estate or ownership shares in a business. Compliance and restrictions all happen automatically, as they are built into the blockchain protocol code.
Using Digital Assets to Complete Payments
Cryptocurrency is quickly becoming a popular digital asset that clients are discovering as a more secure way to provide payment for services. This method of asset representation has created a new digital transactional system for previously illiquid markets. It’s advanced new blockchain technology applications that are less costly and better mitigate risk by using asset tokens for the representation of the property and/or contracts between parties.
Smart Contracting Technology
Smart contracting is a way for law firms to transition away from time-consuming, static documentation. Traditional paper or digital copies of contractual agreements will become a thing of the past with programmable components through blockchain networking and its ability to automate the application of terms and conditions automatically.
Digital Wallet Instead of Escrow Accounts
Another one of many fast-growing blockchain technologies is the digital wallet. This e-commerce transaction software system enables a more secure method of online payment. As a result of smart contracting being able to automate fund releases after completion of specified milestones or deliverables being received, digital wallets will eventually replace the need for escrow accounts in a broad range of transactional activities.
How can Law Firms use Blockchain to Stay at the Forefront of Technology?
Law firms should have a big picture view of how their services and practices could expand with the use of technology tools such as blockchain. This technology continues to bring valuable advancements for contract law. Attorneys should also prepare themselves for the impact on the legal frameworks and how it could impact businesses that have incorporated this technology into their day-to-day operations and financial management strategies. With a combined understanding of blockchain networking functions and legal expertise, law firms can integrate their practices to provide much-needed legal authority to these companies and organizations.
If you’re interested in utilizing blockchain as a tool in your legal profession and aren’t sure where to start, or if you’re interested in learning more about blockchain for legal purposes, the Global Legal Blockchain Consortium showcases how blockchain can benefit the business of law. The GLBC was founded to help companies join together in developing standards to govern the use of blockchain technology in legal applications. Currently the organization is composed of over 300 large companies, law firms, software companies and universities.
As blockchain continues to advance and offer greater potential to legal professionals and firms, understanding this tech tool and leveraging its capabilities will keep legal practices at the forefront of technology. As lawyers spend up to 48% of their time on administrative tasks, blockchain can be a simple and widely useful tool for many law firms and legal departments, easily integrated into most existing software applications.
About ABC Legal Services
ABC Legal is the nation’s leading service of process and court filing company and is the official process server to the U.S. Department of Justice. Docketly is a subsidiary of ABC Legal, providing appearance counsel on a digital, custom-built platform that smoothly integrates with our applications and services. ABC Legal’s applications are cloud-based and compatible for use on desktop, browser, and smartphones. Our solutions and digital approach ensure process server partners, law firm customers, and their clients save valuable time and resources when serving legal notices safely and with maximum compliance, control and transparency. ABC Legal is based in Seattle, WA, with more than 2,000 process servers throughout the U.S., as well as internationally in more than 75 countries. To learn more about ABC Legal, our solutions, and subsidiary company Docketly, visit www.abclegal.com.