Blockchain technology is being adopted by almost every industry worldwide, and the legal industry is no different. By using blockchain technology to facilitate operations, legal firms are looking to make their functioning more efficient.
This article will look at the different ways legal firms can leverage blockchain to revolutionize their day-to-day operations.
Let’s dive in!
Blockchain In Law: An Overview
According to a PwC report titled ‘Time for change PwC Law Firms’ Survey 2017’, the following data was revealed about the outlook of law firms towards blockchain technology:
- 70% of law firms said that they would want to use smart contracts for transactional legal services.
- 41% said that they would want to use blockchain technology for transactional legal services
- 21% of law firms would use blockchain technology for business support whereas,
- 31% would use blockchain for providing high-value legal services
The data from PwC’s survey reflects the legal firms’ openness towards exploring the potential of using blockchain technology in the legal industry. Moreover, it shows that they are aware of its benefits and how it can make their business operations more efficient.
Furthermore, an organization called the Global Legal Blockchain Consortium (GBLC) that comprises over 140 large law firms, software companies, and universities worldwide, has also been established to further improve the legal system by adopting blockchain technology. These stakeholders have joined together to develop standards to ‘govern the use of blockchain technology in the business of law’. As per GBLC’s official website, this consortium focuses on:
- Data privacy and security for contracts, documents, and communications.
- Data integrity and authenticity for contracts, documents, and communications.
- Interoperability between large corporate legal departments and law firms.
- Productivity improvements and cost savings in the operations of legal departments and law firms.
Despite the presence of GBLC and the willingness of law firms to adopt blockchain technology, the legal industry has been slow to implement the changes and modernize itself.
By adopting blockchain technology, law firms can reap the following benefits:
- Accessibility – Blockchain technology can make the legal industry more accessible as it can help law firms streamline their transactional processes by using smart contracts and automated contract management. This would reduce the time spent on the preparation of standard contracts and documents, which will help reduce costs. As the transaction process becomes simple and costs are reduced, the legal system will become more accessible to the general public.
- Transparency – Blockchain technology will allow legal firms to store all the data on a publicly accessible ledger that can be shared among all parties involved in an agreement. This will allow any of the parties to cross-examine legal documents related to their case at any time without having to seek permission from anyone.
- Cost Savings – Since many tasks in the legal system are being carried out manually, there are many overhead costs involved. However, with the introduction of blockchain technology, these processes can be automated, and by reducing the number of hours of hourly lawyer fees spent on executing these processes, the overall cost of law firm services can also be reduced. Moreover, with smart contracts, the transactions between two parties can be done quickly and at a lower cost. Thus, by saving time and reducing costs throughout the existing legal system, blockchain technology can make legal services more accessible.
- Automation – The use of blockchain technology and smart contracts can do most of the administrative tasks done by lawyers. According to Clio’s Legal Trends Report 2018, lawyers can spend up to 48% of their time on such administrative tasks. Thus through automation, a lot of time and money can be saved. This will also help make the legal industry more efficient.
- Data Integrity – Hackers tend to target legal documents as they contain valuable and confidential information. By storing these documents on a decentralized blockchain, law firms can increase the data integrity and make it much harder for hackers to access them. Even if the hackers succeed in breaching the security and tampering with the documents, the changes made can be verified by checking if the hash value of the associated legal documents still matches or not.
Use Cases Of Blockchain In The Legal Industry
Blockchain technology has many use cases in the legal industry; some of them are as follows:
#1 Smart Contracts
Legal firms tend to spend much time drafting standard legal documents and mostly contain boilerplate content. By using blockchain technology and smart contracts, these contracts can be automated by simply setting the terms and conditions of the document in the contract. For example, standard legal documents such as lease agreements, rental agreements can be automated using smart contracts. This will help reduce the cost of generating and securing legal documents.
Moreover, the use of smart contracts will help simplify the process of drafting contracts and increase the legal contract’s security. Once a contract is stored on a blockchain, it is tough for anyone to tamper with them.
#2 Electronic Signatures
By signing legal contracts and documents on a blockchain, the costs of such signatures can be reduced to a small fraction of the cost when documents are signed using e-signature platforms like DocuSign. Moreover, having signatures stored on a blockchain will help keep the legal documents safe and enable their easy verification as and when needed.
#3 Chain Of Custody
In any legal case, the collection of evidence is of utmost importance for the investigation process. Most cases go on for several years, and in such situations, the evidence must be verifiable using legal documentation. One of such important documents is the chain of custody documentation which provides essential information related to the case about the collection, storage, and handling of the evidence.
The storage and handling of such evidence in essential documents like the chain of custody documentation can be challenging over the years as it can be tampered with by anyone. This is where blockchain technology helps keep the document secure and allows evidence to be traced as it uses time-stamped cryptographic records.
#4 Proof For Ownership Of Assets
Whenever there is a change in ownership of an asset like land or real estate, the government has to spend large amounts of resources and manage these changes. All these titles or proof of ownership of an asset can be safely stored on the blockchain using blockchain technology. This makes it much easier for people to transfer ownership from one person to another at a lower cost.
#5 Intellectual Property Rights
Most of the Intellectual Property (IP) Filings need to be reviewed manually. The process of reviewing IP rights can be time-consuming as it follows a lengthy approval process. A platform can be created using blockchain technology where all trademarks and patents can be stored safely, thus disrupting the way IP Filings have traditionally been handled. Since all the data will be stored on a blockchain that cannot be tampered with, the disputes related to IP Rights will also decrease.
In Conclusion…
- While blockchain technology has been slow to leave a mark on the legal industry, a day will surely come when all legal firms use blockchain for their daily operations. To ensure that we live to see such a day, educational institutions must teach future lawyers about how blockchain works and how it can be implemented in the legal industry.
So, what do you think about the use of blockchain in the legal industry? Are there any interesting use cases that we missed out on?
Comment below and let us know what you think!
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