Does Blockchain Write a New Chapter for Lawyers?

The disruptive influence of blockchain has changed many industries, and legal services are no exception. Blockchain can make operational workflows at law firms easy and faultless. Its embedded automatic monitoring of transactions guaranties data validity. Being inherently decentralized, blockchain prevents hacking and addresses data integrity.

The research conducted by PwC in 2017 states that many lawyers are planning to use or are already using blockchain for transactional (41%) and high-value legal services (31%), as well as for business support (21%). The same research considered blockchain-based smart contracts the most disrupting feature that can be adopted by law firms.

Smart Contracts Automate Task Management

Law firms are turning to blockchain-led smart contracts due to their automation capacity, immutability, and security. Smart contracts guarantee that a particular task will be triggered by a certain action. Blockchain is responsible for the immutability of smart contracts. Their distributed storage prevents them from cybersecurity threats.

To understand how it works, let’s look at the example. Let’s assume that companies A and B have agreed about the following terms. As soon as A employs managers for certain vacant positions, B agrees to sell A its assets. In this case, a smart contract in place could act as a public ledger. From the very beginning, it would verify whether A has carried out its part of the agreement. As soon as A’s obligations are met, the smart contract automatically transfers money for the assets from A’s account to that of B’s, and changes the asset owner from B to A.

To adopt smart contracts, law firms need to develop their own blockchain-based applications, either from scratch or by using ready-made software such as OpenLaw. If the company plans to build its own application, the viable option is to use a blockchain ecosystem, such as genEOS.

Blockchain Reinforces Security

There are a few built-in blockchain features enabling advanced data security.

• Data encryption makes records impossible to access from the outside.

• Data decentralization means that data is distributed between all the chain’s nodes, with each node containing all the data recorded to this blockchain. This prevents blockchain from hacking attacks.

• To allow any changes to the stored records, blockchain requires that every transaction be witnessed by this blockchain’s members.

• Blockchain manages permission schemas, making unauthorized access nearly impossible.

To benefit from the integrity enabled by blockchain, law firms can adopt ready-made services like Integra Ledger, which enhance data protection.

Speed-up of Routine Tasks

There are many daily tasks that can be eased up with blockchain. For instance, how much time do law firms spend on looking for transaction details? By logging all the records and updates to them, blockchain can provide a high-speed traceability of all the transactions, especially in comparison with any paper-based system.

If multiple members take part in the same legal procedure, it’s crucial to be sure that data is immutable. Blockchain is built in such a way that each of its blocks stores all the data recorded to this blockchain. It means that no one can alter any of its elements.

To illustrate this point, there’s K&L Gates New York that is one of the first law firms to develop its own blockchain software for managing its daily routine. Other companies are welcome to follow by either developing their own tool from scratch or using an off-the-shelf blockchain ecosystem like genEOS.

Blockchain Is Not Only about Tokens

“You don’t need to be doing initial coin offerings or issuing tokens to benefit from blockchain,” says Judith Rinearson, a partner in K&L Gates’ New York and London offices. This quote is in tune with how lawyers perceive this groundbreaking technology.

Blockchain guarantees safety, transparency, traceability, and immutability of the stored data. In addition, smart contracts can automate carrying out of any agreement once their requirements are fulfilled.

Lastly, to adopt blockchain, law firms can choose between two options—either developing their own software or using ready-made solutions.