Legal IT

Using AI for legal research

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How safe is using AI for legal research? On the one hand, AI is making quick progress and keeps getting better. The arrival of a new generation of AI agents will only speed up that process. But on the other hand, we keep getting headlines where law firms are being fined for using AI that referred to non-existing legislation and jurisprudence. In this article, we look at a) how AI is reshaping legal research, b) at the risks and accuracy concerns of using AI in legal research, c) at possible mitigation strategies. Finally, d) we look at using AI for legal research on non-US law.

How is AI reshaping legal research – benefits

AI has been having a significant impact on legal research, and generative AI has certainly sped up that process. Many law firms are using generative AI to assist them with their legal research. It is easy and convenient, as they can ask questions in natural language, rather than having to study some query language. And now that most generative AIs have started offering more advanced research agents that can provide sources, AI has become even more attractive. So, AI is significantly reshaping legal research in several impactful ways. Most of those are beneficial.

One of the most noticeable changes is the enhanced speed and efficiency it brings. AI tools are capable of sifting through vast volumes of legal data in seconds, identifying relevant information much faster than a human could. This efficiency saves lawyers considerable time and resources.

Beyond speed, AI can also improve the accuracy and depth of insight in legal research. By analysing large datasets, AI can detect patterns and extract insights that might go unnoticed by human researchers. It can also flag potential errors or inconsistencies in legal documents, helping to ensure the accuracy and reliability of the information used. But caution is needed, as we will discuss below.

Another major advantage is the broader access to legal information that AI provides. These tools can draw from a wide array of sources, including statutes, case law, legal journals, and specialized databases. This comprehensive reach allows lawyers to develop a fuller understanding of the legal issues they face.

Natural Language Processing (NLP) and machine learning further enhance AI’s capabilities in the legal field. NLP enables AI to comprehend the meaning within legal texts. This allows it to extract key information and identify relevant precedents. Meanwhile, machine learning algorithms can analyse historical case data to predict outcomes. This gives lawyers valuable insights into the strengths and weaknesses of their cases.

AI is also increasingly being integrated into established legal research platforms. This integration improves the efficiency and comprehensiveness of legal research.

However, as AI becomes more embedded in legal practice, responsible usage is essential. Ensuring accuracy, upholding ethical standards, and maintaining regulatory compliance are critical. Lawyers must treat AI as a supportive tool rather than a standalone solution, and it remains vital to verify any information generated by AI systems. Because there are still considerable risks involved in using AI for legal research.

Risks and accuracy concerns of using AI in legal research

In a recent case in California, a judge found that nine out of the twenty-seven quoted sources were non-existent. The two law firms involved (one had delegated research to the other) were fined 31 000 USD. If you follow the news on legal AI, it is a common problem. Apart from that, AI still often is biased, too. Let’s have a closer look at both issues.

Accuracy concerns

AI systems can produce inaccurate, incomplete, or misleading legal information. This is particularly the case when dealing with complex cases, with nuanced legal concepts, or when legislation or jurisprudence has changed recently.

Even worse are AI “Hallucinations”. As witnessed in the example above, AI can generate plausible but factually incorrect information. It is therefore crucial to verify all AI-generated output against credible sources. The Californian example above highlights how this is a serious risk, as one in three sources that were quoted did not exist.

The example also illustrates the risk of reliance on AI without oversight. You cannot assume the AI knows what it’s doing. Over-reliance on AI without thorough human review can lead to errors that compromise case outcomes and erode client trust.

Bias and ethical concerns

In previous articles, we pointed out that AI inherits and reflects all the biases of the data pool that it was trained upon. This can lead to unfair or discriminatory legal outcomes. So, bias in AI algorithms is a first concern.

Many AI systems cannot explain how they reached their conclusions, or they fail to mention sources. Lack of transparency and accountability, therefore, is a second issue. The algorithms used by AI systems can be opaque, making it difficult to understand how decisions are made and hold the AI system accountable.

Clients may not fully understand the role of AI in their legal representation. This can easily undermine their trust. Clear communication is essential.

As with any online tool lawyers use that share client information, there are data privacy and confidentiality concerns.

Finally, there is the aspect of professional responsibility. Lawyers have a duty to supervise AI-generated work, ensuring it is accurate and ethical. They also must communicate with clients about the use of AI tools.

Mitigation strategies

It is possible to counteract these risks by implementing some mitigation strategies.

  • Always verify AI-generated results against credible legal databases and primary sources.
  • Actively oversee and review AI-generated work to ensure accuracy, as well as ethical compliance.
  • Be transparent with clients about the use of AI tools.
  • Implement robust data security measures to protect client information and comply with privacy regulations.
  • Adhere to ethical guidelines and professional responsibilities when using AI in legal practice.

What about using AI for legal research on non-US law?

Most of the advances in generative AI are being made in the US, and the EU is catching up. How well do the generative AI platforms perform when it comes to non-US law? And are they available in other languages?

Let’s start with the language question: all the major generative AI engines are available in Dutch and French.

Then, what about non-US law? We did some test with European Law, more specifically about GDPR, and overall, these tests went well. We did not test on recent legislation or jurisprudence.

We also briefly did some tests with Belgian law. We thought art. 1382 of the Civil Code would be an interesting test case, given that it was recently replaced by a new book 6 on extra-contractual liability. We ran the test on ChatGPT, CoPilot, Gemini, Claude, Perplexity, Grok, and you.com. Only four out of seven pointed out that art. 1382 CC had been replaced. They were ChatGPT, CoPilot, Gemini and Grok. The other three, Claude, Perplexity, and You.Com, all did not mention book 6 on extracontractual liability at all.

So, while caution and supervision are already needed for US and EU law, it is even more the case for the law of EU member states, where several generative AI platforms were not (yet) aware of recent legislation.

Conclusion

Using AI for legal research holds promise, but supervision is still very much needed. The above examples show how they can still hallucinate, and that they may not be aware of recent changes in legislation or jurisprudence.

 

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Legal IT

An introduction to online dispute resolution

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In a recent article, we discussed online courts and how the pandemic was a catalyst for their adoption. Similarly, the pandemic also was a catalyst for online dispute resolution (ODR) systems. So, that is what we are having a look at in this article. We answer the following questions: What is online dispute resolution? What are the methods of online dispute resolution? What are the benefits? What are the limitations and risks?

What is online dispute resolution?

Wikipedia explains it well: “Online dispute resolution (ODR) is a form of dispute resolution which uses technology to facilitate the resolution of disputes between parties. It primarily involves negotiation, mediation or arbitration, or a combination of all three. In this respect it is often seen as being the online equivalent of alternative dispute resolution (ADR). However, ODR can also augment these traditional means of resolving disputes by applying innovative techniques and online technologies to the process.”

So, online dispute resolution systems are digital platforms that facilitate the resolution of disputes without requiring parties to meet in person, and without lawyers. They started appearing as soon as online transactions did. Many online retailers preferred to have a system to settle disputes online, rather than having to go through lawyers and the courts. So, at first, online dispute resolution was to settle online disputes, and mainly with online retailers. But because it proved to be an effective way to solve disputes, it soon started being used for other disputes as well. And its popularity increased during the pandemic. In recent years, ODR systems have evolved significantly and represent a major shift in how conflicts can be resolved.

