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Legal IT

Robots, Liability and Personhood

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There were some interesting stories in the news lately about Artificial Intelligence and robots. There was the story, e.g., of Sophia, the first robot to officially become a citizen of Saudi Arabia. There also was a bar exam in the States that included the question whether we are dealing with murder or product liability, if a robot kills somebody. Several articles were published on companies that build driverless cars and how they have to contemplate ethical and legal issues when deciding what to do when an accident is unavoidable. If a mother with a child on her arm, e.g., unexpectedly steps in front of the car, what does the car do? Does it hit the mother and child? Does it avoid the mother to hit the motorcycle in the middle lane that is waiting to turn? Or does it go into the lane of oncoming traffic, with the risk of killing the people in the driverless car? All these stories raise some thought-provoking legal issues. In this article we’ll have a cursory glance at personhood and liability with regard to Artificial Intelligence systems.

Let’s start with Sophia. She is a robot designed by Hong Kong-based AI robotics company Hanson Robotics. Sophia is programmed to learn and mimic human behaviour and emotions, and functions autonomously. When she has a conversation with someone, her answers are not pre-programmed. She made world headlines when in October 2017, she attended a UN meeting on artificial intelligence and sustainable development and had a brief conversation with UN Deputy Secretary-General Amina J. Mohammed.

Shortly after, when attending a similar event in Saudi Arabia, she was granted citizenship in the country.  This was rightfully labelled as a historical event, as it was the first time ever a robot or AI system was granted such a distinction. This instantly raises many legal questions, e.g., regarding the legal rights and obligations artificial intelligence systems can have. Or what should the criteria be for personhood for robots and artificial intelligence systems? And what about liability?

Speaking of liability: a bar exam recently included the question: “if a robot kills somebody, is it murder or product liability?” The question was inspired by an article in Slate Magazine, by Ryan Calo, which discussed Paolo Bacigalupi’s novel The Windup Girl. The novel is about an artificial girl, the Mika Model, which strives to copy human behaviour and emotions, and is designed to create its own individuality. In this particular case, the model seems to develop a mind of her own, and she ends up killing somebody who was torturing her. So Bacigalupi’s protagonist, Detective Rivera, finds himself asking a canonical legal question: when a robot kills, is it murder or product liability?

At present, the rule would still be that the manufacturer is liable. But that can change soon. AI systems can make their own decisions, and are becoming more and more autonomous What if intent can be proven? What if, as in Bacigalupi’s novel, the actions of the robot are acts of self-preservation? Can we say that the Mika Model acted in self-defence? Or, coming back to Sophia: what if she, as a Saudi Arabian citizen, causes damage? Or commits blasphemy? Who is liable, the system or its manufacturer?

At a panel discussion in the UK, a third option was suggested with regard to the liability issue. One expert compared robots and AI systems to pets, and the manufacturers to breeders. In his view, if a robot causes damage, the owner is liable, unless he can prove it was faulty, in which case the manufacturer could be held liable.

The discussion is not an academic one, as we can expect such cases to be handled by courts in the near future.  In January 2017, the European Parliament’s legal affairs committee approved a wide-ranging report that outlines a possible framework under which humans would interact with AI and robots. These items stand out in the report:

  • The report states there is a need to create a specific legal status for robots, one that designates them as “electronic persons,” which effectively gives robots certain rights, and obligations. (This effectively would create a third type of personhood, apart from natural and legal persons).
  • Fearing a robot revolution, the report also wants to create an obligation for designers of AI systems to incorporate a “kill switch” into their designs.
  • As another safety mechanism the authors of the report suggest that Isaac Asimov’s three laws of robotics should be programmed into AI systems, as well. (1. A robot may not injure a human being or, through inaction, allow a human being to come to harm. 2. A robot must obey orders given it by human beings except where such orders would conflict with the First Law. 3. A robot must protect its own existence as long as such protection does not conflict with the First or Second Law.)
  • Finally, the report also calls for the creation of a European agency for robotics and AI that would be capable of responding to new opportunities and challenges arising from technological advancements in robotics.

It won’t be too long before Robot Law becomes part of the regular legal curriculum.

