The increasing adaptation of technology within the legal industry has sent a clear indication: technology will underpin innovation in legal services and spur a rapid evolution. One technology which is frequently making its way to the top of trending conversations is blockchain. The transparent, immutable and secure nature of the blockchain has the ability to disrupt every industry around the world.
Currently, lawyers around the world are buried under mountains of excessive paperwork. Keeping the historical records of the cases has always been a challenging task for every legal advisor. With the adoption of blockchain, legal firms can maintain an accurate chain of custody and other legitimate activities by storing and validating records on the decentralized platform.
How Can Blockchain Revolutionize The Legal Industry?
Blockchain when applied, can affect the legal profession and regulatory environment in two significant ways. First, it can act as a secure database where documents, such as evidence, can be stored and then referenced later on if arguments arise. Second, it can be used in creating a way for contracts to be created and transferred digitally, reducing the need for legal instruments and thus, middlemen.
Use-cases of Blockchain in The Legal Industry
Blockchain has a limitless scope in the legal industry which ranges from maintaining property records to court records, chains of custody, UCC filings, intellectual property rights, litigation and settlements, and financial transactions.
Self-Executing Smart Contracts: The legal contracts and documentation are written with physical signatures for ages, which is time-consuming and prone to human error. In the Annual Law Firms’ Survey 2017, PwC revealed that 70% of surveyed law firms would utilize smart contracts for transactional legal services. The survey also stated that, out of the analysis of total legal firms, 41% will use blockchain for transactional legal services, 21% for business support and 31% for providing high-value legal services.
The self-executing smart contracts can eliminate the need for third parties in the implementation of contractual agreements. Therefore, reducing the time required to draw up legally binding agreements and making legal documentation more accessible and transparent. Automatically executing smart contracts greatly reduce the cost and friction of generating and securing legal agreements.
Optimization of the Intellectual Property Systems: Every year Patent and Trademark Offices around the globe receive thousands of new applications for the trademark. The annual report for the Fiscal Year 2017 revealed that USPTO (US Patent and Trademark Office) took approximately 16.3 months to complete patent average first action pendency (a period from the filing of an application to an initial office action). It took about 24.2 months to perform patent average total pendency (a period from the application filing to issued or abandoned patent).
A blockchain-based intellectual property system is hard to manipulate and will automate the processes of registering, monitoring and selling intellectual properties while reducing legal costs. With the help of blockchain, users can prove authorship, share confidential information, transfer IP rights, and make defensive publication while copyright entities can solve various disputes.
Legal Document Storage and Chain of Custody: For a paper-based legal industry, introducing blockchain systems that will record case proceedings, evidence, and legal documents will speed up trials. The transparent and immutable functionalities of blockchain technology will eliminate the tampering and loss of evidence. It can easily identify people involved in financial transactions and prevent money laundering and fraud in the private and public sector.
For the legal industry, collecting evidence is the crux of investigation and the entire legal matter. Blockchain can help in validation and proper documentation of the findings. Chain of custody documentation provides information about the collection, storage, transportation and handling of the electronic evidence. Maintaining such documentation can be cumbersome and vulnerable to errors. Blockchain can transform the chain of custody procedure, by bringing auditability and traceability to the system facilitated by the enabling of time-stamped cryptographic records.
The Present Scenario of Blockchain in the Legal Industry
Blockchain has many myths floating around its adoption in the Legal Industry. Some legal practitioners are skeptical about the role of blockchain technology in the legal industry. They believe that it will eventually reduce the demand for legal services, it will reduce the need for intermediaries in legally binding agreements. However, it won’t end the need for a legal professional.
The adoption of blockchain in the Legal Industry is in the nascent stage and its acceptance would make it more transparent and secure. Recently, Perkins Coie partnered with Accord Project to standardize smart contracts and blockchain for the legal sector. OpenLaw has been offering tools to help lawyers create smart contracts. All this indicates that the Legal Industry is undergoing a massive transformation with the advent of blockchain technology.