What are the methods of online dispute resolution?

Initially, online dispute resolution happened almost entirely outside of the courts, and by consensus. By now, we mainly have two categories of online dispute resolutions. They are consensual and adjudicative solutions.

Consensual methods

Consensual ODR methods focus on mutual agreement between the parties.

Online negotiation is one of the simplest forms. It can be entirely automated, with software platforms facilitating the exchange of offers. It can also be assisted, involving digital communication tools such as email, chat, or video conferencing. This method is especially common for minor disputes, like those arising from online marketplaces.

Online mediation involves a neutral third party (the mediator) who assists the disputing parties in reaching a voluntary settlement. The mediator does not impose a solution but helps clarify issues, encourage dialogue, and explore possible compromises. Mediation is well-suited for cases where the parties have an interest in maintaining a relationship, and it benefits from the confidentiality and flexibility that online platforms can offer.

Hybrid systems are a combination of negotiation and mediation, using structured phases and automation to encourage resolution. For example, platforms like eBay and PayPal use hybrid ODR processes that automatically prompt parties to negotiate, and if that fails, escalate the case to human mediators.

Adjudicative methods

On the adjudicative side, ODR includes mechanisms where a decision is made by a third party or authority, and this decision is binding.

Online arbitration replicates traditional arbitration processes, with a neutral arbitrator reviewing submissions and rendering a binding decision. This method is commonly used for commercial or contractual disputes and may involve document-only reviews or virtual hearings.

Another form of adjudicative ODR is platform-based adjudication. These systems are often used by e-commerce websites. First, users submit their evidence, such as communication logs or transaction record. Then, a decision is made by a platform official or through an automated system. This approach is efficient but can sometimes lack transparency or the option for appeal.

Finally, some jurisdictions are now developing online courts that offer digital litigation options. These systems allow parties to file claims, submit evidence, and receive rulings entirely online. The UK’s online civil money claims court is one example of a government-led effort to modernize access to justice.

What are the benefits?

Online Dispute Resolution (ODR) provides several key advantages over traditional conflict resolution methods.

A first benefit that already was mentioned before it the efficiency of ODR. Digital ODR platforms allow to streamline the processes. They do so by automating scheduling, communication, and document submission, which significantly reduces the conflict resolution time compared to court proceedings.

Another benefit is accessibility. Disputes are resolved online, which mean parties do not have to travel to meet in person to resolve their disputes. This is especially beneficial for cross-border commerce.

ODR systems also are cost-effective. Online dispute resolution reduces expenses such as travel, venue hire, legal representation, and court fees. Online dispute resolution makes dispute resolution more affordable, particularly for low-value disputes.

Online dispute resolution offers a higher degree of convenience. Parties can engage in resolution remotely, at their preferred time, using their own devices. It makes it ideal for small businesses and individuals with busy schedules.

ODR is less adversarial. Virtual mediation or negotiation tend to create a more constructive atmosphere. The fact that parties are trying to avoid going to court helps them express themselves more openly and makes it easier to find common ground.

The final benefits of ODR are transparency and accountability. The entire dispute resolution process is recorded in digital records, which provide an auditable trail of communications. This ensures fairness, prevents misunderstandings, and aids enforcement or appeals.

What are the limitations and risks?

While online dispute resolution offers many benefits, it also has several limitations that may affect its fairness and effectiveness.

For starters, there is an aspect of digital inequality. Not all users have equal internet access, suitable devices, or digital literacy, creating imbalances between parties, especially in cross-border disputes.

We also must take procedural unfairness into account. Some platforms use opaque processes or automated decisions without clear explanations or appeal options. This can easily make users feel like the system lacks empathy.

As with all online services, there are always privacy and security concerns. Sensitive data is collected and exchanged, and inadequate cybersecurity measures can lead to data breaches or identity theft.

Another possible problem with ODR are the enforceability issues. While online arbitration can be binding, negotiation or mediation outcomes may require traditional legal enforcement, reducing ODR’s time and cost benefits.

Experience has also taught that ODR is unsuitable for complex disputes. Emotionally sensitive or legally intricate cases may need human judgment and face-to-face interaction that ODR cannot fully replicate.

When using an ODR platform, there also is a risk of platform bias. If the platform is controlled by one disputing party, neutrality and fairness may be compromised, whether intentionally or through algorithmic influence.

Finally, there also is the issue of lack of regulation. Many ODR systems operate in legal grey areas. This makes it difficult to ensure consistent quality, transparency, and accountability.

Conclusion

Online dispute resolution presents clear advantages in terms of accessibility, efficiency, and affordability. Yet, at the same time, it is not without significant risks. There are many issues such as digital inequality, procedural opacity, privacy concerns, enforcement difficulties, limited suitability for complex cases, potential platform bias, and regulatory uncertainty. All these risk and limitations point to the need for a cautious implementation. Ensuring that ODR complements rather than replaces traditional legal mechanisms – especially in sensitive or high-stakes disputes – is essential for maintaining trust and fairness in its process.

PS: the EU had its own ODR platform, but that has been discontinued as of 20 March 2025, in favour of a more encompassing alternative dispute resolution approach.

 

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Legal IT

Unbundled Legal Services

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Unbundled legal services are gaining in popularity. In this article, we explore the following questions: What are unbundled legal services? What are the benefits? What are the risks of using unbundling legal services?

What are unbundled legal services?

So, what are we talking about? Unbundled legal services (also called “limited scope representation” or “à la carte legal services”) is a legal service delivery model where attorneys provide specific, clearly defined services for discrete portions of a client’s legal matter rather than handling the entire case from start to finish. In traditional full-service representation, an attorney handles everything related to a case. With unbundled services, clients can pick and choose which specific tasks they want professional help with, while handling other aspects themselves.

The concept was introduced by Forrest S. Mosten, in his book, Unbundling legal services: a guide to delivering legal services a la carte, which was published in 2000. The practice of unbundling legal services first took off in family law. Since then, the use of unbundled legal services has been increasing. This growth is driven by a rising demand for affordable legal solutions, a growing number of self-represented litigants, and clients’ desire for more control over their legal affairs. Lawyers have responded with greater acceptance and support for this model, recognizing its potential to bridge the justice gap.

By now, unbundled legal services have become quite common, and they are expected to become even more so. In a way, one could also label all the services offered by Alternative Legal Service Providers (ALSPs) unbundled legal services. They do exactly the same thing: they focus on – and specialize in – one aspect of the legal process. So, from that perspective, it’s not just the clients but also the lawyers who benefit from unbundled legal services, where they can outsource specific tasks, either to ALSPs or other lawyers.

These days, we can find plenty of examples of unbundled legal services:

  • Legal coaching (giving advice on how clients can represent themselves)
  • Transactional guidance
  • Negotiation advice for a specific matter
  • Limited litigation and court appearances, like a court appearance for a specific hearing only
  • Document preparation or review, and document drafting (think of contracts, wills, etc.)
  • Agreement review
  • Case evaluation
  • Settlement evaluation
  • Legal research on a particular issue
  • Consultation on strategy or specific legal questions

What are the benefits?