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Legal IT

Our Most Read Articles December 2017

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Overall, this is the top 5 of our most read articles:

  1.  AI and contracts: https://www.lamiroy.com/blog/ai-and-contracts/
  2. Legal Chatbots: https://www.lamiroy.com/blog/legal-chatbots/
  3. The Law Practice of the Future: https://www.lamiroy.com/blog/the-law-practice-of-the-future-part-1/
  4. Blockchain and the Law: https://www.lamiroy.com/blog/blockchain-and-the-law/
  5. Considerations when moving your Law Firm to the Cloud: https://www.lamiroy.com/blog/considerations-moving-law-firm-cloud/

In the last month, these were the 10 most read articles on our blog:

  1. Legal Chatbots: https://www.lamiroy.com/blog/legal-chatbots/
  2. Online Courts: https://www.lamiroy.com/blog/online-courts/
  3. Introduction to content marketing for lawyers: https://www.lamiroy.com/blog/introduction-content-marketing-lawyers/
  4. Legal Technology and productivity: https://www.lamiroy.com/blog/legal-technology-and-productivity/
  5. AI and contracts: https://www.lamiroy.com/blog/ai-and-contracts/
  6. The New legal career: https://www.lamiroy.com/blog/the-new-legal-career/
  7. Blockchain and the law: https://www.lamiroy.com/blog/blockchain-and-the-law/
  8. Legal AI and Bias: https://www.lamiroy.com/blog/legal-ai-and-bias/
  9. The Law Practice of the future: https://www.lamiroy.com/blog/the-law-practice-of-the-future-part-1/
  10. Digital Marketing for Lawyers: https://www.lamiroy.com/blog/digital-marketing-for-lawyers/
Legal IT

An Introduction to Content Marketing for Lawyers

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In previous articles we mentioned the importance of content marketing. So, what is it? Why is it important, and is it important for lawyers, too? In this article, we explore some of the basics of content marketing for lawyers.

What is content marketing? The Content Marketing Institute defines content marketing as “a marketing technique of creating and distributing valuable, relevant and consistent content to attract and acquire a clearly defined audience – with the objective of driving profitable customer action.” The Wikipedia defines it as “a form of marketing focused on creating, publishing and distributing content for a targeted audience online. It is often used by businesses in order to attract attention and generate leads, expand their customer base, generate or increase online sales, increase brand awareness or credibility, and engage an online community of users.”

So, content marketing is about attracting customers. Traditionally, the buying process consisted of four steps: 1) a potential customer or client would become aware of a need, 2) he or she would next research what solutions are available, 3) would then consider and evaluate the options, and 4) would finally buy a specific product or service. In this traditional process, content marketing is effective for the first two stages of the process in that it helps raise awareness of solutions and educates consumers about products or services.

These days, however, legal consumers are online consumers, and in an online world, things go slightly differently. In previous articles, we pointed out that successful online marketing strategies rely on the ACT methodology: Attract, Convert, and Transform. (See our article on ‘Why Social Media Matter’ for more information). Where online marketing mainly differs from traditional marketing is that the conversion process consists of two steps: before turning a website visitor into a customer or client, that visitor must be turned into a content consumer first. And that is where the role of content marketing becomes crucial. And, yes, this applies to lawyers, too.

Unlike a once-off advertising campaign, content marketing is a long-term strategy, based on building a strong relationship with your target audience, by giving them high-quality content that is very relevant to them on a consistent basis. In doing so, you build awareness, trust, and loyalty among your readers.

Joleena Louis, e.g., is a matrimonial and family law attorney, who uses her blog to give potential clients free legal advice. She found that this benefited her in three ways: It positions her as an expert and authority in her practice area. It helps her get more clients. And it gets her loyal followers and free marketing.

There are many ways one can present potential customers with valuable content. Amongst the most popular ways are infographics, blogs, podcasts, videos, and books. Other examples include news flashes (in a blog, email or newsletter), white papers, e-books, email newsletters, case studies, podcasts, how-to guides, question and answer articles as well as live sessions, photos, FAQs, discussion groups, and testimonials.

So, how does one start? You basically have two options: you can outsource it, or you can do it yourself. If you want to do it yourself, blogging is the easiest option. (We previously published an article on starting a blog). You can start your own blog on your website, or you can use a dedicated blogging platform. You also have the option to publish articles on LinkedIn, Facebook, or Medium. And once you published your article, you can use social media campaigns to alert people that new content is available.

