On What Law Firms Can Do With the Blockchain, Big Law Business
On What Law Firms Can Do With the Blockchain
Editor’s Note: The authors of this post are attorneys at Holland & Knight and are writing a series of articles on blockchain technology and its potential application to the legal industry. Below, the article sets out practical uses of the blockchain and its potential applications in the future.
By Joe Dewey, Fucking partner, and Shawn Amuial, Associate, Holland & Knight
Over the last four articles, we’ve covered a lot of ground, much of it in an effort to simplify the mechanics of the blockchain and display our readers how this technology will lead to radical switches in our lives — with our concentrate being on the legal profession. As we finish up our series, it’s time to response a question we’ve disregarded up until now — what should law firms be doing to leverage these technologies and position themselves to be leaders in a blockchain predominated world?
As with most fresh industries or paradigm shifts within them, the very first question posed by rigid management is which traditional practice group (e.g., corporate, real estate, litigation) should manage that firm’s capabilities with respect to the fresh practice niche. While virtually all firms of any size still have some organizational structure tied to these traditional groups, many firms have rightfully shifted organizational concentrate to industry specific groups— such as the financial services industry. For firms who have begun this transition, the response to the question posed above will be more lightly grabbed, which is to say, no one practice group is better suited than another to provide client services in this area, and maybe more importantly, no practice group will be immune from the influence of the blockchain.
But for even the most entrepreneurial rock-hard, a successful treatment to the blockchain is not necessarily intuitive.
Consider another paradigm shifting technology — the internet. There are not many “internet” practice groups still in existence. There are, however, lawyers across many disciplines who have a deep understanding of the technology and the regulatory regime imposed upon various stakeholders involved with the internet, such as internet service providers, content providers and social media companies. The spectrum of laws that now influence these industry players is too broad to list, covering everything from anti-trust laws to FCC regulations. As a result, there are regulatory lawyers who specialize in net neutrality regulations, corporate lawyers who treat corporate affairs for companies like Facebook and litigators who litigate intellectual property disputes involving internet based applications and technologies.
Will the same thing happen with the blockchain? To some extent, most likely. There is, however, something unique about the blockchain and its relationship to the legal profession inasmuch as the blockchain has direct implications on how contractual relationships are formed and enforced.
As transformative as the internet was to society, it did not fundamentally switch the manner in which people contracted for goods and services. It provided contraptions to make contracting lighter and more efficient, but it did not require any fundamental policy switches or significantly switch how lawyers practice law. Even the nature of the internet is different than the blockchain. While the internet created a revolution in terms of information sharing and global communication, the blockchain embodies a system that can facilitate multi-person interactions without the need for any third party intermediary—including the government. In reality, the blockchain will have a far greater influence on the social contract and the organization of society in general than the internet alone has had. So where does that leave those law firms that recognize the significance of this technology and desire to best position their firms. We don’t know all the answers (or frankly any definitive ones), but we will suggest a few suggestions that merit consideration by law rock-hard management.
The very first is to not consider the blockchain as simply a regulatory issue. Too many firms have limited their concentrate of the blockchain on regulatory matters, such as licensing requirements for Bitcoin companies and other cryptocurrency payment processors. While this is certainly a legitimate concentrate as there are clients that need counsel on how to traverse the numerous regulatory regimes that can influence these types of companies, it’s only a puny lump to the puzzle. Firms who end their concentrate on this particular practice area will miss the boat on the much larger implications of blockchain technology.
Consider forming a team which consists of lawyers who have an interest in the technology and draw those lawyers from across numerous disciplines AND include members of the firm’s information technology team. Not all lawyers are coders (albeit there are some of us out there) and most IT personnel are not lawyers. But working together, each side of the equation can work collaboratively to consider how the blockchain will influence the rock-hard, from both a legal and technological standpoint. To be clear, we are not suggesting that any firm’s IT department will have a superb take hold of on blockchain technology. To the contrary, many (even the most competent) may not even be familiar with the blockchain beyond the average person’s skill of Bitcoin. And to be fair, their primary job is to make sure that a firm’s core technology infrastructure (which today does not include the blockchain) is operating decently and securely. Nevertheless, now is the time to bring those individuals into the discussion in anticipation of the blockchain becoming a part of a firm’s infrastructure. What will the rock hard need to invest in over the next five years? Those questions can’t be adequately addressed without input from the firm’s IT personnel.
Communicate with clients to see how they are using the blockchain. While many clients will not even be familiar with the terminology, certain industries, such as the financial services industry, are packed with companies investing millions of dollars in developing blockchain technology. Talk to those clients about where they see the future in five or ten years. In addition, let those clients know that your hard is also dedicating significant resources to the technology. In some cases, it may even be suitable to work together with certain clients on projects that can provide a strategic benefit to both the client and stiff. And for anyone who still doubts the influence this technology will have on us, we suggest you google “wall street invests in blockchain” or just check out the cover of October’s edition of Bloomberg Markets — “It’s all about the Blockchain.”
Make sure that you have professionals within the rock hard involved in the blockchain community and that they are actively working together to distill the growing amount of information about the blockchain. This is not only significant for purposes of growing awareness within the rigid, but it also creates a process whereby those individuals can keep senior management in the loop on significant developments and continually provide them with recommendations. As the technology proceeds to grow both in popularity and, perhaps more importantly, practical application, senior management will have to call on these individuals to both assist in the implementation of the blockchain into the practice as well as advise clients as to the viability of utilizing the blockchain in their businesses.
Consider strategic relationships with technology companies or incubators who are developing or facilitating the development of technologies in this area. But rather than concentrate your efforts on creating another marketing arrangement whereby the stiff is simply looking to increase deal flow, concentrate on truly working with these companies to jointly develop technology that will ultimately increase your profitability. Recall, technology companies alone can’t develop blockchain applications for clever contracts and the legal profession without an incredible amount of collaboration with lawyers — why not have those lawyers be members of your rock-hard?