Blockchain and the Law: Opportunity comes for those who are prepared.

Blockchain and the Law: Opportunity comes for those who are prepared

by Ashwin Gupta

In 2014 I remember agonizing over investing in bitcoin or trying my luck in the stock market. I invested in the stock market because, at the time, traditional wisdom dictated that it was a “bubble” and I was unprepared to learn the mechanics.  To offer some perspective, bitcoin was valued at $770 US in 2014, and its current price is over $29 000. Over the years, I watched some of my peers enriched as bitcoin increased in value exponentially. This choice taught me the value of being prepared in an evolving digital future (and that traditional wisdom can be unreliable).

The legal profession has historically resisted digital implementation.[1][2] But as the legal system is forced to adopt a digital future by the pandemic[3] and technological advances,[4] professionals who are prepared for these changes will have the most opportunity to set the standards for this adoption. The standards set this juncture will impact countless aspects of the legal system like access to justice and legal procedure. As an incoming law school graduate, my interest is no longer merely financial. I see opportunities in improving our legal system through this adoption —assuming I’m prepared.

Preparation

In ushering in the digital future, it’s imperative that legal professionals familiarize themselves with digital tools. I foresee three tools that will drive changes in the legal system:  1. Blockchain 2. Artificial intelligence and 3. Software development. Since this blog isn’t going down anytime soon, I predict that in 20 years or less some level of familiarity will be required with each of these tools for lawyers. At least, in the same way that lawyers are expected to be familiar with the interface of E-mail, but most do not understand what an e-mail provider like Gmail does behind the scenes to keep it all running. I’ll explain why I think so with regards to Blockchain, and I’ll justify my prediction for AI and Software development in the comments to keep the post short.

Blockchain

A blockchain is a distributed database that is shared among the nodes of a computer network.[5] Nodes could refer to multiple systems across the world or a localized system depending on the structure. But essentially, it’s a digital cloud without a centralized storage. The main advantages of having a blockchain to store data is that its immutable and transparent meaning that no one can tamper with the data without leaving a trail and verifying their right to access. Since the data is stored on nodes instead of a centralized system, it’s secured from cyber-attacks. Decentralized security has become an invaluable feature due to a recent increase in cyberattacks.[6] Blockchain could have countless applications to the law, which takes advantage of these features. A few obvious applications which come to mind are: blockchain land title registration, smart contract storage, tokenization, and chain of custody tracking.

Land title registration is a fitting use for blockchain. Currently a property lawyer is tasked with sourcing and verifying all the transfers of title leading up to a novel transfer to verify the integrity of the novel property (liens, covenants, easements, fraudulent transfers etc.). A blockchain storage utilized by the Land Title Office would be able to build those requirements into the system, eliminating needs for lawyers to go through the verification entirely. Although there are significant challenges here, like labor required to digitize those documents in a manner appropriate. If done correctly, this would significantly decrease legal costs for property buyers.

Smart contracts automate the execution of an agreement when all predetermined conditions are met, so that all parties can be certain of the outcome without any intermediary’s involvement or time loss. A corollary to the utility of smart contracts is e-signing. Ethereum currently runs a e-signing feature that costs less than that of DocuSign, and the signatures are independent of the contract being signed which guarantees that all parties receive and sign the same document regardless of timeframe.[7] The smart contract feature has tremendous utility in supply chain, as orders require all parties to be on the same page and typically hinge on conditions that can be predefined for a smart contract purpose. Blockchain based contracts have baked in compliance and there’s no room for misinterpretation. Use of smart contracts reduces legal disputes with vendors, freeing up legal resources for other matters. Use of e-signing reduces costs and frees up time for lawyers and their clients. [8]

Tokenization is fascinating and has the potential to change the landscape of property rights. It allows us to take real world or digital products and place their rights in a digital token. These tokens are traded via smart contracts and are stored on the blockchain. This allows token holders to liquidate and invest in segments of assets otherwise indivisible such as artifacts, artworks, collectables like bottles of wine and many others. This includes many other real and digital world products in the investing market.[9] For perspective, the court could’ve tokenized and divided that infamous Popov v Hayashi[10] game ball instead of forcing a sale. These tokens are already being used for a wide variety of purposes and I’d suggest property lawyers should get very comfortable with how these Non-Fungible Tokens (NFTs) work. [11]