To attract readers, your content must meet a need or interest of your readers. In other words, it must add value for your readers. Your content also must stand out. In Forbes Magazine, Josh Steimle wrote: “Content is good if they genuinely want to read it. Content is great if they’re willing to pay to read it. If you want to see great examples of content, just look at what you’ve paid to read, watch, or listen to lately. (…) If you’re not sure how you can add value through content marketing, ask your existing customers what kind of content you can produce that would be helpful to them now, or would have been helpful to them when they were looking for your product or service. They’ll tell you.”

Finally, the content you present to your audience must not be an academic presentation. Research has shown that what works best is to use informal and engaging story telling techniques.

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Legal IT

Online Courts

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2017 has marked yet another milestone in legal history: in the last months, we have seen the arrival of the first online courts. Canada, the United Kingdom, Ireland and China all have projects with online courts that are either already operational or in the process being developed.

The first online court ever was established in British Columbia, Canada. Since 1 June 2017, a few hundred small claims disputes have been heard and resolved entirely online. Any civil small claim dispute with a value of up to $5,000 can be handled by British Columbia’s Civil Resolution Tribunal via the internet.

“It is the world’s first online dispute tribunal, that is tied with the public justice system,” says British Columbia’s Justice Minister Suzanne Anton. “If you can take these minor matters out of a court room, you free up the court room for important criminal matters and more difficult matters that courts are suited for handling.”

Another advantage is that an online court makes the justice system more accessible. “I think people are intimidated to go to court,” says Professor Kenneth Thornicroft. “Most people have access to an online system, you can go to most public library and get access and deal with the dispute on your own time, you’re not locked into the times of the courts.”

Soon afterwards, the UK also launched its first pilot project for “new digital procedure for money claims under £10,000”. The project started on 31 July 2017 and will last 28 months, i.e. until 30 November 2019.

At present the project is in a “private beta” phase, and is only available to eligible users by invitation only. From January 2018 on, the project will go to “public beta”, meaning it will be opened up to all court users with an appropriate claim. It is expected that HM Courts and Tribunal Service (HMCTS) will be providing face-to-face assistance to the half of people signed up to it who are expected to need help with filling in forms.

In a lecture, the Master of the Rolls, Sir Terence Etherton said that the “online solutions court should be seen as a template for securing now and over time in the future the critical object of greater access to justice.” He added that the court would operate in a problem-solving way. “It will be problem-solving in the sense that the Online Court through stage 1 and 2 of the process will help the parties find the appropriate solution to their dispute.”

In September 2017, Ireland’s Supreme Court also started moving a significant portion of its work online, as part of a push to bring more of the courts system onto the internet. The plan is that all applications for permission to appeal to the Supreme Court, including the filing of documents and the delivery of decisions, will take place online. It is hoped this will be the first step in bringing huge amounts of the appeal process, at all levels, out of the courtrooms and onto the internet. Chief Justice Frank Clarke said it will take about a year before the first online case is considered.

Another online court that is already operational can be found in Hangzhou, China. It handled its first case on 18 August 2017. The court operates with a judge and a jury. It hears cases regarding online shopping, microfinance loans, copyright infringement, product liability and related issues. Cases can be filed entirely electronically in a matter of minutes. When the case is handled, it is live streamed, and parties can present their arguments via video conferencing. The court uses technologies like face recognition, Speech Recognition Systems, and artificial intelligence to draft judgments.

Most experts agree that the arrival of online courts can be good thing in as far as it 1) can simplify access to Justice, and 2) can speed up procedures.  As mentioned above, the organizers of the UK pilot project anticipate that half of the people using the system will still need assistance while filling out the online forms. This, however, is an area where intelligent bots have already proven that they can play a useful role, too. So, we can expect even more of the procedure to be automated.

 

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Legal IT

Legal Technology and Productivity

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A recently published report found that lawyers only spend 29% of their time on billable tasks. A staggering 48% of their time is spent on office administration, generating and sending bills, configuring technology, and collections. The remaining time is dedicated to business development.

Given these statistics, it is not surprising that another survey found that lawyers expect that efficiency will grow in importance and focus over the next two years. The best ways to increase efficiency are expected to be found in optimising technology tools and solutions, followed by talent management, and process and workflow improvement. Outsourcing legal work is considered the least promising option.

It seems obvious that legal technology can help increase efficiency and productivity, but its implementation must be done properly. It’s not because you start using technology, that you will automatically become more productive. To fully reap the benefits of legal technology, it must be implemented and used in a disciplined and well-planned way.