The main purpose of unbundled legal services is to save costs for the client. So, for clients, this model offers a cost-effective solution. It makes legal assistance more accessible to those who might not afford comprehensive representation. As such, unbundled legal services also improve access to justice. And they provide greater control and involvement in the clients’ legal matters, as clients can choose which aspects to handle independently and which to delegate to an attorney.

For attorneys, offering unbundled services can expand their client base, enhance job satisfaction by tailoring services to specific client needs, and improve financial outcomes through upfront payments.

For both parties, unbundled legal services offer greater flexibility.

What are the risks of using unbundling legal services?

While unbundled legal services increase access to justice and affordability, they come with several notable risks for both attorneys and their clients.

For attorneys, there are significant potential malpractice concerns: if scope limitations aren’t clearly documented, this may result in a failure of a client to comply with their responsibilities, either through inability or a lack of understanding of the expectation. Many lawyers also struggle with maintaining appropriate boundaries when clients inevitably want assistance beyond the agreed scope. There’s an additional challenge of providing competent representation with only limited involvement in a case. Attorneys maintain an ethical duty too to verify that clients are competent to handle portions of their own case. Add to that that possible negative outcomes could reflect poorly on the attorney, even when those outcomes stem from the client’s handling of the case.

For clients, there’s often a misunderstanding about the limited nature of representation. Many clients struggle with inadequate handling of case aspects outside the attorney’s scope and may miss critical deadlines or procedural requirements. Complex legal matters can be difficult to navigate without continuous guidance, potentially leading to worse outcomes than with full representation.

Several mitigation strategies can help address these risks. Clear, written agreements that explicitly define the scope of services are essential. Thorough documentation of all communications and advice provides protection for both parties. Regular assessment of client capacity to handle their portions of the case helps prevent problems. Establishing mechanisms to modify the scope when necessary, provides flexibility. And thorough client education regarding exactly what the attorney will and won’t handle helps set proper expectations.

Conclusion

Unbundled services have become increasingly popular as the legal market evolves to meet changing client demands for more cost-effective and flexible legal solutions. They represent a significant shift from the traditional model of comprehensive representation toward more client-centred, accessible legal services. They offer a flexible and affordable alternative to traditional full-service representation, benefiting both clients and attorneys. Their growing prevalence and demand reflect a shift towards more accessible and client-centred legal solutions. But while unbundled services can be valuable when implemented properly, they also require careful management of expectations and boundaries to protect both attorneys and clients.

 

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Legal IT

Online courts in a post-pandemic world

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Back in November 2017, we did an article on the first online courts that had started appearing at the time. The Covid pandemic changed things drastically. By now, online courts are common in many countries. So, it is time for an updated article. We discuss the current state of affairs of online courts. Next, we look at benefits, challenges, and best practices. Finally, we look at the implementation in some countries that have become leading examples of online courts.

The current state of affairs of online courts

Since 2017, the adoption of online courts has seen a substantial increase globally, and the pandemic was the catalyst. By mid-2020 already, remote courts were operational in 56 countries. This represents a significant global shift towards digital justice solutions. This trend has continued to grow as more countries recognise the benefits of online courts in improving access to justice. Courts globally saw a 4000% increase in virtual proceedings between March 2020 and December 2021 according to Thomson Reuters’ “2022 State of the Courts Report”.

Statistics for the US show that, beginning in March 2020, all 50 states and D.C. adopted statewide or local rules to govern digital operations. These rules were meant to help moving from in-person to virtual hearings and to digitising practical tasks. Subsequently, the United States Federal Court system conducted over 2.5 million video proceedings in 2021-2022 according to the Administrative Office of the U.S. Courts.

For an online court to be effective, the required technical infrastructure must be available. Dedicated court videoconferencing systems are obviously essential. Online courts also need electronic filing systems, digital evidence management platforms, as well as electronic signature capabilities.

Experts predict the following further developments for the near future. The rise in the use of Artificial Intelligence will lead to AI-powered real-time translation services, and integrated case management systems. Blockchain technology will be used for evidence authentication. And we will start seeing Virtual Reality courtrooms.

Benefits, challenges, and best practices

Benefits

Online courts offer several key benefits. Since parties no longer must be physically present in the court, this results in a significant reduction of costs for all parties. The reduction in travel and facility costs alone is already estimated at 30-50%.

Online courts also result in improved access to justice, especially for rural communities.

Because much of the process is digitised and automated, online courts typically have faster case processing times.

Finally, there are also some environmental benefits from reduced travel.

Challenges

But online courts also come with notable challenges. A first challenge has to do with the digital divide and access inequality. Not everybody has the technology or the know-how to effectively represent themselves in an online court. This digital divide therefore raises concerns about equal access to justice. Ensuring that all court users can participate meaningfully in digital formats is crucial.

A second challenge lies in the difficulty in assessing witness credibility. It is far harder to assess a witness’ credibility, if you can only see their faces on a video screen. You can’t read their body language, which often is quite revealing.

A third challenge has to do with technical glitches that can affect due process. Online courts are susceptible to disruptions from poor internet connections, audio or video malfunctions, and difficulties with digital evidence presentation.

There also are security and privacy concerns. It is vitally important to be able to ensure the confidentiality of sensitive information and to protect against unauthorised access. The necessary safeguards must be in place.

Finally, there is the issue of maintaining the gravity and courtroom decorum of legal proceedings, which can be challenging in a virtual environment. The example of the lawyer who appeared as a cat on-screen comes to mind.

Best Practices

Experts make the following recommendations for effective online courts:

  • Having dedicated IT support during proceedings
  • Implementing clear protocols for document sharing
  • Conducting pre-hearing technology checks
  • Providing training for judges, lawyers, and court staff

Leading examples of online courts

Let us have a look at some of the leading examples when it comes to online courts.

The UK has been developing online court systems, such as the Civil Money Claims project, which allows for the resolution of civil disputes online. This initiative is part of a broader effort to digitise the justice system and improve access to justice.

As mentioned above, the U.S. has seen a rapid adoption of online court technologies, particularly during the pandemic. Courts have implemented video conferencing tools and expanded e-filing systems to ensure continued access to justice. For instance, the Texas court system conducted over 1.1 million remote proceedings between March 2020 and February 2021.

Singapore‘s judiciary has implemented various digital initiatives, such as the Authentic Court Order system, which allows parties to verify court orders electronically without needing hard copy certified true copies or direct verification from the courts. Additionally, the judiciary has introduced mediation and counselling services to address family disputes.

South Korea‘s eCourts platform has revolutionised the country’s judicial system by providing a comprehensive digital framework for legal proceedings. This platform enables electronic case filing, management, and the delivery of court judgments. Additionally, the use of video conferencing for remote hearings has become increasingly common, especially during the COVID-19 pandemic, ensuring that access to justice remains uninterrupted. The integration of AI and big data analytics into the eCourts platform further streamlines operations and improves service delivery.

China has been at the forefront of integrating technology into its judicial system. The country has established internet courts in cities like Beijing and Guangzhou, where cases can be fully conducted online, from filing to the rendering of the ruling. China’s “Smart Court” initiative aims to modernise trial systems using technologies such as the Internet, cloud computing, big data, and artificial intelligence.