These are just some of the obvious use cases of blockchain in law, but it’s my logical inference that integration and day to day use of these utilities will require local legal professionals (judges too) with some level of blockchain based education. Osgoode hall has a certificate program intended for lawyers called “Blockchain Law”, University of Windsor & UofT offer blockchain courses, and most critically University of Ottawa has a blockchain legal lab (with a twitter account). Passionate students that make good use of these opportunities will be prepared to seize any blockchain opportunities throughout their careers and could help shape a transforming legal system.

Citations

  1. “Impeding Technology – Legal Culture and Technological Resistance” (2020), online: https://theitcountreyjustice.wordpress.com/2020/06/28/impeding-technology-legal-culture-and-technological-resistance/
  2. Ben Mears “Legal Innovation: 5 Experts Predict Future Challenges and Opportunities” (2020), online: https://www.collectivecampus.io/blog/legal-innovation-5-experts-predict-future-challenges-and-opportunities
  3. Clive Rich The Future of Law: Rise of the Digital Lawyer (2021), online: https://www.law.com/international-edition/2021/05/27/the-future-of-law-rise-of-the-digital-lawyer/?slreturn=20211019231524
  4. Vivek Wadhwa, “Laws and Ethics Can’t Keep Pace with Technology” (2014), online: https://www.technologyreview.com/2014/04/15/172377/laws-and-ethics-cant-keep-pace-with-technology/
  5. Luke Conway, “Blockchain Explained” (2021) online: https://www.investopedia.com/terms/b/blockchain.asp
  6. Mirdula Shan, “Blockchain & Healthcare: How CyberSecurity Saves Lives” (2021), online: https://harvardtechnologyreview.com/2021/08/23/blockchain-healthcare-how-cybersecurity-saves-lives/
  7. “Blockchain in the Legal Industry”, online: https://consensys.net/blockchain-use-cases/law/
  8. “What are Smart Contracts on Blockchain”, online: https://www.ibm.com/topics/smart-contracts#:~:text=Smart%20contracts%20are%20simply%20programs,intermediary’s%20involvement%20or%20time%20loss.
  9. Riddle & Cole “TOKENIZATION 101: HOW TOKENIZATION OF PHYSICAL ASSETS ENABLES THE ECONOMY OF EVERYTHING”, online https://www.riddleandcode.com/tokenization-101
  10. https://www.lexisnexis.com/community/casebrief/p/casebrief-popov-v-hayashi

12.Supra note 9.

[1] “Impeding Technology – Legal Culture and Technological Resistance” (2020), online:  https://theitcountreyjustice.wordpress.com/2020/06/28/impeding-technology-legal-culture-and-technological-resistance/

[2]Ben Mears “Legal Innovation: 5 Experts Predict Future Challenges and Opportunities” (2020), online: https://www.collectivecampus.io/blog/legal-innovation-5-experts-predict-future-challenges-and-opportunities

[3] Clive Rich The Future of Law: Rise of the Digital Lawyer (2021), online: https://www.law.com/international-edition/2021/05/27/the-future-of-law-rise-of-the-digital-lawyer/?slreturn=20211019231524

[4] Vivek Wadhwa, “Laws and Ethics Can’t Keep Pace with Technology” (2014), online: https://www.technologyreview.com/2014/04/15/172377/laws-and-ethics-cant-keep-pace-with-technology/

[5] Luke Conway, “Blockchain Explained” (2021) online: https://www.investopedia.com/terms/b/blockchain.asp

[6] Mirdula Shan, “Blockchain & Healthcare: How CyberSecurity Saves Lives” (2021), online: https://harvardtechnologyreview.com/2021/08/23/blockchain-healthcare-how-cybersecurity-saves-lives/

[7] “Blockchain in the Legal Industry”, online: https://consensys.net/blockchain-use-cases/law/

[8] “What are Smart Contracts on Blockchain”, online: https://www.ibm.com/topics/smart-contracts#:~:text=Smart%20contracts%20are%20simply%20programs,intermediary’s%20involvement%20or%20time%20loss.