Optimizing legal technology goes hand in hand with process and workflow improvement, which in itself also contributes to optimizing efficiency. Analysing how you work and seeing how the process and workflow can be improved needs to be done on a regular basis.

One of the areas were legal technology has proven its value is Legal Case Management Software. Packages typically include modules or apps for contact management, case management, document management and assembly, billing, as well as calendaring. When these are properly organized, they help you save time.

In this context, it is useful to point out that moving to a cloud solution for Legal Case Management software can save additional time and resources. Cloud solution providers typically maximize their Internet security, use reliable physical security (biometric scans etc.), and have immediate disaster recovery plans. Using a cloud solution makes your IT budgeting more predictable, and eliminates IT hassle and distractions. Add to that, that cloud solutions offer inherent Remote Access, making your information accessible from anywhere, at any time. Finally, by now cloud solutions are often cheaper as you have to invest less in hardware infrastructure, additional software licenses (security, etc.), as well as in IT staff.

Analysing processes and the workflow for specific types of cases revealed that some of them lend themselves exceptionally well for automation. This is the case, e.g., for debt recovery / collections, e.g., where the vast majority of the process can be automated.

There are additional tools available that typically work as add-ons to Legal Case Management Software, which can help increase productivity. Take, e.g., dictation software: for the average user, dictating a text is three times faster than typing it. Using voice controlled apps, as well as working with two monitors also help you work faster. (Think, e.g., of writing a brief, where you have your word processor on one monitor, and the relevant information on the other).

Thus far, we mainly paid attention to Legal Case Management Software, which only offers part of the available solutions. A law firm is a firm, and has to be managed as such, and that is where Law Firm Management Software comes in. Typically, this consists of an accounting application, as well as different advanced reporting options that allow you, e.g., to get overviews of how much is spent on what, who owes you, who in the firm is most productive, etc. Some packages cater specifically for larger law firms, and offer HRM solutions as well.

The progress in the field of artificial intelligence has led to significant advances in software solutions for Legal Research, eDiscovery, and Knowledge Management. These, too, can make your more productive.

Talking about artificial intelligence: at present, up to 23 % of the tasks that a lawyer routinely performs can already be automated. We can expect an increase in the usage of intelligent bots that can take over those routinely performed tasks, which will offer lawyers the opportunity to focus more on billable work.

Finally, using a smart phone or tablet can also increase your productivity. In a previous article, we talked about different apps for mobile devices that allow you to work when you’re not at the office. When, e.g., you are waiting in a court room, or travelling, you can spend that time doing some work on your portable device, where that time would otherwise just be wasted.

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Legal IT

Legal AI and Bias

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Justice is blind, but legal AI may be biased.

Like many advanced technologies, artificial intelligence (AI) comes with its advantages and disadvantages. Some of the potentially negative aspects of AI regularly make headlines. There is a fear that humans could be replaced by AI, and that AI might take our jobs. (As pointed out in a previous article, lawyers are less at risk of such a scenario: AI would perform certain tasks, but not take jobs, as only 23% of the work lawyers do can be automated at present). Others, like Elon Musk, predict doomsday scenarios if we start using AI in weapons or warfare. And there could indeed be a problem there: what if armed robotic soldiers are hacked, or have bad code and go rogue? Some predict that superintelligence (where AI systems become vastly more intelligent than human beings) and the singularity (i.e. the moment when AI systems become self-aware) are inevitable. The combination of both would lead to humans being the inferior species, and possibly being wiped out.

John Giannandrea, who leads AI at Google, does not believe these are the real problems with AI. He sees another problem, and it happens to be one that is very relevant to lawyers. He is worried about intelligent systems learning human prejudices. “The real safety question, if you want to call it that, is that if we give these systems biased data, they will be biased,” Giannandrea said.

The case that comes to mind is COMPAS, which is risk assessment software that is used to predict the likelihood of somebody being repeat offender. It is often used in criminal cases in the US by judges and parole boards. ProPublica is a Pulitzer Prize winning non-profit news organization. It decided to analyse how correct COMPAS was in its predictions. They discovered that COMPAS’ algorithms correctly predicted recidivism for black and white defendants at roughly the same rate. But when the algorithms were wrong, they were wrong in different ways for each race. African American defendants were almost twice as likely to be labelled a higher risk where they did not actually re-offend. And for Caucasian defendants the opposite mistake was made: they were more likely to be labelled lower risk by the software, while in reality they did re-offend. In other words, ProPublica discovered a double bias in COMPAS, one in favour of white defendants, and one against black defendants. (Note that COMPAS disputes those findings and argues the data were misinterpreted).