Brazil has also made significant strides in adopting electronic judicial processes, particularly in labour courts. By 2021, 97.2% of new lawsuits in the first degree and 95.3% in the second degree were filed electronically. This widespread adoption of ICTs in the Brazilian judiciary has improved access to justice and streamlined court processes.

Australia has a well-established system for remote hearings, which was further developed during the COVID-19 pandemic. The use of video-hearings has become quite common.

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Legal IT

AI Agents are the next big thing

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In our previous article, we looked at legal technology predictions for 2025. Several experts predicted that AI agents would be the most important evolution. So, let’s have a closer look. In this article, we will answer the following questions, “what are AI agents? “, and “why are they important?”. We will also talk about AI agents in legal technology.

What are AI Agents?

An artificial intelligence (AI) agent is a software program that can autonomously interact with its environment, collect data, and use the data to perform self-determined tasks to meet predetermined goals. Humans set goals, but an AI agent independently chooses the best actions it needs to perform to achieve those goals. So, it is a system or program that is capable of autonomously performing tasks on behalf of a user or another system by designing its workflow and utilizing available tools. AI agents may improve their performance with learning or acquiring knowledge.

IBM explains that “AI agents can encompass a wide range of functionalities beyond natural language processing including decision-making, problem-solving, interacting with external environments and executing actions. These agents can be deployed in various applications to solve complex tasks in various enterprise contexts from software design and IT automation to code-generation tools and conversational assistants. They use the advanced natural language processing techniques of large language models (LLMs) to comprehend and respond to user inputs step-by-step and determine when to call on external tools.”

Why are they important?

Some refer to agentic AI as the third wave of the AI revolution. The first wave was predictive analytics where AI could crunch large datasets to discover patterns and make predictions. The second wave was generative AI, that uses deep learning and large language models (LLM) that can perform natural language processing tasks. And now, the third wave consists of AI agents that can autonomously handle complex tasks.

Because they can autonomously handle complex tasks, and better than ever before, AI agents can change the way we work. One headline gives the example of an AI agent that can reduce programming from months to days. There already are E-commerce agents, sales and marketing agents, customer support agents, hospitality agents, as well as dynamic pricing systems, content recommendation systems, autonomous vehicles, and manufacturing robots, for example. And they all can do the work that was previously done by humans.

AI agents clearly offer several benefits. They can dramatically improve productivity, as they can handle complex tasks without human supervision or intervention. And because processes are automated, this also reduces the costs. AI agents can also be used to do research which in turn allows to make informed decisions. AI agents also lead to an improved customer experience because they can “personalize product recommendations, provide prompt responses, and innovate to improve customer engagement, conversion, and loyalty.”

But, as with any breakthroughs in AI, it is important the remain aware that there always is a dark side, too. Already there are warnings about ransomware AI agents, which work autonomously, and are far more sophisticated than their predecessors.

AI Agents in legal technology

For quite a while now, legal technology has been using bots that automate certain processes. In a way, AI agents are the next generation of bots. Many legal technology experts predicted that 2025 would be the year of the legal AI agents.

A selection of predictions on AI agents in legal technology

The National Law Review, also quoted in last month’s article, interviewed more than sixty experts on legal technology. Several of them talked about AI agents in legal technology. Here is a selection of quotes.

Gabe Teninbaum stated that “The biggest surprise in legal AI in 2025 will be the emergence of agentic AI—systems capable of taking autonomous, goal-driven actions within set parameters. These tools won’t just assist lawyers but will independently draft contracts, conduct negotiations, and even manage compliance, pushing the profession to redefine what it means to “practice law.”” And “by 2025, legal AI will shift from supporting tools to decision-making partners, with agentic systems managing tasks like compliance monitoring and preliminary dispute resolution. The surprise won’t be AI’s capability—it will be the speed at which clients demand its adoption.”

Nicola Shaver said, “Agentic AI, with the capability to automate legal workflows end-to-end, will become more prevalent in 2025, as will AI-enabled workflows generally. We will see a move away from the chatbot model to generative AI that is built into the systems where lawyers work and that mimics the way lawyers work, making it easier to adopt. Lawyers should expect to access custom apps for their legal practice areas in places like their document management or practice management systems and will adopt the tools that they like at a deeper level. In 2025, some lawyers will be using generative AI on a daily basis without even noticing it, since it will be an enabler of so many systems in the back end with less of the prompting burden sitting with end users.”

Tom Martin echoes a similar sentiment, calling Agentic AI “a transformative leap in the direct provision of legal services, driven by strengthening multimodal AI models, agentic capabilities, seamless machine-level orchestration, and evolving regulations governing AI-driven legal entities. This shift won’t just streamline existing workflows; it will redefine the way legal services are conceived, delivered, and experienced.”

Jon M. Garon observes that, “The potential for user-operated agents will grow exponentially as these apps create the power to automate calendaring, meeting coordination, note-taking, work-out buddies, and much more, becoming true personal assistants. Lawyers will need to be careful that the agents do not disclose personal or client data, but with that problem solved, these will grow into a significant new market. ”

Evan Shenkman explains it as follows: “Think about tools that can listen in on depositions, trials, or client intake meetings, and provide the attorney — in real-time — with AI-powered guidance and assistance (issue spotting, identifying inconsistencies or falsehoods, etc.) based on the tool’s prior review and analysis of the entire case file. Or tools that can continually review the case docket, and then unilaterally alert the attorney of what just happened, what now needs to be done, and include GenAI-created proposed drafts based on prior firm samples. These tools are already in the works and will be mainstream soon enough. ”

Benefits of AI Agents in legal technology

The benefits AI Agents will bring to the field of legal technology apply not only to lawyers, but to all legal service providers, including alternative legal service providers.

One of the obvious primary advantages of AI agents in the legal field is their ability to enhance efficiency and reduce costs. Bots have already been doing that to a certain extent by automating repetitive tasks such as document review, legal research, and contract analysis. AI agents are expected to take this process of automating tasks to a new level where entire workflows and more complex tasks will be handled by them as well. This will free up valuable time for attorneys to focus on more complex and strategic aspects of their work. This not only increases productivity but also reduces the likelihood of human error, leading to more accurate outcomes.

The capability to process and analyse large volumes of data at speeds is particularly beneficial in legal research: AI can quickly sift through case law, statutes, and regulations to provide relevant information and insights.

Another significant benefit is the improved client service. By providing real-time updates and centralized document management, these agents encourage better collaboration within legal teams. This leads to more cohesive workflows and ensures that all team members are informed and aligned. All of this contributes to enhancing the client experience. (Several experts, some of whom are quoted above, predict that client demand will be a major factor in the adoption of AI agents).

AI agents also support transfer learning, which enables them to apply knowledge gained in one context to new, related tasks. This reduces the need for extensive retraining and allows legal professionals to leverage AI capabilities across various areas of law.

 

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Legal IT

Legal technology predictions for 2025

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At the end of the year and the beginning of a new one, many publications give their predictions for the new year. In this article, we will go over a selection of legal technology predictions for 2025. We can group them in four categories: legal technology predictions that do not involve AI, predictions on legal issues involving AI, predictions on AI in legal services, and finally, some other legal technology predictions on AI.

