It’s Time for Smart Law
Is the legal profession ready for the creative disruption of the blockchain and smart contracts? This short essay on legalese and code will take you eight minutes to read, or eighty hours if you follow all the links.
The Party of the First Part
Lately, I’ve been talking with lawyers about smart contracts and blockchain technology. They are very interested, until it comes to doing something. Then they are very busy with client work that pays the bills.
One lawyer told me smart contracts are great — they will help reduce expenses of the very basic work that legal aides and junior lawyers do, but this technology won’t affect what real lawyers do, which is understanding client needs, doing research, looking for facts, thinking about scenarios, and helping clients make hard decisions.
They might be right. It might turn out that in ten years the tools will have smart contracts built into them and that will let them continue to charge $400 an hour while saving clients’ money on lower-paid staff.
But they might be wrong, as so many executives have been as the digital wave washes over their industries, changing them completely. As so many bankers and insurance executives are right now at this very moment. It’s hard to see, but there’s a possibility that smart contracts will do to this industry what the Internet did to travel agents. They could replace 80 percent of your industry, leaving far too many lawyers fighting for the remaining less-lucrative work.
I’m not going to go into how that might happen. Many have probably already read it and disregarded it. Instead, I’m going to explain how today’s young lawyers coming out of school over the next ten years are going to build legal practices that could well replace the old-school firms that provide less and less value to their clients. It could happen in the same unexpected way that the jewish firms, which practically didn’t exist in the 1950s, eventually came to dominate law practice on Wall Street (fascinating read).
The premise of this short essay is that lawyers never learned to write, so they have continually built up, layer by layer, a colossal mishmash of language that substitutes for clear thinking. They defend this ornate handicraft, explaining that these terms of art refer to cases and structures opaque to the average man, that these dark runes are sacred and can only be interpreted by one with years as an apprentice sorcerer, a master of capitalization, and who can conjure the most convoluted verbal code that will give clients ultimate protection. They assure us they are on our side.
Simple Lines of Thought
I think in five years most law schools will be teaching, probably requiring, coding skills. Thinking like a lawyer and thinking like a programmer aren’t that different. In fact, I would say that the vast majority of programmers are like lawyers — they lack basic writing and logic skills, so they end up making things far more complex than they need to and often don’t reduce ambiguity but make it worse. Writing a shorter document usually takes more time.
I once read a line from a programmer’s blog saying “To make something more simple, you don’t add simplicity in, you take complexity out.” Think about that for a minute. Do you agree with that statement?
I don’t. I have written close to a million words a year, every year, for the past thirty years. And I have learned that you actually add simplicity in. It’s a skill. It’s possible to learn how to do it, but you need to learn the basics and the tricks of the trade. Ask Alan Siegel (no relation) of Siegel Vision in New York — he’s been doing it all his life. He practically started the simplification business. His previous firm created the 1040-EZ form for the IRS. His book Simple, written with Irene Etzkorn, is one of the foundations of this new domain. In Siegel’s writing, he shows many examples of multi-page legal documents being rewritten in simple, clear language that reduces by around 70 percent the number of words and still has the same, or better, legal effectiveness.
I’ll just give one example, from a company I don’t think has taken its own medicine, LinkedIn. The LinkedIn User Agreement is possibly unique among its peers. Take the average user agreement, which no one ever reads, and try taking the complexity out and see if you get this as a result. I don’t think you will. This kind of writing takes a different skill that very few lawyers have.
Smart Words for Smart Contracts
I keep talking about language, because language is thought. Seriously, literally, language is thought. Did I mention language is thought? So if language biases our thinking, then a bad grammar when coded will lead to nonsense. And, while it’s not strictly true in all of legal work, and most lawyers do provide value to their clients, this concept hits home in many cases. The way we work changes the nature — and often the outcome — of the work. This is as true in voting and decision making as it is in applying legal frameworks to current cases.
That’s why I’m working with a small group of smart (mostly young) lawyers who believe that if we’re going to code future legislation, contracts, and regulations, we should start with a stack of clear, simple documents.
In each country, there is a legal system that can be roughly divided into common and civil law. A set of documents establishes the foundation, and people (often judges) try to figure out what these documents really say and how they apply today. The goal of this project is to build a set of documents built on simple principles that try to disambiguate and express the law as economically as possible, without jargon. This is difficult if not impossible, but our goal is to get an 80 percent improvement using far fewer words.
A simple example is applying user experience design to a contract. Many contracts have specific terms, numbers, and dates — I call them parameters — built right into the text, so they are hard to find and change. A few contracts do it differently: they use variables — terms that substitute for specifics — and then they specify the value of the variables at the end, so the reader can see at a glance what the overall parameters are, and they are easy to change.