[9] Riddle & Cole “TOKENIZATION 101: HOW TOKENIZATION OF PHYSICAL ASSETS ENABLES THE ECONOMY OF EVERYTHING”, online https://www.riddleandcode.com/tokenization-101

[10] https://www.lexisnexis.com/community/casebrief/p/casebrief-popov-v-hayashi

[11] Supra note 9.

Explaining Technology’s Role in the Practice of Law

Earlier this semester, I helped organize an event for first-year law students where we brought in speakers to teach them about contract drafting. To draft a contract, a lawyer will almost always be working with some existing template. This template will then be modified manually or with the help of some technology solution. In the event, we modified an existing template by using PracticalLaw and ended up with a mock non-disclosure agreement.

After the event, we gathered feedback from the attendees. The feedback showed that the first-year law student attendees were not taught what they expected. They expected to learn how to draft a contract from scratch. They were not aware that in the real world, contracts are never drafted from scratch. They are almost always just modified existing templates.

Law school does very little to expose their students to how the law interacts with technology in the real world. If I had not spent my last summer working at a law firm, I too would have been confused that a contract draft workshop is more of a copy and paste exercise than applying principles you learned in first-year contracts class.

It has long been a critique of law school that it doesn’t teach you how to be a lawyer. It simply teaches you how to think like a lawyer. That is fine as understanding how to be a lawyer is part of the articling process, and it is essential first to learn how to think like a lawyer in law school. However, to properly think like a lawyer, it is essential to know technology’s role in the practice of law.

Experts at McKinsey estimate that 23% of legal work can be done with technology that already exists.[1] This number will undoubtedly climb as the technology available to legal professionals expands. The way a lawyer “thinks” will not be the same in 20 years as it is now. Because of technology, certain things that lawyers do now will be taken over by technology in the future, and new responsibilities for lawyers may arise. If law school is meant to teach a student how to think like a lawyer, it should be teaching students how to think like a modern lawyer and not a lawyer from the 20th century.  A modern lawyer should understand the role technology plays now and be able to anticipate the growing role it will play in the future.

Integrating technological realities into the law school curriculum is not tricky. For example, in a contracts class, a teacher should point out that in reality, applications build contracts, and it is a lawyer’s job to use the concepts they have learned to review the validity of a contract (not to build it from scratch). In a family law example, law students should understand that systems will calculate support payment numbers. Their role is to use concepts learned to verify that number and understand what goes into that number. Knowing how the concepts learnt will be applied in the real world will lead to a better learning experience for students.

I am not suggesting students need to learn how actually to use legal tech applications. Since there are so many different tech solutions in the legal world, it is unrealistic for students to learn specific applications on the off-chance the firm they work at employs that application. I only suggest that teachers make an effort to explain to students how technology interplays with the concepts they are learning and how technology will affect the way these concepts are used. Schools currently require teachers to give real-world applications of what students are learning. Such a change would only require administrations to ask that some of these real-world application examples be related to the use of technology.

Going through law school to understand how technology interplays with the law will produce much better lawyers. Although I am not yet an articling student, I know from talking to people that there is time spent reworking how you view the law once you understand technology’s role. If students understood how technology interacts with the law from the get-go, they could better hit the ground running when they enter the legal profession. Less time spent learning the technological realities of a modern-day legal practice means more time can be spent learning to be an effective lawyer. This will lead to better efficiency for firms, better results for clients, and a less stressful articling experience for the students.

Source(s):

[1] Hess, A. (2020, February 18). Experts say 23% of lawyers’ work can be automated-law schools are trying to stay ahead of the curve. CNBC. Retrieved November 19, 2021, from https://www.cnbc.com/2020/02/06/technology-is-changing-the-legal-profession-and-law-schools.html.