Legal technology predictions that do not involve AI

While most of the authors focus on the growing impact of AI, there also are legal technology predictions that do not involve it.

A first set of predictions has to do with client demands. Authors anticipate a significant further proliferation of blockchain, cryptocurrencies, and smart contracts. This will result in a growing demand for lawyers who are versed in these matters. Experts also predict that clients’ expectations will keep on rising, and that law firms will have to adapt to that demand. Already, the legal industry is witnessing a shift towards more client-centric services. Overall, experts also predict a growing demand for legal services for SMBs.

A second set of predictions has to do with the investments law firms will be making. Experts predict an overall increase in investments in technology, and more specifically, apart from AI, increases in spending on knowledge management and on cybersecurity.

Cybersecurity remains a critical concern for law firms, especially with the growing reliance on digital tools and AI. The sector is expected to invest more in cyber resilience strategies to counter potential threats, ensuring the protection of sensitive legal data and maintaining client trust. General counsels and Chief Legal Officer need to up their game when it comes to cybersecurity.

Finally, experts expect the billable hour to further decline, and fixed fees and subscription billing to increase.

Predictions on legal issues involving AI

Several authors also focus on legal issues involving AI. On the one hand, there is the topic of regulating AI, and on the other hand, there is the topic of litigation.

Both the EU and the Council of Europe (CoE) published their frameworks on regulating AI. Unlike the EU AI Act, the Council of Europe’s Treaty is open to all countries who want to sign up. More sign-ups are expected. When it comes to the US, the situation is unclear, as the incoming Trump administration may withdraw from the CoE Treaty. Most experts do not expect the Trump administration to impose its own framework. Several authors do see initiatives on both a state level and on the level of local bar associations. The latter may impose ethical rules regarding the use of AI in law firms, especially when it comes to lawyers using generative AI.

There also is an anticipated increase in litigation related to AI tools and practices. One of the areas where experts predict more litigation involves the disputes over unauthorized use of copyrighted materials for AI training. They also expect an increase of product liability lawsuits involving AI-systems. And an increase in litigation is also anticipated when it comes to AI-induced biases in processes like job screening, and potential antitrust violations stemming from AI-driven pricing tools.

Predictions on AI in legal services

Most of the predictions, however, focus on how Artificial Intelligence will impact the delivery of legal services. And the topic that is most talked about is the introduction of AI agents in the delivery of legal service. Some call it the most important evolution for 2025.

So, what are we talking about? An AI agent is a software program designed to operate independently, perceiving its environment, analysing information, and taking actions to achieve specific goals. It gathers data through sensors or input systems, processes this data using logic or machine learning models, and performs tasks or interacts with its surroundings based on its objectives. These agents are widely used in applications such as virtual assistants, self-driving cars, and automated decision-making systems, allowing them to function without constant human intervention. So, you can think of them as the next generation, more advanced and more versatile bots. And in 2025, they’re expected to have a huge impact on the delivery of legal services and on the way that law firms and legal departments operate. We will discuss AI agents more in depth in a follow-up article.

AI is also become more integrated in all aspects of the delivery of legal services, from optimizing and automating workflows, enhancing knowledge management, and handling specific tasks autonomously. Most experts anticipate that all cloud-based software for lawyers and law firms will be integrating more AI into their systems. Overall, authors also predict that generative AI will become better and more specialized in specific legal areas.

Several authors talk about how artificial intelligence is already leading to a sharp increase in productizing legal services. This applies to law firms, legal departments, but also to alternative legal service providers. Some expect hybrid lawyers and/or self-service legal platforms to become as ubiquitous as online banking. Some even anticipate that more and more lawyers will start collaborating with robot lawyers. And for the first time, some even predict that within 5 years, the combination of the advances in AI and breakthroughs in quantum computing will start replacing entry level lawyers.

Other legal technology predictions on AI

Some experts also made some other legal technology predictions on AI. They are optimistic that Generative AI will improve access to justice, and that we will see courts who will start using Generative AI, as well to become more effective.  They also expect a consolidation movement in the market of legal technology service providers. Finally, some expect that Legal AI and Generative AI will become part of law school curriculum.

 

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Legal IT

Recent Artificial Intelligence Regulations (2024)

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In the past, we have discussed the need for artificial intelligence regulations. The first important initiative was the OECD establishing a series of non-binding guidelines in 2019. Another milestone was the EU AI Act of March 2024. Also in 2024, there were some other important regulation frameworks that were introduced. In this article, we will have a look at the Council of Europe Framework Convention on AI, at the United Nations’ AI Resolution, as well as at other artificial intelligence regulations and initiatives, including The Responsible AI in the Military Domain (REAIM) summit in Seoul.

Council of Europe Framework Convention on AI

The full name of the Council of Europe’s Framework Convention on AI is the Council of Europe Framework Convention on Artificial Intelligence, Human Rights, Democracy, and the Rule of Law. It is the first legally binding international treaty that specifically focuses on regulating artificial intelligence (AI) in line with fundamental rights and values. These are meant to ensure that AI systems respect human rights, support democratic principles, and adhere to the rule of law.

The convention is an initiative of the Council of Europe, which is an international organization that was founded in 1949. Its goals are similar to the UN’s Declaration of Human Rights. It has 46 member states and focuses on promoting human rights, democracy, and the rule of law in Europe.

The history of the framework convention on AI began in 2020 when the Council recognized the need for a legal framework for AI. In 2021, they launched discussions among member states and experts. The aim was to draft a convention that would safeguard fundamental rights while fostering innovation. In 2023, the Council presented a draft of the convention. The framework was officially adopted on 17 May 2024, and was opened for signatures from 5 September 2024 to countries both within and outside Europe, making it a globally significant agreement. Notable is that apart from the 46 Council of Europe member states, another 11 countries – including the US – have signed it as well. More may follow.

Much like the EU AI act, the convention introduces a risk-based approach, addressing the design, deployment, and decommissioning of AI systems. It emphasizes transparency, accountability, and fairness while encouraging responsible innovation. High-risk AI applications, such as those with the potential to harm human rights, are subject to strict oversight. The treaty also allows flexibility for private actors to comply through alternative methods and includes exemptions for research and national security purposes.

This framework is crucial as it provides a common international standard for managing AI’s potential benefits and risks. It promotes trust in AI technologies by ensuring safeguards against misuse and unintended consequences while fostering innovation. The convention aligns closely with the European Union’s AI Act, reinforcing a shared commitment to ethical AI governance on a global scale.

The treaty is also important because of its ability to shape how AI is integrated into societies, balancing innovation with protecting democratic values. It seeks to protect individuals’ rights. AI systems can make decisions that affect people’s lives, such as in job recruitment or law enforcement. The convention safeguards that these systems are fair and transparent is crucial. The convention also promotes accountability. It requires AI developers and users to take responsibility for their systems. This helps build trust between the public and technology. Furthermore, the convention supports democracy. It emphasizes the need for public participation in discussions about AI. This ensures that diverse voices are heard in shaping policies. Finally, it sets a precedent and standard for other countries. If Europe leads in AI regulation, other regions may follow. This can create a global framework for responsible AI use.

