How LawTech Will, Change the Legal Industry?
BSN LONG STORY SHORT SERIES #17
In this latest episode of BSN’s Long Story Short Series, we focus on how LawTech will improve the traditional delivery of legal services and impact the legal sector. The term “LawTech” is derived from the phrases “Law” and “Technology” and refers to legal technology. LawTech, like FinTech, refers to the use of blockchain, artificial intelligence, big data, and other new technology tools to revolutionize the legal sector.
In this webinar, we have an excellent line-up of true experts in this field to address the benefits of LawTech, the evolution of technical advancements, ethical considerations surrounding LawTech, and helpful guidance for lawyers and law companies. The three distinguished guests for today’s discussion include Brian W Tang, founding executive director, Lite Lab at HKU, Rosa Giovanna Barresi, an associate member of BABEL (Blockchains and Artificial Intelligence for Business, Economics, and Law) at the University of Florence, and David Fisher, founder, and CEO at Integra Ledger. Ben Yorke of Cointelegraph moderated the talk.
To begin with, please give a little background context on yourself, the role you play in the LawTech industry.
Rosa: She is a lawyer in the corporate and finance field. She has a master’s degree in Corporate and banking and finance law and has practiced her profession for ten years in New York. She is an associate member of BABEL at the University of Florence. She has established a LawTech team (a non-profit organization) to scale the intersection between law and technology.
Brian: He did his first law degree in Australia and second law degree in New York. He joined Credit Suisse in Hong Kong, where he is responsible for managing capital markets, mergers and acquisitions (M&A), and initial price offerings (IPOs). When the initial coin offerings (ICOs) began, he got interested in RegTech. Later he came across a global legal hackathon hosted by Thomson Reuters, and his team made it to the finals and won in New York. Following this, he created LITE Lab to help lawyers embrace legal tech.
David: He is a life-long entrepreneur- has started multiple companies in the finance and developed space. Six years ago, he got fascinated by law (as a business) while helping one client and consequently founded Integra Ledger. Along the journey, he founded the global legal blockchain consortium (including350 institutions worldwide), launched an international legal hackathon, and global partner of the Financial Times.
What does LawTech mean, and what is its scope?
Rosa: Many people think that LegalTech and LawTech are the same. However, LegalTech covers the technologies like artificial intelligence (AI) that lawyers use in their work; LawTech covers the software products for the clients like legal chatbots, marketplace. LegalTech has a broader meaning that includes LawTech.
Brian: LawTech covers services that Law firms provide and gives rise to GovTech, RegTech, etc. Thus, it has a broader meaning than we think and can be used by both the public and private sectors.
The biggest client of LawTech and Fintech are institutions. Why are legal services not accessible to most populations? How can LawTech help to make legal services more accessible and practical to the general public?
David: LegalTech is different from FinTech and all other techs. The legal industry, by nature, is an intermediary industry that delivers intermediary services to its clients—for instance, a contract between two parties to provide something of tangible value. Like blockchain is the payment rail for the internet, Legal rail is the digitalization of law and delivery of services.
Brian: FinTech is about financial inclusion, whereas LawTech is about access to justice. Law is complicated as it involves a contract between parties and between states. Law applies specific processes, including leveraging data and get insights (data analysis). This is where AI, ML, and even user experience significantly enhance legal processes. Corporate, in-house, and layperson consumers consume legal services differently. What we can do is to make LawTech more accessible to different consumers.
Rosa: Equal access to legal services and justice is fundamental. This goal is connected to the income of other countries- high-income countries have a high unmet need for justice, such as housing issues. For middle-income countries, the law is required to fulfill requirements for employment, housing tenure. Moreover, financial inclusion is essential to address these concerns.
The COVID-19 epidemic has drastically changed the way people live. Has this led to faster adoption of LawTech? What effect has the epidemic had on the legal industry, and what does the future hold for the legal profession in a post-pandemic world?
David: A Mckinsey study in mid-2020 mentioned that the pandemic accelerated technology adoption, and he agrees with this notion and expects this acceleration to rise in the next ten years.
Brian: When pandemic hit, organizations were doing well in specific spaces- communications, knowledge management, e-signatures. However, in the early stage of the pandemic, cash flow issues became evident as firms started suffering losses. As a result, people now appreciate law firms since work from home has become a reality, and law firms must set rules for remote workers. He is optimistic that the adoption of LawTech will accelerate soon.