The problem of bias in AI is real. AI is being used in more and more industries, like housing, education, employment, medicine and law. Some experts are warning that algorithmic bias is already pervasive in many industries, and that almost no one is making an effort to identify or correct it. “It’s important that we be transparent about the training data that we are using, and are looking for hidden biases in it, otherwise we are building biased systems,” Giannandrea added.

Giannandrea correctly points out that the underlying problem is a problem of lack of transparency in the algorithms that are being used. “Many of the most powerful emerging machine-learning techniques are so complex and opaque in their workings that they defy careful examination.”

Apart of all the ethical implications, the fact that it is unclear how the algorithms come to a specific conclusion could have legal implications. The U.S. Supreme Court might soon take up the case of a Wisconsin convict who claims his right to due process was violated when the judge who sentenced him consulted COMPAS. The argument used by the defence is that the workings of the system were opaque to the defendant, making it impossible to know for what arguments a defence had to be built.

To address these problems, a new institute, the AI Now Institute (ainowinstitute.org) was founded. It produces interdisciplinary research on the social implications of artificial intelligence and acts as a hub for the emerging field focused on these issues. Their main mission consists of “Researching the social implications of artificial intelligence now to ensure a more equitable future.” They want to make sure that AI systems are sensitive and responsive to the complex social domains in which they are applied. To that end, we will need to develop new ways to measure, audit, analyse, and improve them.

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Legal IT

The New Legal Career

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Mark Cohen recently published an interesting article in Forbes Magazine on The New Legal Career. He observed how legal careers have evolved in three significant ways: 1. legal practice is now the delivery of legal services; 2. technology brings lawyers back to basics; and 3. legal delivery presents great opportunities. It’s worthwhile exploring these evolutions further.

Legal practice is now the delivery of legal (and other) services

For centuries, consulting a lawyer was equal to consulting an expert, who could give advice, and perform specific tasks, including legal representation, in his or her field of expertise. In the last few decennia, all of that has changed. Law practices are more and more being run like businesses, and as a result focus more on the delivery of legal services. And their activities are no longer limited to just legal services. As Mark Cohen points out: “legal delivery has been transformed into a three-legged stool supported by legal, technological, and process expertise.” We are dealing with “a structural and process change that involves the interaction of professional expertise, technology and process to leverage and scale the delivery of professional services.”

A while ago Deloitte published the results of its survey on “Future Trends for Legal Services.” One of its key findings was that the market for legal services is moving and growing. Another one was that the expectations that customers had of their legal services providers were evolving and expanding, too. The report concluded that there was a need for a new type of legal service provider.

The same sentiment was echoed in an article, published in May 2017, in Law.com, on “The 12 Core Competencies that Define the Future of Legal Operations”. The author concluded that, these days, the consumers of legal services expect law firms to also be proficient at:

  • Strategic planning;
  • Financial management;
  • Vendor management;
  • Data analytics;
  • Technology support;
  • Alternative support models;
  • Knowledge management;
  • Growth and development;
  • Communications;
  • Global data governance/records management;
  • Litigation support; and
  • Cross-functional alignment.

This implies that the traditional advice that lawyers should develop a singular deep expertise (i.e. an I-shaped profile) is outdated. Instead, lawyers should look to combine a legal expertise with a broader skill set (i.e. a T-shaped profile), which includes effective interpersonal and negotiation skills, business understanding and judgment, and empathizing with and understanding client’s psychological needs.

The Role of Technology

Lawyers have an unprecedented access to new technologies, like law firm management software, eDiscovery, Artificial Intelligence, and others, which are available to assist them in their profession. These technologies enable, i.a., lower cost delivery, budgeting, fee analysis, rapid communication, and understanding companies and industries.

In the last year, there has also been a dramatic proliferation in intelligent legal chatbots, and robot lawyers, which are offering legal services. While these may seem to be competing with law firms, it is worth pointing out that this type of automation takes over certain tasks, not jobs. With the currently available technology, only 23 percent of a lawyer’s tasks can be automated.

