Blockchain takes decentralisation to the next level. The brilliance of blockchain’s main component – its shared record book – is that it requires no central authority. There is no need for a middleman of any kind which gives it great disruptive potential, and makes it such a cause of concern for many well-established institutions.
Despite Forrester analysts predicting that 2018 will be the start of the downfall for blockchain proposals that have been too optimistic, the technology’s combination of transparency and security has led to blockchain being developed for almost every industry.
In practice, removing intermediaries and implementing blockchain can help to automate, and streamline many standard business procedures. Getting executive approval on projects or signing formal client agreements can be automated using blockchain. This helps to expedite processes, whilst also keeping a live, up-to-date record of what has been completed.
So, why should the legal sector now turn their attention to blockchain?
There is no doubt that technology and data now dominates business. This has several advantages, but it does increase the likelihood of cyberattacks. Recent high-profile attacks such as WannaCry in 2017 have really brought cyberattacks into the public eye and highlighted just how vulnerable businesses are.
The legal sector is a prime target for hackers because of the nature of the data law firms hold. This data is often very valuable, and this is why according to a report from the National Cyber Security Centre (NCSC), 60% of legal firms reported cyberattacks in 2017.
Blockchain improves cybersecurity, and could mitigate the amount of data loss from an attack, because the technology never stores data on one server. It stores the data across an entire computer network and kept on every computer with access to that network. This means if a hacker wants to breach the network and access the data, they would need to simultaneously attack each individual computer on the network. This would be a very time-consuming and difficult process.
Legal contracts remain written, and require physical signatures on all original documents. This can often be a time consuming and laborious process. Blockchain technology has the potential to make this process digital, with a move to ‘smart contracts’. These smart contracts could be created and executed directly between the relevant parties, without requiring the lawyer to be present.
We can expect to see smart contracts utilised with greater frequency because they are often faster, cheaper, and more secure than traditional transactional mechanisms. This will result in many types of legal matters such as property records, court filings, and transfer of funds to clients, all leveraging blockchain.
Attribution of intellectual property
Lawsuits and disputes over the ownership of intellectual property such as images and music is currently commonplace. Too often is an artist’s music used without their permission and without royalties being paid. This is another problem that blockchain technology could address.
A number of blockchain-based projects, such as Ujo Music and VOISE, are working on ideas that would allow users to register their intellectual property easily. Once the property is registered, the permanent nature of blockchain makes the ownership indisputable.
Cryptocurrency has been around for about a decade and is probably the most well-known application of blockchain. More lawyers are going to have awareness of Bitcoin and other blockchain-powered cryptocurrencies, as their use in financial transactions increases.
When these cryptocurrencies become mainstream, they will be used in a number of legal proceedings such as wills, divorce settlements and international transactions. For that reason, it is imperative that lawyers and legal practitioners have an understanding of both cryptocurrency and blockchain technology.
Turning the promise into a reality
It is clear that blockchain has the potential to really disrupt the legal sector and streamline some of the outdated practices that exist. However, it is important to exercise caution and understand the technology is still in it’s infancy. It is going to need to evolve through several stages before it becomes a useful tool. For this evolution to take place, and blockchain to become commercially viable, organisations need to fundamentally change the way corporate IT is delivered.
There will be a convergence of legacy IT infrastructure with these new distributed systems and this new paradigm doesn’t mean the need for reliable and secure infrastructure disappears. In fact, the more distributed the application, the more important the network and a secured connection to any external traditional databases.
The good news is the tools we need to bring about this new distributed architecture are already here. The rise of blockchain has been made possible by the introduction and growth of low latency networks, clouds and distributed compute platforms – without these technologies blockchain would be impossible.
About the author: Craig Tavares is director for product innovation and technology at Cogeco Peer 1.
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