The Dawn of Blockchain in Law

Blockchain technology is being aggressively used in fund administration, real estate, banking, and information services. The legal industry has also begun exploring blockchain tech and setting up communities that work on acclimatizing legal to blockchain in order to gain a competitive advantage[1].

Why the love for blockchain?
According to digital strategist Andrew Medal1, “the immutable and transparent nature of the blockchain” is what industry leaders find enticing. According to the co-founder of Ethereum1, a blockchain-based computing platform, blockchain is the most powerful entity that can control any system, and is set to revolutionize the IT strategies of all industries as we know them.

How is legal incorporating blockchain?
Law firms are building their familiarity with this technology to create digitally secure smart contracts[2] and to process transactions. Only with an explicit understanding of this technology can they get clients on board and provide intelligent advice for actualizing these contracts and transactions.

What are smart contracts?
Ethereum smart contracts are self-enforcing contracts. They require a fulfillment of specific terms to proceed with the implementation of the contract’s instructions. It is essentially a program that will be executed exactly as it is written.

Although the smart contract is a confident alternative to the traditional legal contract, great care must be taken while writing it. An error-free smart contract will be executed smoothly. However, programming errors can cause misuse and exploitation of the contract2. Once a standard format is established for these contracts, their unmitigated use is in the cards for the legal industry.

Law firms dabbling in blockchain
14 law firms have joined the Ethereum Enterprise Alliance (EEA) to develop blockchain solutions and to test smart contracts. But the development of smart contracts isn’t restricted to the EEA alone. Frost Brown Todd has created a prototype smart contract that it is going to begin using in software escrow agreements2. They claimed that a theoretical knowledge of blockchain is insufficient to truly understand this highly complex technology, and law firms must venture out and use it in a full-fledged fashion to grasp it completely.

How can you make a smart contract?
Smart contracts are written in computer languages which are mostly unfamiliar to the average attorney. Law firms need to hire third party programmers to construct these smart contracts in collaboration with their attorneys. The requirement of an entirely new skill set may explain the slow adoption of blockchain in the legal industry2.
What are your thoughts on blockchain for legal? Let us know in the comments section of this article.