The result of these technological evolutions is that they allow lawyers to focus on more essential tasks, like engaging with clients, exercising professional judgment, providing counsel (not just in legal matters but more holistically), engaging in client representation before tribunals, or negotiating key commercial transactions.

The advanced use of technology has another beneficial effect: by increasing efficiency and productivity, Legal Tech helps make the law more affordable, and therefore more accessible.

Legal delivery presents great opportunities

Several of the articles mentioned above showed how law firms are confronted with a new demand for both legal and non-legal services.

Mark Cohen: “The new legal career presents a wealth of opportunity for those that combine practice excellence, ‘contemporarily relevant’ skills (process and project management, marketing, business basics, etc.), and people skills. (…) A proliferation of delivery models, products, markets, and opportunities will result in the creation of new jobs, new collaborative opportunities, and a global marketplace.”

The changing market offers other opportunities, as well. In the last 5 years, e.g., there has been a 484% rise in Legal Tech patents. Worldwide, 579 patents relating to new legal services technology were filed worldwide in 2016, up from just 99 patents in 2012. Many of these were filed by lawyers-turned-entrepreneurs. An interesting article in Entrepeneur magazine, on 14 June 2017, mentions 10 such examples of lawyers who are creating a revolution in Legal Tech:

  1. Haley Altman created Doxly, an automated document and transaction management platform
  2. Noory Bechor founded LawGeex, which specializes in AI contract review
  3. Ned Gannon created eBrevia, which provides contract due diligence and lease abstraction
  4. Michael Mills started Neota Logic Inc, an AI-driven, no-code platform for intelligent automation of expertise, documents and processes
  5. Chrissie Lightfoot founded Robot Lawyer LISA, a Legal Intelligence Support Assistant (AI)
  6. Nehal Madhani started Alt Lega to manage global IP filings
  7. Joseph R. Tiano created Legal Decoder, which provides analytic tools and data to manage costs of outside counsel
  8. Michael Sander founded Docket Alarm, which provides legal search, analytics and litigations alerts for the United States court system
  9. Andrew Arruda co-founded, Ross Intelligence, an AI legal assistant and research tool, leveraging IBM Watson
  10. Noah Waisberg started Kira Systems, which helps enterprises identify, extract and analyze business information from unstructured contracts

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Legal IT

The Mobile Lawyer

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The combination of cloud technologies and mobile devices have profoundly changed the way lawyers work. Over the years, lawyers have started using their mobile devices more and more for professional purposes, while they’re not at the office. Law firms can now be accessible to lawyers and their clients from anywhere, 24/7. While this has led to the emergence of virtual offices, those are still a minority. Instead, what we have witnessed is the rise of the mobile law firms. Unlike virtual offices, mobile law firms still have physical offices but you don’t have to physically be in them to be able to work. Using cloud technologies, they offer the convenience and flexibility to work securely from anywhere and at any time. In 2017, the vast majority of lawyers are telecommuting, or mobile lawyers.

Let us have a look at some statistics from the latest survey published by the American Bar Association:

  • 94% of lawyers reported “regularly or occasionally using a mobile device for law- related tasks at home,” while 91% reported they also regularly use their mobile devices while in transit.
  • 33% of lawyers telecommute at least once a week. Solo and small firm lawyers were the most likely to do so, at 39% and 35% respectively.
  • Surprisingly, mobile devices are the most popular devices used at the office: 70% reported using smartphones, 66% use desktop computers, 51% use laptop computers, and 25% use tablets. (61% of solo lawyers mainly use laptops at work).
  • 40% of lawyers are using specifically legal apps on their smartphones, with legal research apps being the most popular. (Note that these apps exclude the apps that are part of their legal practice management software).
  • 40% also have downloaded general business apps to their smartphones, with document storage apps being the most popular.

A survey by Legaltech News revealed that lawyers mainly use mobile devices for increased productivity and increased flexibility.

The main tasks they perform online are practice management tasks. In 2017, most providers of law firm management software offer solutions that use cloud technologies, allowing lawyers to work from anywhere, 24/7. They use these mobile tools mainly to access their mail, their calendars, their contacts, and their case files. Other popular practice management functions include time tracking, billing, and expense tracking.

Mobile lawyers also use mobile apps for legal research, to store and share documents in the cloud, to work with PDFs, to scan documents and handwritten notes, to dictate and take notes, and to organize and present evidence. Many lawyers also have a legal dictionary on their smartphones.