Virtual Viability: Are Virtual Firms Here to Stay?

by Nick Todd

Back in 2018, if I were a lawyer looking to venture into the realm of solo practice, I would have instinctively begun the search for an office. But in just three years, a worldwide pandemic has since proven that the collaboration and productivity of an office environment can be replicated–in some cases even enhanced–virtually.

Indeed, the early days of the pandemic taught many laws firms that the adoption of video conferencing and communications technologies such as Zoom and Slack were necessary for survival in an uncertain and ever-changing world.  It was a transition that was nothing short of remarkable, defying expectations of an industry that had been plagued by years of resistance to the online world.  But what was once implemented out of survival is now increasingly being implemented by choice–virtual workspaces can eliminate the high overhead costs that come with an office, give employees the freedom to work from anywhere in the world, and increase productivity [1].  And with the high cost of legal services also translating into an access to justice problem, it comes as no surprise that law firms are now beginning online.

But the transition to online work has also been met with challenges, and as much as we would like to believe that remote work will greatly improve our lifestyles, so too have many in the legal profession experienced the burnout that can result from constant virtual interaction [2]. Others insist that in-person interaction is essential for their well-being and mental health–that virtual interaction is simply “not the same” [3]. With benefits and drawbacks to online work environments, this begs the question: are virtual firms here to stay?

If we look at current trends, legal professionals are increasingly finding less value in their physical offices.  In a 2020 study conducted by Clio, both lawyers and consumers indicated that access to commercial office space was not a priority when it came to a law firm’s success [4].  Some might view this as a sign of the impending end of the retail office, but with covid mandates gradually lifting and lawyers returning to their offices, it appears unlikely that law firms will abandon physical office space altogether.  And this makes sense–for the moment, work essentials such as social events, physical interaction, and team management remain difficult to implement in a virtual environment.  Research is already underway as to why, with early explanations highlighting the finding that the regions of our brain which process behaviour, thoughts and emotions are more engaged when face to face as opposed to virtual [5].

Another challenge that virtual law firms must overcome to achieve longterm success is that of isolation.  According to the findings of a study conducted by the University of Berkeley’s Haas School of Business, managers throughout the pandemic adopted a “narrower, more controlling view of their work, with a greater focus on analytical and task-based activities at the expense of people development and relationship management” [6].  In other words, virtual worlds can cause us to become more insular and disassociate from our peers, and that can present significant ramifications for the working world.  Failure to provide a physical space for clients to meet with lawyers may even constitue a barrier to access to justice, as technological access continues to remain a problem in Canada and elsewhere.

As it stands, increased profitability and freedom at the expense of interpersonal connection and fulfilment may make virtual firms a tough sell for some.  It does seem, however, that virtual firms–at least in some capacity–are here to stay.  But for these firms to rise to any sort of prominence in the legal field, significant efforts to confront the social and access to justice challenges associated with virtual spaces must be made.  The legal industry may rise to the occasion to meet these challenges as it did during the pandemic–and I hope it does.  Remote work has the potential to create a real difference in people’s lives, but so too can it also take away from them.  Either way, it is clear that the pandemic has, at the very least, forever unsettled our relationship with the office.

COVID has indeed proven that online work environments are viable alternatives to the traditional brick-and-mortar office.  But as with any bet on the future, we must ask ourselves: is viable enough?

Sources:

[1] Wolters Skluwer, “The Rise of the Virtual Lawyer” (2019), online: <https://www.wolterskluwer.com/en-gb/expert-insights/the-rise-of-the-virtual-lawyer-traditional-vs-virtual-law-firms> at paras 1-9.

[2] Hannah Roberts, “Zoom and Gloom:  Lawyers Are Growing Tired of Endless Video Calls”, online: Law.Com International <https://www.law.com/international-edition/2020/07/22/zoom-and-gloom-lawyers-are-growing-tired-of-endless-video-calls/?slreturn=20211015033403> at paras 1-12.

[3] Ibid at para 15.

[4] Clio, “2020 Legal Trends Report”, online: Clio <https://www.clio.com/wp-content/uploads/2020/08/2020-Legal-Trends-Report.pdf> at 45.