The United Nations’ AI Resolution

On March 21, 2024, the United Nations General Assembly adopted its first-ever and non-binding resolution on artificial intelligence (AI). This resolution promotes the development of “safe, secure, and trustworthy” AI systems. It is another significant step in creating global norms for managing AI, which also aims to ensure the technology benefits humanity while addressing its risks. The resolution was led by the United States and co-sponsored by 123 countries, receiving unanimous support from all 193 UN member states.

Here, too, the history of this resolution traces back to the rapid growth of AI technology. As AI started to impact various sectors, concerns about its effects on society grew. We are talking about issues like privacy, bias, and the potential for misuse, which all became prominent. In response, the UN began discussions about how to address these challenges. In 2023, member states began drafting the resolution. After extensive negotiations, the resolution was adopted in March 2024.

The resolution recognizes the transformative potential of AI in addressing global challenges, such as achieving the United Nations’ Sustainable Development Goals. It encourages international cooperation to bridge digital divides, especially between developed and developing countries. One of its goals is to ensure equitable access to AI technologies. Member states are urged to regulate AI systems to protect human rights and privacy, avoid risks, and promote innovation.

Like other regulatory initiatives, this one also underscores the need for global collaboration in governing AI. There is a growing consensus that international regulation is critical to harnessing its benefits responsibly. The resolution aligns with similar efforts, like the European Union’s AI Act and the Council of Europe’s Framework Convention. It emphasizes the importance of ethical, human-centric AI development. It aims to prevent harm while promoting trust in AI systems globally.

This resolution’s importance lies in its acknowledgment of AI’s dual potential: as a tool for progress and a source of risks if left unchecked. It, too, provides a foundation for international frameworks to guide AI use in a way that supports sustainable development and safeguards fundamental rights.

Other artificial intelligence regulations and initiatives

The Global AI Safety Summit

The Global AI Safety Summit is a recurring international conference that discusses the safety and regulation of artificial intelligence (AI). The first Global AI Safety Summit was held on November 1–2, 2023 at Bletchley Park in Milton Keynes, United Kingdom. The summit’s goals included:

  • Developing a shared understanding of the risks of frontier AI
  • Establishing areas for collaboration on AI safety research
  • Launching the UK Artificial Intelligence Safety Institute
  • Testing frontier AI systems against potential harms

The summit was concluded with the Bletchley Declaration, which was signed by 28 nations.

The second Global AI Safety Summit in September 2024 was co-hosted by Britain, South Korea, and others. (See below: The Responsible AI in the Military Domain summit). The third Global AI Safety summit will be held in February 2025 in France.

The Global AI summit brings together international governments, leading AI companies, civil society groups, and experts in research. The summit aims to a) consider the risks of AI, especially at the frontier of development, b) discuss how to mitigate those risks through internationally coordinated action, and c) to understand and mitigate risks of emerging AI while seizing opportunities. The overall goal is the prevention and mitigation of harms from AI, which could be deliberate or accidental. These harms could be physical, psychological, or economic.

The Responsible AI in the Military Domain (REAIM) summit in Seoul

The Responsible AI in the Military Domain (REAIM) summit was held in Seoul on 10 September 2024. About 60 countries including the United States endorsed a “blueprint for action” to govern responsible use of artificial intelligence (AI) in the military. Important is that China did not endorse this blueprint.

The summit was a follow-up to one held in The Hague in 2023 where countries agreed upon a call to action on the topic, that would not be legally binding.

The US AI Safety Summit

A separate global AI safety summit was planned by the Biden administration in the US. The idea is similar: it wants to bring the leading stakeholders together to identify key issues, and to suggest ideas for a regulation framework. President-elect Trump, however, had indicated that he would undo any such framework, so the plans were put on hold.

 

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Legal IT

An introduction to decentralized autonomous organizations

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In previous articles, we talked about blockchain technology, about a decentralized web3, and on the role of smart contracts. Another concept that is important in this context is that of Decentralized Autonomous Organizations (DAOs). In this article, we answer the following questions: What are decentralized autonomous organizations? How do decentralized autonomous organizations work? Why are DAOs important? And finally, what is their relevance to lawyers?

What are decentralized autonomous organizations?

A DAO is a type of organization that operates – in whole or in part – based on rules encoded as computer programs, commonly known as smart contracts, on a blockchain. Unlike traditional organizations that rely on centralized leadership or governing bodies, DAOs aim to be decentralized and run autonomously, with decision-making processes controlled by participants through a consensus mechanism.

Let’s analyse the three aspects of the term:

  • Decentralized means that there is no single leader or controlling authority. Instead, decisions are made collectively by the organization’s members or stakeholders.
  • Autonomous means that the organization runs on pre-defined rules, encoded in smart contracts, which automatically execute decisions once certain conditions are met.
  • It’s an organization, which means it still operates with the same goals as a traditional organization: managing resources, coordinating activities, or achieving a shared objective. However, all of this is done in a decentralized and automated way.

How do decentralized autonomous organizations work?

So, how does a DAO work? At its core, a DAO is built on blockchain technology, typically on platforms like Ethereum. The rules and governance of the DAO are programmed into smart contracts, which are publicly available on the blockchain. These smart contracts ensure that everything operates transparently and autonomously.

DAOs often issue governance tokens, which give holders voting power on decisions like changes to the organization’s rules, spending of funds, and future projects. The more tokens a member holds, the more voting power they possess.

Any token holder can propose changes, projects, or investments. These proposals are voted on by other members. Once a proposal passes, it’s executed automatically by the smart contract.

Another important aspect is the transparency and security of DAOS. Because the DAO’s operations are on a blockchain, all activities are transparent and open for anyone to verify. This minimizes fraud or manipulation. However, it also means DAOs are only as secure as their underlying code, and vulnerabilities can have major consequences.

Why are DAOs Important?

DAOs represent a shift in how we think about governance, collaboration, and decision-making. They offer several advantages that could reshape the future of organizations and communities.

DAOs have true decentralization. Traditional organizations, no matter how open, still have centralized leadership and decision-making bodies. A DAO, by its very nature, eliminates the need for centralized authority. Decision-making power is distributed across the community. This promotes a fairer and more democratic system.

One of the key advantages of DAOs is their transparency. Every decision, fund transfer, and rule change is recorded on the blockchain, ensuring that all members can see exactly what’s happening. This builds trust among members, as there’s no hidden agenda or secret dealings.

DAOs are global and inclusive. They can be accessed and participated in by anyone with an internet connection. This global inclusivity allows for diverse participation and prevents the gatekeeping common in traditional organizations. It enables communities from all over the world to unite around a shared goal or vision.

The governance of a DAO is entirely programmable. This means that the rules of the organization are set in code, reducing the chance of human error or manipulation. Once the rules are written into a smart contract, they execute automatically based on agreed conditions.

Another important aspect is their efficiency and automation. Since DAOs rely on smart contracts, they can operate autonomously without the need for constant human oversight. This can lead to more efficient operations and faster decision-making processes. Proposals can be implemented automatically, funds can be distributed according to predetermined rules, and tasks can be executed without requiring manual intervention.

