- Olga Mack
New Horizons for Lawyers in the Blockchain Era
Blockchain offers opportunities to revolutionize the legal field by eliminating third-party actors to ensure greater security and transparency.
There are a variety of ways to leverage the immutability of blockchain technology to improve security in the legal field. This includes, but is not limited to, smart contracts, intellectual property management, streamlining traditional paperwork processes, and using Decentralized Autonomous Organizations (DAOs) for new corporate governance structures.
In a rapidly changing landscape, those who learn to navigate blockchain risks and opportunities are well-equipped to help shape the future of the legal field and its impact on emerging technologies.
Imagine your business client wants to build a secure and transparent product supply chain. What if you could offer to help create a tamper-proof record of each step in the supply chain, from raw materials to finished products?
Imagine tracking the provenance of a diamond from the mine to the storefront with an immutable record that prevents fraud and counterfeiting.
Picture settling stock trades almost instantly instead of waiting two days.
Or securely and transparently transferring property ownership without involving real estate agents, banks, and other intermediaries.
This is the power of blockchain, a distributed database that has the potential to revolutionize the legal industry by making transactions more secure, transparent, and tamper-proof while eliminating the mediators typically involved.
The above examples are just the beginning of how blockchain can change the game for you and your clients. Now, let’s explore additional opportunities for lawyers in the blockchain era.
Smart Contracts Underpin Future Legal Services
Blockchain-based smart contracts underpin a new generation of legal services based on implicit trust and automated decision-making that bypasses go-betweens such as agents and bankers. A network of computers stores all of a blockchain’s data. Cryptographic signatures link each data block to the preceding one.
This provides a secure level of immutability and programmability needed to support smart contracts. A self-executing smart contract automates decisions and actions based on rules and if-then logic. Using smart contracts, lawyers can empower clients to:
Automatically track and manage a product's supply chain to prevent product damage or loss during transit. For example, manufacturers could require that a product be supplied only if it can be delivered to a customer by a specific date.
Develop a decentralized marketplace where buyers and sellers connect directly without third parties like eBay or Amazon acting as middlemen. Rice Exchange, a global blockchain-based rice trading platform, is a great example.
Buy a house in minutes rather than months. Simply send money to the contract, and it will execute the sale and transfer ownership of the house.
In July 2022, Gartner predicted that “wider consumer and business adoption of Web 3.0 commercial applications like blockchain wallets, cryptocurrency, NFT games, and smart contracts are on course to reach a tipping point in the next two to five years.” Blockchain will also transform IP management, streamline a host of other legal services, and become the basis of new business models.
Source: Gartner Hype Cycle for Blockchain and Web3, 2022
Transform Intellectual Property Management
Creators can protect new types of intellectual property, like digital art and music, using blockchain-based smart contracts. On platforms like Ethereum, users can create and trade digital tokens representing ownership of physical assets such as real estate or art. Applying blockchain in the intellectual property (IP) legal field can improve various aspects, such as:
Copyrights. Enable creators to automatically register and protect their work as soon as they create it to help prevent theft and plagiarism.
Patents. Simplify patent applications to help innovators protect ideas. Allow patent holders to share information only with trusted parties to maintain their competitive advantage while still collaborating to innovate.
Trademarks. Register trademarks in minutes, confident they will remain safe from tampering and fraud on an immutable blockchain.
Domain names. Register domain names (used to identify websites and email addresses) securely in minutes. Establish domain transfer and sale terms upon registration.
Trade secrets. Monitor and restrict access to private information to help prevent trade secret theft and prosecute espionage.
Digital assets. Have a secure and tamper-proof way to track the ownership and transfer of digital assets, e.g., cryptocurrency, e-books, and music files.
Streamline Additional Legal Processes
Lawyers can securely conduct more business digitally and spend less time on paperwork using blockchain to streamline legal processes such as:
Evidence protection. Blockchain's secure tracking system for digital files and physical evidence protects the integrity of legal evidence and prevents it from being tampered with, lost, or stolen.
Proof of ownership. Just as creators can establish copyright protection for original work, lawyers can set and track ownership of legal documents to prevent fraud and prove ownership in court. Creating immutable records of contracts and other legal documents will also streamline discovery processes during litigation, M&As, and other due diligence efforts.
Payment processing. A blockchain network can record the details of an agreement and handle payments in legal instruments and litigation outcomes. Even if one party defaults, payments are still made and documented, providing security and peace of mind to all parties.
Create Decentralized Autonomous Organizations
These organizations run autonomously through rules encoded in software. It’s a new form of corporate governance that allows owners to vote to make decisions collectively. Other benefits of Decentralized Autonomous Organizations (DAOs) include:
eliminating intermediary parties, thus reducing time, errors, costs, and opportunities for fraud and corruption.
fewer disputes as smart contracts enforce rules, and blockchains are immutable.
enhanced transparency, as the company can allow anyone to view all the information and actions recorded on its blockchain. This can even eliminate the need for transparency reports.
the ability to create additional legal entities governed by smart contracts.
New Opportunities Await You
The rapid growth and expansion of blockchain and smart contracts will significantly impact various industries, including IP management and legal services. Blockchain technology presents myriad opportunities for forward-thinking lawyers. Early adopters will secure a competitive advantage and contribute to shaping the future of blockchain-powered business models. Those who embrace and navigate these changes will shape the development of this innovative technology, ultimately writing a new chapter in the legal profession.