As another example, we just created a Swiss mutual NDA that looks nothing like today’s NDAs, fits easily on one page, and we believe is as good as any multi-page NDA. There are tradeoffs, the details matter, and one size doesn’t fit all. But, for 99 percent of all cases in Switzerland, we believe this new NDA will be a better tool than what people are using now. We would like to do the same for most other countries.
We are working on a set of general simplification principles we’ll be able to apply to the work coming up. Here’s a start from our Swiss project:
The Ecosystems are Coming
This is not legal automation; this is legal disruption. While these simple contracts will help everyday business people and, we hope, legislators and consumers, we’re just taking the first step. The next goal is to build legal systems in code. Our premise is that it’s better to start with a clear idea of the algorithm, the conceptual stack, the user experience, and the syntax before you go to code. So we want to think it out and create the smart documents that lead to smart algorithms that lead to libraries of smart contracts that work with smart regulation so everything can interoperate.
And just in time, too. The next five years will see an explosion in legal tech. People are working on new languages, tools, governance models, and even a digital jurisdiction. This will lead to the Internet of Agreements, which has already started. Soon, we will be able to scan our legacy documents, translate them into simple language, then into code, and then into legal ecosystems that plug and play, reducing vast amounts of complexity and opening new possibilities we haven’t even thought of yet.
For the first time, we will bring designers and user-experience experts into this effort. This is not to make pretty documents. This is to make user interfaces to legal agreements that are far better than those we have today. These visual interfaces in the paper and electronic documents we create will then play an important role in creating the visual interfaces of the software of the future.
This is not legal automation; this is legal disruption.
Let me be clear: I think lawyers in the future will still be looking for facts, asking and answering hard questions, and helping clients make decisions. But I believe this will take place in an entirely new context, with new questions, new kinds of answers, and more automated and software-augmented decisions and resolutions, with oracles and new governance models and dynamic adjustment as conditions change. This is not your grandfather’s legal system. Just the practice of resolving disputes could change entirely. Governance is undergoing a serious transformation. Securities laws are being routed around. Identity is changing. The kinds of answers that the next-generation of lawyers will give their clients will be very different, and it will be critical to understand the world of law-as-code and code-as-law, and to know the difference between the two.
It’s far fetched now, but there could be a day when those are the two main types of law, rather than common and civil. Those coming through law school today will live through an historic transformation in law — not the digitization of documents but the codification of what we in want in commerce and society. This will likely redefine the way we govern and are governed. It will — as it must be — messy, and those not deeply involved will not understand the conversations.
I want to point you to one particular project that I think is at the forefront of legal engineering, and that’s Legalese.com. Based in Singapore, this group of people is already way out in front, creating a new ecosystem that could one day be the standard stack for legal tech. Please see their web site and tell others about it:
These projects and others are just getting started now, but they could well be the foundation of 21st century law and commerce.
Are you ready now?
Good. We need you.
Join the Legal Simplification Movement
If you’re a young or progressive lawyer, if you want to help plant the seeds of new legal systems across the globe, we ask you to join us. Our first goal is to create a collaborative work space and start working on basic simple documents for each jurisdiction. Ideally, a company would give us accounts to use Confluence, a powerful collaboration platform. And we would set up there the various documents and jurisdictions and language groups so we can start working together. In the absence of that, we will use Slack, which is free but less productive.
We are looking for people who will help us get the words right in each jurisdiction. Our goal is to produce a set of simplified, legally effective documents that form the foundation for a new approach. To begin, we will work on the basic, most common documents, and they will be put in the public domain for all to use. We’ll start with the basic, most common documents in many jurisdictions and languages:
- Mutual nondisclosure
- Work product for hire
- Employment contract
- Rental leases
- Company formation
- Operating agreements
- Homeowner’s documents
- End user license agreement
This is not impossible. There are certain basic requirements of each of these, and we can create modules that add on. This has already been done by private firms, but we aim to make them even simpler and free.
We will need help promoting these simple contracts — perhaps a company like Nolo Press will help us by writing a book about this and promoting these concepts.
If your company can help, or if you want to join us, I’ve already started a Slack just to get things going. We may move to a better system, but this will help build the initial community. I called it CodeIsLaw because other names were taken; this at least is easy to remember. Please join here:
The New Lawyers
Most lawyers in their 40s and 50s today, who are at the peak of their career’s earning potential, won’t participate in this. Surprisingly, a few established firms are leading the way. But most of the people we’re looking for are young, ambitious, and want to change the world. Here is a selection of law firms and thinkers I believe are helping guide clients into this new world. If you know of others, please contact me and I’ll add them:
The Forefront in New York
David Siegel is a friend of ConsenSys. He’s the founder and CEO of Twenty Thirty, a blockchain innovation platform. Please come to 2030.io and sign up for the mailing list.