2019 showed great advances for Blockchain technology because of its potential to be a transformative force across various industries. One industry that greatly benefited from Blockchain was the legal industry. Although it’s not the sector that usually comes to mind when talking about high-tech industries, Blockchain is disrupting and pushing the practice of law into modern times.
What is Blockchain?
CNBC explains that Blockchain can be thought of as a historical fabric that records every digital transaction – be it an exchange of goods, services, values, or even private data – exactly as it occurs. It can also be thought of as a database that showcases a shared list of records that cannot be altered due to heavy encryption. Yet, most people associate Blockchain purely with Bitcoin and other cryptocurrencies.
In a Tech Takes feature on Blockchain by HP, it details how the technology was able to “facilitate a secure public repository of transactions for Bitcoin.” Yet Blockchain is far from just being limited to cryptocurrency. Today it has emerged as a standalone technology that can be used for many purposes, especially in the legal industry.
3 Major changes in the legal industry caused by Blockchain:
1# Maintaining records and conducting transactions:
Its advantages for large institutions and businesses are quite pragmatic and include cutting costs and centralizing less efficient processes. Legal Business World’s article on how Blockchain is revolutionizing the legal industry highlighted that the technology can be used in maintaining records and conducting transactions. In particular, Blockchain is instrumental for information registration, identity management, smart contracts, transaction registration, and payments.
2# Streamlining and hastening processes:
To this day, legal and binding contracts still require physical signatures that may require a significant amount of time to collect. Through smart contracts that are powered by Blockchain, the process that comes with drafting and implementing contracts can be streamlined by directly connecting the relevant parties and also reducing third-party involvement.
Smart Contracts that are self-executing and stored on a decentralized immutable Blockchain, can help automate tasks that are simply too burdensome to do manually. Blockchain will not only reduce costs for clients, but it will also reduce the amount of time and effort needed to pass a contract through legal firms and private lawyers.
3# Tracking monetary transactions:
Last year, retail e-commerce sales worldwide amounted to $3.53 trillion. This number is expected to balloon to $6.54 trillion in 2022. With businesses slowly taking up digital spaces and digital payments becoming the new norm, lawyers will have to turn to Blockchain to track monetary transactions
The emergence of new cryptocurrencies such as the one discussed by Pavneet Kaur in ‘Facebook Unveils a New Cryptocurrency – Libra’, which by the way paves the way for a global financial community, is also another reason why lawyers should use Blockchain as a way to track money. After all, it is the only way the legal industry can keep up with the rapidly modernizing world.
Blockchain’s disruption of the legal industry is showing no signs of stopping. Given this reality, law firms are left with no choice but to embrace changes and look for ways to stay ahead. To do this, Lawyerist suggests focusing on innovations and technologies that will enhance the customer experience and optimize budgets.
As technology opens up new fields, lawyers themselves should also direct their attention to further honing their skills. The American Bar Association encourages lawyers to take IT courses and training, and even obtain certifications to prepare themselves for the new breed of legal issues they will have to face in the coming future.