[5] Alejandro Albedrop, Diana R. Sanchez, and Tamara Skootsky, “Navigating the Expansion of Virtual Communication at Work.” (2021) 59:1 TIP: The Industrial-Organizational Psychologist 1 at 3.

[6] Julian Birkinshaw, Maya Gudka, and Vittorio D’Amato, “The Blinkered Boss: How Has Managerial Behavior Changed with the Shift to Virtual Working?” (2021) 63:4 California MGMT Rev 5 at 21-22.

Technology as a Barrier to Justice: Cautioning Legal Tech Designers

Harjote Sumbal

Technology alone is not the complete solution to Canada’s access to justice problems. Usage of technology can encounter resistance, the measures may ultimately be unsuccessful, and the approach can actually result in the creation of new barriers to access. Professors Roger Smith and Alan Paterson identify “digital exclusion” with its three “digital divides” as a good place to start in assessing challenges of technological reform: (1) physical access to the relevant technology, (2) the technical ability to use the relevant technology, and (3) the cultural inclination to use the relevant technology.[1] Designers of legal tech would do well to anticipate the barriers to justice their applications may create so that they can address them before they manifest. Addressing the second divide – technology itself as a barrier – should drive legal app design to ensure implementation of technology does not widen the access to justice gap further.

A successful application is driven by user demand, which in turn requires trust. Technology can indirectly risk undercutting the administration of justice and compromise user trust. Mistrust of the legal system is a noted barrier to access,[2] so the security of technological processes is essential to make user adoption a possibility. For example, Abedi, Zeleznikow, and Brien have identified three core “facets of security” Online Dispute Resolution (ODR) systems must ensure: (1) information security and confidentiality, (2) privacy of the parties involved, and (3) authentication of parties in transactions and communications.[3] If technological reforms are implemented without due consideration of security issues, legal tech may serve as an additional barrier for wary users rather than increasing access to justice.

Digital divides in accessing technology can serve as significant barriers to access. While cultural resistance speaks to the acceptance of technology by the existing legal industry structures, physical access and technical ability are both barriers for potential users that may actually want to engage with legal technology. While these digital divides can affect any given individual, their impact is likely to most strongly affect vulnerable groups like lower socioeconomic communities, elderly people, Indigenous peoples, and those with language barriers, whether they are refugees, immigrants, or citizens.[4]

In some cases, it is possible to address these barriers within the technological tool’s infrastructure. For example, the Civil Resolution Tribunal (CRT) attempts to address potential language barriers by providing information on the CRT, its process, limitation periods, and available help resources in multiple languages.[5] It also provides additional resources for Indigenous users and directs those without computers to ServiceBC locations or paper forms.[6] The CRT’s recognition of potential technological barriers is an important start. However, not all technology platforms are constructed in the same manner, nor are they as comprehensive as ODR platforms tend to be. Justice apps are more individualized in their scope and user design. For example, the MyLawBC website is designed, amongst other capabilities, to allow users to construct their wills, but offer none of the language, Indigenous, or general helper resources of the CRT described above.

The need for accessibility tailored to vulnerable populations is apparent. A 2008 Law Foundation of Ontario report stated those in vulnerable populations “need to receive direct services rather than rely on self-help”, as legal trouble often piles on to the barriers they already face.[7] As self-service is one of the key features of user-targeted legal technology to save paying legal fees, tools that are too daunting to use are essentially useless. Without specific consideration of vulnerable populations and their userability, technological reforms risk creating a further divide between users and access to justice.

Technological tools like ODR and justice applications have great potential. However, the design and conception of technological tools must consider the specific needs of vulnerable populations or they risk exacerbating the access to justice problem. In order to successfully facilitate greater access to justice, legal tech designers must exercise empathy with target populations when conceptualizing solutions.

[1] Smith, Roger & Paterson, Alan, “Face to Face Legal Services and their Alternatives: Global Lessons from the Digital Revolution” (2014), online (pdf): Strathprints <https://strathprints.strath.ac.uk/56496/1/Smith_Paterson_CPLS_Face_to_face_legal_services_and_their_alternatives.pdf> at 19.