Rosa: In Italy, everything just stopped when the pandemic initially hit the globe. After the initial shock, the only way to keep the interaction live was by improving digital knowledge. As a result, LawTech experienced improvements since lawyers understood that they needed to change their existing ways of working.
What role does blockchain technology play today in the LawTech sector?
Rosa: In Italy, notarizing documents is the fundamental use-case of blockchain technology in LawTech. In Italy and other EU countries, the functions of notaries are delegated to the public official. However, the public notary profession has changed since 2019 because blockchain is being used for notarizing documents in Italy. However, the problem is that for European Administration, paying in Euros is the only accepted way. As blockchain technology lacks this functionality, this can be an issue. However, this issue can be solved when the central bank starts using blockchain for currency-related work.
David: He is working towards applying blockchain technology toward the legal rail in general. Most blockchain applications today are related to payments and the digitalization of things in the physical world. However, he believes that blockchain technology is the fundamental technology to establish digital trust (founded on the notion of social trust). Blockchain can establish trust between advisories, clients, corporates, and governments in criminal and civil law. As a global partner of Financial Times, Integra Ledger interacts with institutions worldwide- law firms and their clients. Apart from niche use-cases like for notary, there are few instances that blockchain is applied in the legal industry.
Brian, by dealing with many startups and corporate councils, you must see many use cases, or at least possible use cases. Do you agree with David that things are a little bit slow going at the moment?
Brian: Blockchain has different facets. Due to the immutability aspect of blockchain, it can be used to store value. The Chinese and Hong Kong systems acknowledge blockchain for dispute resolution: in Chinese online courts, blockchain can be used as an evidence chain; Hong Kong’s legal cloud concept uses the immutability element (with or without blockchain)as the key in the legal space. Data has become a hot topic now- data security, privacy, and data cross-border. Cryptography helps with data security, privacy, and data cross-border can be achieved with security and privacy through blockchain technology. To sum up, there are lots of use-cases of blockchain from immutability and data protection standpoints.
Can you dive into online dispute resolution, Rosa?
Rosa: Initially, online dispute resolution was involved with electronic invoicing, consumer-related problems to discover if decentralized justice is the path forward. She mentioned that China is more developed in terms of an online dispute resolution system. In 2017, the court had two types of online dispute resolution: 1. financial contracts and 2. internet service contracts. China’s new rules that legitimize storing evidence in the blockchain are essential for online dispute resolution. Talking about Europe, new rules were formed in April 2021 for dispute resolution under UK law. Blockchain’s principles of decentralization can be applied to achieve decentralized justice.
Do you believe that human society will achieve decentralized governance/justice?
Rosa: Currently, we don’t have decentralized justice, but she looks forward to seeing it one day.
David: Blockchain in finance has served as a complete replacement to banks and focuses more on peer-to-peer. However, in terms of law, blockchain act as a central technology rather than helper technology. People will be able to subscribe to the body of law of their choice following the digital disruption (like DAOs) one day.
Brian: AI-governance that is maximizing paper clips worldwide has similarities with DAO. On the flip side, the push towards Defi and Central bank digital currencies (CBDCs) means that currencies will be digitized but not decentralized. People might not be willing to go toward decentralized governance. Therefore, technologies can help with digitalization but may not assist with decentralization. He is not that optimistic like other panelists on this viewpoint.
Brian, why do you take a controversial stance toward decentralized governance?
Brian: It is nice to think in a utopian way, but it is not realistic. The law makes you ground things. He believes that some situations need human intervention rather than just leaving it to the wisdom of the masses. Purely distributed governance
David: In a digital and social context, decentralization has a whole new viewpoint. Blockchain has made peer-to-peer trust possible, which previously relied upon intermediaries only. Though most central governments do not want Bitcoin to exist, it does! He thinks that decentralized governance already exists because many companies have adopted blockchain technologies.
Rosa: Regulators should regulate decentralized technologies.
As we advance, what is the role you see organizations like law firms playing in the industry? What are things in the LawTech or Legal-tech space that you want to see implemented?
Rosa: In Italy, the legal sector needs to improve its efficiency. The industry needs to work in parallel with law professionals to implement technology.
David: He looks forward to seeing the synergy between blockchain and intelligence technologies like AI (which will emerge in 5 to 10 years). For instance, the circumstances where legal rail is digitized and AI can impact the core law industry.
Brian: He wants to see a ‘no-code Law code’ platform because such platforms allow non-techies (like law students) to develop technology-oriented products. It is more like educating the next generation of legal professionals.