 

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Legal IT

Blockchain and the Law

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In our previous article, we explained what Blockchain is. In this follow-up article, we look at how it is pertinent for lawyers. In short, it is relevant in two ways: on the one hand, there are the legal aspects of using Blockchain: Blockchain is changing the way things are done in several industries, and lawyers active in those fields should be prepared for that. On the other hand, there already are new legal applications, like e.g. smart contracts, that are built on Blockchain. We can expect many more of those to come.

Legal aspects of Blockchain

A lot of the work lawyers do, has to do with helping to facilitate the secure transfers of assets. Blockchain was developed for exactly that purpose: it creates real-time digital records that verify and confirm that the transactions, detailing such transfers of assets, did happen at a certain time, and in a specific order. In other words, Blockchain offers proof that at present is as good as irrefutable.

In his book Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business and the World, Dan Tapscott states: “anything of value – money, but also titles, deeds, identities, even votes – can be moved, stored and managed securely and privately. Trust is established through mass collaboration and clever code rather than by powerful intermediaries like governments and banks.”

Blockchain has already started disrupting markets, and is expected to affect many more industries. In fact, it has the potential to affect most of them. The most obvious example is the world of finance, where Bitcoin and Blockchain started. Thanks to Blockchain, virtual currencies are a reliable alternative to traditional currencies. Blockchain is also being used in post trade settlements (Securities). Intellectual property, too, is a prime candidate for a Blockchain overhaul: applications are already being developed with regard to digital rights management which will affect music, eBooks, and other online content you purchase or rent. For trademarks, too, Blockchain technology can prove that a certain trademark was registered by a specific party at a specific date. Applications that rely on the Blockchain technology are being developed for real estate (transfer of title deeds), health care (patient data), insurance, energy (peer to peer market for energy), digital voting, gambling, etc.

If you, as a lawyer, represent clients in Blockchain-affected industries, you’ll need to get acquainted with how Blockchain affects those industries. Doing it early offers a competitive edge, as you become a greater resource as trusted adviser to your clients.

As Blockchain is changing the way business is being done, we can also expect the law to start regulating the use of Blockchain. A recent example of this was in the US, where the SEC made a ruling on 25 July 2017 in a case of an ICO, i.e. an Initial Coin Offering:  instead of launching an IPO (Initial Public Offering), a company wished to raise capital using a cryptocurrency instead of US dollars. The SEC ruled that “federal securities laws apply to those who offer and sell securities in the United States, regardless whether the issuing entity is a traditional company or a decentralized autonomous organization, regardless whether those securities are purchased using U.S. dollars or virtual currencies, and regardless whether they are distributed in certificated form or through distributed ledger technology.”

Legal applications using Blockchain

One of the areas where Blockchain is expected to make great strides is ‘smart contracts.’ OpenLaw, e.g., is a joint US and Swiss project that is working on a smart contract platform that will allow lawyers to make legally binding, and self-executing agreements. The platform uses Ethereum, which is an alternative to Bitcoin but is also built on Blockchain. In a first step, lawyers can choose one of many contract templates that can then be further customized online. If the parties for whom the contract is made agree, they can confirm and activate the contract on the Ethereum Blockchain, and then have the contract self-execute its key agreements via the same Blockchain.

Smart contracts are expected to start pitching up everywhere. For this reason, on 15 August 2017, a new legal Blockchain consortium, called the Global Legal Blockchain Consortium (GLBC), was launched. An array of law firms and leading legal tech companies are involved, and their goal is to discuss and consider the issues around the use of Blockchain and smart contracts.

All of this creates new opportunities for lawyers: your law firm can become a Smart Contract Firm, or a Smart Contract Mediator, and/or a Smart Title Company. Individual lawyers can become ‘Distributed Ledger Lawyers’ who are Blockchain law and policy advisors.

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Legal IT

An introduction to blockchain

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You probably have heard about Bitcoin, and you may have heard about the underlying technology, Blockchain, too. But, if your clients asked you what Bitcoin and Blockchain are, could you explain it to them? In this first of two articles, we’ll explore what Blockchain is. In a follow-up article, we will look what its relevance is for lawyers.

