Blockchain might be the most important addition to the legal infrastructure since William the Conqueror gave rise to common law.
A standout session from the third day of programming at the 2017 International Legal Technology Association Conference (ILTACON), “Where Does Blockchain Fit in Legal?,” brought together a diverse panel of experts and a packed room of participants at the Mandalay Bay Convention Center in Las Vegas.
Differing in their ultimate opinions of the technology, the panel all agreed that blockchain might be the most important addition to the legal infrastructure since William the Conqueror gave rise to common law. The standing-room-only crowd further underscored a growing awareness for the need to prepare attorneys and firms for an emerging technology that could be as disruptive as Web 1.0 was in the 1990s.
“In the history of money, agreements, contracts and even general law we have come to a significant milestone. And that milestone is blockchain,” said John Alber, an ILTA futurist and previously Bryan Cave’s strategic innovation partner.
Stephen Palley, an attorney with Anderson Kill & Olick, appeared to be only half-joking as he hyperbolically asserted blockchain to be the “answer to life, the universe and everything.” Palley also took the time to define blockchain itself and some of the associated vocabulary.
According to Palley, blockchain was first mentioned in a Bitcoin whitepaper written by Satoshi Nakamoto, which is likely an alias for a group of people.
“Bitcoin was first described in 2009 as a peer-to-peer financial system where people could engage in financial transactions without a centralized server or intermediary,” Palley explained. “Effectively making it possible to send money to someone without going through a bank.”
Bitcoin was built on a blockchain, which Palley described as a “list of sequential blocks that contains data.” The genius of the theory is the ability to “create the blocks in such a way that each block includes – in its header – a reference to all of the blocks that came before it. The practical reality is that once you’ve added a block to the chain it is impossible to roll back.”
In the legal profession, quite a bit of time is spent researching and litigating whether a valid contract existed and, if it did, what the actual terms of the contract were. Traditionally stored on a single server with a single party having privileged control, most contracts are subject to questions of trust and the handling of the data. Blockchain – basically a distributed ledger, or list, of entries much like a stock ledger – breaks the information up into nodes across different servers and that can only be adjusted by an agreement of involved parties and, once updated, cannot be retroactively altered.
“Law and money have always evolved together. We are at a major change point of that evolution,” Alber added. “It seems probable that blockchain will become a basic infrastructure for process management inside law firms. It’s an important time and we should be paying attention to it.”
Joseph Raczynski, a technology manager with Thomson Reuters, finds the cryptocurrency aspect of blockchain to be “an absolutely fascinating subject” and even partly takes the blame for some of the hype surrounding the subject as he’s long been discussing it at every opportunity, he said.
“We are reaching a real boiling point with the advent of ICOs (Initial Coin Offerings) and the secondary market trading of these currencies, which operates much like the NASDAQ. I was just in attendance at the largest cryptocurrency convention in New York and there were literally newly minted millionaires walking around everywhere.”
This application of this technology appears to be limitless. Most interestingly for ILTACON attendees, it also appears to be a real opportunity for a much closer collaboration between lawyers and technology teams in law firms and corporate legal departments.