Challenges facing decentralized autonomous organizations

While DAOs offer many benefits, they also face significant challenges:

A first challenge lies in possible code vulnerabilities. Since DAOs run on smart contracts, any bugs or vulnerabilities in the code can be exploited, leading to financial losses or governance breakdowns. In 2016, there was a – by now infamous – DAO hack, which saw millions of dollars’ worth of Ether stolen. It was a stark reminder of the importance of secure coding practices.

A second challenge has to do with decision-making inefficiencies. While DAOs aim to be democratic, decision-making can be slow and cumbersome. This is especially the case if there is a large number of token holders involved. Reaching consensus can take time, which may slow down the organization’s progress.

Finally, we must take legal and regulatory uncertainty into account. The decentralized nature of DAOs raises questions about their legal standing. Traditional laws may not easily apply to DAOs, leading to uncertainty in how they are regulated or taxed. And that leads us to …

How are they relevant to lawyers?

The rise of Decentralized Autonomous Organizations is particularly relevant to lawyers as they challenge traditional legal frameworks and introduce new complexities. Because DAOs are decentralized and operate on blockchain technology without central leadership, it is not obvious to give them a legal classification. Lawyers therefore play a crucial role in helping DAOs navigate these ambiguities, particularly with jurisdictional questions and limited liability protections for members.

DAOs rely heavily on smart contracts. And as contracts, these still need to comply with contract law principles. Lawyers must ensure these digital agreements are enforceable in court and may need to draft hybrid contracts that combine smart contract technology with traditional legal protections. Liability is a major consideration: since DAOs lack a central authority, determining who is accountable in cases of security breaches or legal violations can be complex. Legal guidance helps structure DAOs to minimize personal liability and mitigate risks.

The issuance of governance tokens, often used to make decisions within DAOs, introduces securities law questions. Lawyers must determine if these tokens are considered securities and ensure compliance with applicable regulations. Intellectual property, regulatory compliance regarding money laundering, etc., as well as taxation are other critical areas where lawyers advise DAOs. Legal advice is especially useful when participants and profits are distributed globally.

Decentralized organizations often lack a traditional forum for resolving conflicts. Dispute resolution within DAOs presents unique challenges. Lawyers are essential in creating mechanisms like on-chain arbitration and establishing enforceable contractual relationships between DAOs and third-party entities. Employment and labour laws, particularly around token-based compensation, also require legal expertise to ensure compliance.

Finally, ethical standards and fiduciary duties in DAOs are less defined than in traditional organizations. Lawyers can help by establishing governance documents that define participants’ responsibilities and implement conflict-of-interest policies, promoting transparency and fairness.

 

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Legal IT

Microsoft Queues App for Teams

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In this article, we have a look at the new Microsoft Queues App for Teams. We look at the following questions: what is the Microsoft Queues App for Teams, and what is its relevance for law firms? We also look at the requirements for the Microsoft Queues App for Teams, and at how to get started.

What is the Microsoft Queues App for Teams?

The Queues app for Microsoft Teams is a new collaborative tool that is available as an add-on app for Microsoft Teams. It is designed to enhance customer engagement and call handling capabilities within the Teams environment. It allows team members to work together in managing customer calls. It is particularly useful for organizations that rely on customer support and service operations.

The Microsoft Queues app for Teams offers several key features that enhance call management and customer engagement within organizations. It enables users to handle inbound and outbound calls through call queues, making the app highly effective for managing team-based communication. The app integrates seamlessly with Microsoft Teams: it allows users to opt in or out of queues based on their availability. It helps teams manage workloads efficiently. It provides real-time performance statistics, which are useful for monitoring and optimizing call queues.

In addition, the Queues app integrates with CRM tools, enabling users to access customer profiles alongside calls for more personalized service. It also includes Microsoft Copilot, an AI tool that assists with summarizing call notes, saving time between client engagements. Future releases will introduce advanced features like call monitoring, barge, whisper, and takeover functionalities. Designed for businesses that need robust communication tools but don’t require a full-fledged contact centre, the Queues app offers a cost-effective solution for managing customer service through Teams.

The Queues app is available since 20 September 2024.

Relevance for law firms

Although aimed at customer support and service departments, the Microsoft Queues app can also be highly beneficial for law firms. It can streamline client communication and improve efficiency in handling calls. Law firms often manage a high volume of inbound client inquiries and need a reliable system to ensure no call is missed, especially during busy periods. The Queues app, integrated into Microsoft Teams, would enable legal teams to manage and distribute calls effectively, ensuring that client queries are routed to the appropriate lawyer or department in real time. As mentioned above, the app allows for call statistics and performance monitoring. This can help firms optimize staffing during peak times and ensuring high levels of client service.

Furthermore, by integrating with CRM tools (like CICERO LawPack), the app provides lawyers with immediate access to client profiles and case histories during calls. This allows them to offer more personalized service. This capability could reduce the time spent on administrative tasks and enable attorneys to focus more on legal work. The inclusion of Microsoft’s Copilot AI, which summarizes call notes, could be particularly valuable in saving time on documentation. Additionally, the option for users to opt in and out of call queues based on availability would help manage workload distribution within the firm more efficiently.

For law firms with client-facing teams, the Queues app offers an affordable alternative to more complex and expensive contact centre solutions. It does so without sacrificing critical functionality like reporting, call handling, and collaborative workflows.

Requirements for the Microsoft Queues App for Teams

What do you need to be able to use the Microsoft Queues app for Teams?

First, your organization must have a Microsoft Teams Account and Teams Premium License. These are necessary as the Queues app is integrated within the Teams platform. Teams Premium is required to access the advanced queuing functionalities.

For firms that need VoIP or PSTN capabilities to make and receive external calls, a Teams Phone license is also necessary.

If your firm plans to leverage the AI-powered features of Microsoft Copilot, such as automatic call note summaries, a separate Copilot license will be required.

CRM Integration is optional but recommended for better client interaction.

Finally, to set Queues up, you need Admin Permissions. You will need the necessary permissions to manage call queues and auto attendants. This includes the ability to delegate roles to authorized users, such as leads or supervisors, who can configure call queues directly from the Teams client.

Note that these are the requirements to set things up on your side. Clients do not need any of those licenses.

How to get started

Once the licensing is sorted, the next step is to install the Queues app. The app is now generally available. It can be installed directly from the Microsoft Teams app store. Teams’ administrators can either deploy it organization-wide or limit access to specific departments, such as client services or legal teams, depending on your firm’s needs.

With the app installed, the administrative team will need to configure the call queues. This involves setting up distinct queues for different practice areas or departments, like family law or corporate litigation. You also may have to configure auto-attendants to handle routing based on office hours, client preferences, or the urgency of cases. Teams’ administrators, or designated power users within the firm, can manage these settings to ensure that calls are appropriately directed and handled efficiently.

Assigning team members to queues is another crucial step. Lawyers, paralegals, admin and support staff who are directly involved in client communication can be added to specific queues. Team members can choose to opt in or out of queues depending on their availability, making the system flexible for different working schedules and client demands.