Bitcoin is probably the best-known cryptocurrency. A cryptocurrency is a digital or virtual currency that uses encryption techniques to a) regulate the generation of units of currency, and b) to verify the transfer of funds. What is important about these virtual currencies is that, unlike regular currencies, they operate independently of any government or central bank. Blockchain is the technology that was developed to make this possible. And the technology has the potential to revolutionise the way we do business.  Some experts even predict that Blockchain will replace the Internet for doing business online. Add to that, that Blockchain technology is not just useful for virtual currencies. Many other uses are possible, including legal ones like self-executing smart contracts.

To understand what Blockchain is, it is necessary to understand why it was created in the first place, and that is to solve the problem of “double spend”. If I go to a bookstore and buy a printed book, the book is physically transferred from the bookstore to me. The bookstore no longer has that copy, I have. And it’s possible for the bookstore to run out of copies. But if I buy an eBook online, things are different. What I get is a copy, and the online bookstore I got it from can still sell an unlimited amount of copies. Digital products can be copied, infinitely. And that creates a special problem for digital currencies. What prevents me from spending one amount of 20 € three times, online? In this example, the bank does: if I go to an online store and spend 20 €, the bank will take that amount off my account and hand it over, often through intermediaries like credit card companies, to the store owner. But the whole purpose of Bitcoin was to be able to operate without any central bank or government. So, how can we make sure one Bitcoin isn’t spent more than once by the same owner? Blockchain is the technology that was invented to solve that problem. The way it is done, is by creating a secure register or ledger that keeps track of all transactions, and of which copies are distributed over a peer-to-peer network.

Blockchain can be described as a distributed ledger technology (DLT) that consists of a distributed data structure and algorithms, which create a decentralized ledger or registry of transactions, which is both permanent / immutable, and secure.

A distributed ledger technology

Instead of keeping one central register or ledger, Blockchain consists of a decentralized network of volunteer-run nodes, each of which keep an identical copy of the register. (The idea was that, to work with bitcoins, you need a bitcoin wallet, and every owner of a wallet should have a copy of the register). Each transaction that is registered gets a timestamp, and the network uses algorithms that ‘vote’ on the order in which transactions occur, and ensures that each transaction is unique.

Blockchain is secure and permanent / immutable

“Once a majority of nodes reaches consensus that all transactions in the recent past are unique (that is, not double spent), they are cryptographically sealed into a block. Each new block is linked to previously sealed blocks to create a chain of accepted history, thereby preserving a verified record of every spend.” (ZDNet). This ‘cryptographic sealing’ uses hash functions and digital signatures that work in one way only. Let’s take an example: on 4 August 2017, at 8:15:0000 AM UCT, wallet X transfers 1 bitcoin to wallet Y. Just as is the case with an online money transfer, this information is structured in a specific way. To that set of data, a one-way encryption is applied, that is irreversible. The result of the encryption is a unique string, let’s say, fictitiously, W(#MD31NAP^FV12. It is impossible to read from that string who paid what to whom. But if X claims he paid Y 1 bitcoin on 4 August 2017, at 8:15:0000 AM UCT, to Y, then the ‘key’ will have to be W(#MD31NAP^FV12. So, if that key is found in the ledger matching that timestamp, it is irrefutable proof that indeed that transaction occurred in that way. If X claims he paid 2 bitcoins, then the key would be different.

Blockchain uses ‘consensus algorithms’ to make sure each transaction is unique, which is needed in case of conflicting data. Because of the algorithms it uses, Blockchain comes as close to being unhackable as currently is possible. And while there have been instances where Bitcoin was hacked, Blockchain itself, i.e. the underlying technology, has not. Still, the consensus mechanism has one inherent risk, which has been called the 51%-problem. The nodes in the network vote by majority. If a hacker would succeed in taking over 51% of the nodes in the network, then he could start manipulating the votes to change records, i.e. replace them by modified ones. It would still be a hard thing to accomplish, extra security mechanisms have been built in. Which leads us to the next item.

Blockchain is permanent and immutable: each block of data in the Blockchain is time-stamped, and can only be added to the chain after the time stamp is applied and verified by the distributed computers across the chain. The practical effect of this is that a block of data can never be changed retrospectively, as all subsequent records would have to be modified as well.

Blockchain has many advantages: its decentralization makes it independent and secure. Because the whole process is managed by algorithms and no human interventions are necessary, the transaction fees are lower, and transactions themselves can be conducted more quickly.

In short, Blockchain technology has the potential to disrupt several markets, and lawyers will have to be prepared for that. There already are legal applications for the technology, as well. We will have a look at all of that, in a follow-up article.

 

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