How Blockchain Will Affect the Business of Law
Much of the business of law relies on services that protect clients’ rights and property, create an environment of trust in which clients can conduct transactions with other parties, and ensure the proper execution of clients’ directions. Granted, the business of law is more complex than that, but protection, trust, and execution cover much of it.
That’s why legal professionals should take interest in the rapidly growing technology of blockchain. Blockchain, with its distributed ledger system functionality, can provide protection of rights and/or property, an environment of trust for transacting business, and a platform for automatically executing a user’s directions without human involvement.
What is blockchain?
Blockchain uses a large network of computers to redundantly store records. This makes the records essentially tamper-proof. No individual can compromise all the computers on which records are stored, and, the way the network is configured, any attempt to tamper with records would be evident to all parties.
Using blockchain eliminates the need for human, third-party intervention to assure validity. The fact that each transaction is visible to all involved parties (even though the confidential information it contains remains secure), ensures that the information entered by the user remains tamper-free.
Blockchain also can be set to execute directions in a legal document. For example, it can automatically distribute funds as the user directed –without human verification — when the computer detects from other online records that a condition has been met.
What does this mean for the business of law?
Many functions for which blockchain is touted focus on eliminating “friction,” steps that slow the process’ completion. Many friction points blockchain would eliminate include steps that lawyers take in providing protection, trust, and execution.
This doesn’t mean that blockchain threatens revenues. It reduces time spent creating legal documents, searching legal records, and manually verifying validity before executing a document, but also offers new ways for legal firms to serve their clients.
Blockchain is just a tool, and law firms can provide the expertise to help clients make the best use of it. It will affect different businesses in different ways, and clients will need trusted advisors to help them navigate it. Understanding how blockchain affects clients and how to make the most of its functionalities will become a crucial way that law firms add value.
Blockchain will also make collaboration with other firms easier. Rather than each firm maintaining costly, standalone systems to ensure security and privacy for client communications and records, blockchain provides a common platform. Not to mention that phasing out legacy systems will reduce expenditures.
Savvy firms can even develop custom applications that increase clients’ frictionless functionality. These can be proprietary applications that set the firm apart from others, or become a source of revenue from licensing them to other firms.
Takeaways
It’s not necessary to become an expert in the technology itself to benefit from it. But firms that gain a solid understanding of how it can benefit their clients will thrive.
The key to blockchain for the business of law is to recognize and embrace what it can do, while also recognizing what only highly trained legal professionals can add to it. The tasks it replaces create opportunities to shift resources into providing new and more profitable services.
Check out:
http://www.integraledger.com/ to learn about the blockchain ecosystem we are creating.
http://www.legalconsortium.org/ to learn about The Global Legal Blockchain Consortium
