Blockchain: the next big thing to hit lawyers?

The publication of the Law Society’s welcome report on ‘Capturing Technological Innovation in Legal Services’ prompts me to describe what is happening on the other side of the pond on the same subject. But first, I urge lawyers to read the Law Society’s report. It provides fascinating detail on how law firms use new, and previously unimaginable, technologies.

As I have reported before, the American Bar Association (ABA) has just set up a Center for Innovation. Its activities might provide inspiration for other ideas on innovation here.

For instance, it has invited fellows to work with it. It has two sorts. ‘NextGen Fellows’ are recent (last five years) law graduates, who will spend one year in-residence at ABA headquarters. They will receive a stipend of $45,000 with benefits. ‘Innovation Fellows’ on the other hand can be any interested individual, who will be invited to take a nine-12 week sabbatical from work and spend it at ABA headquarters working on projects to improve the legal sector and practice of law. The ABA is hoping to obtain sponsorship to cover these fellows’ living costs. It prompts me to ask: can we place innovation fellowships within our own structures?

Second, the Center can initiate and lead projects. Its first is the Louisiana Flood App. Thousands of flood victims in and around Baton Rouge, Louisiana, lacked the home-ownership documentation needed for disaster assistance. With Stanford Law School, the Center developed a mobile app to help victims gather the documents and complete submissions. The app also directs victims to appropriate legal services in the region, based on their income qualifications.

Third, one of the Center’s key functions is to highlight what is new and creative. Each month, its website has a ‘Spotlight on Innovation’, focusing on new approaches and ideas to improve legal services. For its opening month (since the website has only just gone live), it features ‘ABA Free Legal Answers’, which is a pretty standard virtual legal advice clinic, although impressive as a result of its very wide reach. I am sure the site will feature more cutting-edge examples in the future. It justifies its choice this month by saying that it combines three of its favourite things: collaboration, technology, and access to justice.

ABA Free Legal Answers is currently available in 20 states, and will reach more than 40 states by the end of 2017. It has only been launched a few months ago, but has already served nearly 2,000 clients. The model is simple: clients post civil (not criminal) legal questions to a website, and volunteer lawyers select questions and provide legal advice. Clients and lawyers alike can log in any time, anywhere. The ABA partners with bars, legal aid agencies, or access to justice commissions, to find both clients and volunteer lawyers.

This has some similarities to the nationwide French site run by the French national bar that I wrote about recently. And so this is the question for local application: is it not time for the Law Society to undertake a similar jurisdiction-wide initiative for England and Wales?

There is an important innovation briefly mentioned in the Law Society report, but not in sufficient detail. I have obtained the detail through ABA publications. It should become a top priority for both the ABA and the Law Society. The Law Society report says it is one of the opportunities in which the Law Society can take the lead, by way of bringing people with relevant knowledge together to test it.

The innovation is called ‘blockchain’, and ABA tech people think it is the next big thing to hit lawyers. The technical definition of blockchain is that it is an incorruptible digital ledger or database of economic transactions, open to anyone, which can be programmed to record not just financial transactions but virtually everything of value (i.e. not just money, but also titles, deeds, identities, even votes). A practical use of it is in bitcoin, which is the principal context in which it is mentioned in the Law Society report.

It seems that real estate is the area of law which might be hit next, because blockchain offers decentralised proof of validity, improved speed, ease of transactions, lowered costs, and an immutable public ledger with all relevant history. Sweden is apparently considering placing its land registry on a blockchain.

Any area of law which relies on a similar need for certainty, speed and lower costs is equally susceptible, with the consequence that it may knock out some middle-actors, or at least some of their current activities. The scary part comes with the notion of smart-contracts distributed through blockchain – in other words, computerised agreements between multiple parties without requiring supervision.

The future is here. Now we need to make the best of it.

Jonathan Goldsmith is a consultant and former secretary-general at the Council of Bars and Law Societies of Europe, which represents around a million European lawyers through its member bars and law societies. He blogs weekly for the Gazette on European affairs