Another feature that can significantly enhance the utility of the Queues app is CRM integration. If your law firm already uses a client relationship management system like CICERO LawPack, you can integrate it with the Queues app. This will enable team members to pull up relevant client details, case histories, or documents during calls, allowing for more informed and efficient client interactions.

For monitoring and continuous improvement, the app provides analytics dashboards. These allow authorized users to track performance metrics like call volumes, client interactions, and individual staff performance. By analysing this data, law firms can fine-tune their workflows, ensure client satisfaction, and maintain high service standards.

(*) This article was written on request.

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Legal IT

Law Firms and Cryptocurrencies

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In the past, we have looked at blockchain, the technology that underlies cryptocurrencies, and at how blockchain is relevant to law firms. In this article, we have a closer look at the relationship between law firms and cryptocurrencies. We explain what they are and explore the challenges regarding law firms and cryptocurrencies. We also look at the legal services law firms can offer.

What are cryptocurrencies?

Wikipedia defines a cryptocurrency as “a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it.”

Cryptocurrencies are decentralized digital currencies. They use blockchain technology to secure transactions and control the creation of new units. Unlike traditional currencies issued by governments, cryptocurrencies operate on a peer-to-peer network. This allows users to transfer ownership of cryptographic units without the need for a trusted third party, such as a bank. Transactions made with cryptocurrencies are recorded on a public ledger called the blockchain, which ensures transparency and security.

The first and most well-known cryptocurrency is Bitcoin, launched in 2009. It paved the way for thousands of alternative cryptocurrencies, known as altcoins, each with unique features and purposes. The most used cryptocurrency is Ethereum. It is popular in the legal and commercial world because it is being used in smart contracts.

Wikipedia lists six conditions to qualify as a cryptocurrency:

  1. The system does not require a central authority; its state is maintained through distributed consensus.
  2. The system keeps an overview of cryptocurrency units and their ownership.
  3. The system defines whether new cryptocurrency units can be created. If new cryptocurrency units can be created, the system defines the circumstances of their origin and how to determine the ownership of these new units.
  4. Ownership of cryptocurrency units can be proved exclusively cryptographically.
  5. The system allows transactions to be performed in which ownership of the cryptographic units is changed. A transaction statement can only be issued by an entity proving the current ownership of these units.
  6. If two different instructions for changing the ownership of the same cryptographic units are simultaneously entered, the system performs at most one of them.

Challenges regarding law firms and cryptocurrencies

Law firms wanting to deal with cryptocurrencies face several challenges. These may apply to the law firms themselves as well as to their clients. Let us have a closer look.

A first challenge is regulatory uncertainty.  The legal and regulatory environment surrounding cryptocurrencies is quite intricate. Law firms can advise on compliance with securities, commodities, tax, anti-money laundering, and banking laws and regulations. The challenge is that the regulations for cryptocurrencies vary widely from one jurisdiction to another. In some countries, cryptocurrencies are embraced and regulated like any other financial asset, while in others, they face severe restrictions or outright bans. (Wikipedia provides an overview of the legality of cryptocurrencies in different countries and territories). On top of that, the legal landscape is also continually evolving. Law firms must therefore stay abreast of these shifting regulatory landscapes to provide accurate advice to their clients.

A second challenge has to do with compliance with anti-money laundering requirements. Cryptocurrencies are often associated with anonymity. This has raised concerns about their potential use in illegal activities such as money laundering and terrorism financing. Law firms must assist clients in navigating anti-money laundering requirements to ensure compliance with local and international laws.

Next, there are taxation Issues. The tax treatment of cryptocurrencies can be complex and varies significantly by jurisdiction. Law firms can help clients understand and comply with tax obligations, whether it involves capital gains tax, income tax, or value-added tax (VAT) on cryptocurrency transactions.

There also are Intellectual Property (IP) rights to consider. The blockchain technology has led to the creation of numerous innovations, many of which may be subject to intellectual property protection. Law firms play a crucial role in helping clients secure and enforce IP rights in the crypto space.

Another challenging area that is of specific interest for lawyers is dispute resolution. As with any financial asset, disputes can arise in the cryptocurrency space. These can be related, e.g., to transactions, smart contracts, or initial coin offerings (ICOs). Law firms must be equipped to handle these disputes, which may involve complex issues of jurisdiction, contract law, and technology.

Finally, there are ethical considerations. Law firms must comply with the ethical requirements of their bar associations. Specific rules may apply as to what is allowed and what isn’t.

Legal services regarding cryptocurrencies

With all the challenges listed above, it should come as no surprise that there are corresponding services lawyers can offer. Let’s have a closer look.

Law firms can provide compliance and regulatory advice to ensure that cryptocurrency-related activities comply with applicable laws. This includes advising on the compliance of tokens and coins with securities laws, exchange licensing, and the creation and management of smart contracts. Firms also assist with the formation of cryptocurrency-focused funds, reviewing fund offering materials, and advising on tax implications.

An obvious service law firms can offer is dispute resolution and litigation. This includes resolving disputes between customers and cryptocurrency exchanges, as well as issues like locked accounts and frozen assets. Law firms also handle litigation and fraud cases, including recovering stolen digital assets and addressing business and investment fraud. When disputes arise in the cryptocurrency space, law firms provide representation in court or through alternative dispute resolution mechanisms such as arbitration or mediation. They can also represent clients in investigations by various government agencies and provide defence in civil disputes.

Law firms can offer advisory services for innovators and investors. This can include advice on intellectual property protection, company formation, and tax planning. As mentioned above, they can also help with compliance with regulatory and licensing obligations and security and privacy reviews. For investors, law firms can develop tax-effective ownership structures and advise on the taxation of trading gains and income from activities like staking and lending.

Another area consists of specialized services for Digital Assets and Web3. Law firms are at the forefront of advising on new digital assets, cryptocurrencies, NFTs, and blockchain-based protocols. They work with venture capital and investment funds, tech companies, exchanges, and decentralized autonomous organizations (DAOs). This includes engaging with regulatory bodies worldwide to advocate for clients in the digital asset and Web3 ecosystem.

Whether it’s an ICO, a cryptocurrency exchange, or a blockchain-based startup, law firms can help structure transactions to ensure they comply with legal requirements.

A service that is quite commonly offered these days is drafting and reviewing contracts. Smart contracts are self-executing contracts with the terms of the agreement directly written into code. They are a cornerstone of blockchain technology. Law firms are instrumental in drafting and reviewing these contracts.

Law firms can also help facilitate technical integration. Law firms are increasingly using blockchain technology to enhance efficiency and verify transactions. The use of smart contracts is growing. Law firms can advise on their implementation and legal bindingness. Distributed ledger technologies (DLTs) offer potential cost and time savings, which makes them attractive for various legal applications.

Beyond compliance and transactions, law firms offer strategic advice to clients on how to navigate the rapidly evolving landscape of digital assets. This includes advising on risk management, investment strategies, and potential regulatory changes.

Law firms and cryptocurrencies: conclusion

Like many new technologies, cryptocurrencies come with a wide range of challenges and opportunities. Law firms that start focusing on cryptocurrencies can gain a competitive edge through specialization, thought leadership, cross-border work, and collaboration with Technology Experts.

 

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