[2] Tania Sourdin, et al, Digital Technology and Justice: Justice Apps, (Milton: Routledge, 2020) at 23.

[3] Fahimeh Abedi, John Zeleznikow & Chris Brien, “Developing Regulatory Standards for the Concept of Security in Online Dispute Resolution Systems” (2019) 35 Computer Law & Security Review 1.

[4] Sourdin, supra note 2 at 66.

[5] Civil Resolution Tribunal, “Resources” (2021), online: < https://civilresolutionbc.ca/resources/>.

[6] Ibid.

[7] Sourdin, supra note 2 at 68; See Karen Cohl & George Thomson, “Connecting Across Language and Distance: Linguistic and Rural Access to Legal Information and Services” (December 2008), online: The Law Foundation of Ontario <https://lawfoundation.on.ca/download/connecting-across-language-and-distance-2008/>.

Legal Tech and AI as tools to improve client service and lawyer wellbeing.

Time is the most valuable commodity for lawyers, evidenced by the widespread reliance on the billable hour as a metric for valuing services provided, and even for defining success. This reliance on the billable hour sometimes leads to lawyers spending more time than necessary on certain tasks, and rather than looking for ways to increase efficiency, this time is logged in six-minute increments in its fullness, as a happy addition towards a billable hour target.

Huge workloads and high billable hour targets lead to high stress in the workplace, mental health issues, and inevitably lead to poor client service when the length of time spent on a task is valued more than how efficiently the task was completed.

I spent the summer of 2L at a national firm, and quickly learned that lawyers spend too much time on tasks that could be automated with the help of AI or existing technology solutions. The COVID-19 pandemic introduced some basic technology-driven efficiencies, out of necessity.

Examples of technology solutions now being used to increase efficiency (some because of COVID-19 and working from home):

  • Zoom court hearings
  • DocuSign to execute agreements
  • Due diligence via virtual data rooms
  • Digital closing books folders

Having been exposed to all the above examples of tech solutions this past summer, I can’t imagine how things were done before, when physical documents required a signature, when real paper was relied upon to conduct due diligence and when lawyers walked into the court chambers to argue and seek orders in front a judge, literally, rather than from their home office (or kitchen table). The time savings generated by these simple tech solutions make it hard, or impossible to go back, once experienced.

At the firm that I worked at, AI based software like Kira, for example, was utilized to analyze contracts and documents to aid with tasks including due diligence for a corporate transaction. AI software can drastically reduce the time that lawyers spend reading contracts, word by word, which creates time to focus on client relationships, and creating time to conduct more specialized legal analysis related to risk, adding value to the service provided to clients.

AI has the power to change one of the least efficient systems, being the reliance on precedents for contract drafting. When helping a client on either side of a corporate transaction, lawyers use similar deals previously worked on as “precedent” for the next deal. Countless hours are spent reading through previous contracts and documents to try to find the right “fit” for the next deal. Lawyers then spend their time plugging in the variables from the deal they are working on, into the precedent document. This leads to contracts that are more “cookie-cutter” than “bespoke”. AI has the potential to help lawyers draft bespoke contracts for their client’s transaction using the power of machine learning.

Moving away from the precedent system and using the power of machine learning to draft contracts could significantly cut down the time spent reviewing precedents and essentially copy and pasting variables into cookie-cutter contracts. Creating time, machine learning tools, could allow lawyers to leave the office on time and head home for dinner with their families, and could also mean more time is spent understanding their client’s needs and focusing their legal expertise on more complex aspects of a transaction where risk may go unnoticed.

As a 3rd year law student who has briefly experienced working in a national law firm, I believe it is crucial to begin developing knowledge about, and skills working with, legal technology and expert systems early on in our careers. While some worry that AI and technology solutions will take away jobs from lawyers, I would argue instead that technology and AI should be embraced and leveraged to improve client service and increase lawyer wellbeing, by creating more of the most important commodity in the legal profession, time.

David Blackstock