Book Review: Blockchain and the Legal Profession

Neil Brown reviews ‘Blockchain and the Legal Profession’ and isn’t convinced…

According to the blurb, this book aims to ‘cut through the hype and explore the many different facets of Blockchain, and what it will mean for the legal profession’.

In my opinion, it falls rather short.

The first three chapters have the greatest focus on the legal profession, a trait unfortunately missing from some of the later pieces.

After a description of the blockchain which I found hard to follow (chapter 4 of The New Scientist’s ‘The End of Money: The story of bitcoin, cryptocurrencies and the blockchain revolution’ remains my suggested starting point), chapter 1 asserts that, yes, blockchain will disrupt legal practice.

But it does not explain how.

It points to indicators that the legal industry is ripe for disruption — a common enough view — but it does not follow that blockchain will be the, or even a, disruptor, and more detail would have been welcome.

It also claims that blockchain will make (some) lawyers redundant, but again is light on explaining why this should be the case, other than in respect of lawyers acting as information repositories.

Chapter 2 — law and p2p tech — gives the strong impression that we can expect lots of amazing things to happen, thanks to blockchain but, again, I felt there was insufficient detail about implementation.

With the example of the potential to issue parking fines quickly, the chapter introduces smart contracts, using the blockchain. There’s plenty written about smart contracts, and I did not feel that this discussion brought anything particularly new to the table, especially since smart contracts and blockchains are not indelibly linked. Perhaps for someone who wanted a starting point, this chapter would be worthwhile, but given the proliferation of articles and blogposts written about smart contracts, I would have hoped for something more critical and analytical.

The concluding section looks at the practice of lawyers in the future, commenting that ‘the functional aspects of the practice of law will be assumed and automatic’ and that lawyers will advise on ‘how to navigate … digital choice of law strategy, smart contract design, and application of artificial intelligence’.

Chapter 3 focuses on the impact of blockchain on law firm business models. It looks to the death of the intermediary, with a practical example of the use of Bitcoin, as blockchain-based currency, to remove the need to use an intermediary fiat currency in international transactions. I liked this, and wish there was more of the same kind of ‘applied thinking’ throughout.

I’m curious, though, as to whether Bitcoin is really an answer here, as it strikes me that there is something akin to a network effect in operation: as a would-be customer, it’s no good me having Bitcoin as a currency, especially in large sums, if I can’t buy much with it, and, as a retailer, I’ve no incentive to accept payment in Bitcoin if I can’t pay my bills with it. Until that gets unlocked, perhaps Bitcoin remains primarily a form of investment.

I say this as I bought a small amount of Bitcoin some months back, to understand the experience, and I still have the full sum left in my wallet, as the opportunity to spend it has not arisen. I’ve also looked at taking Bitcoin or other cryptocurrencies as payment through decoded:Legal, and I’ve yet to convince myself that doing so would be a sound decision. Discussion of how the legal profession might itself use cryptocurrency, albeit more to do with the application layer of cryptocurrency than with the underlying blockchain itself, would have been superb.

As with chapter 1, it tends towards hyperbole in places — it is ‘astonishing’ that ‘so few’ lawyers are developing practices focused on blockchains (is it? Really?) — but offers sensible guidance that firms should be encouraged to experiment with the use of blockchain in their own practices. More examples of what this might look like would have been ideal, beyond ‘smart contracts’.

Similarly, it predicts the death of the billable hour (which, again, seems to be a common enough view to be almost unarguable at this point), but it is left unclear why this will be down to blockchain.

Smart contracts are the mainstay of chapter 4, which speaks of a ‘legal system, whose inefficiency has reached dimensions threatening systemic incoherence’.

Recognising that blockchains are complementary to smart contracts, rather than inherent, this chapter discusses the benefits brought by a blockchain in terms of transparency and decentralisation. However, ‘transparency’ may not be desirable for many confidential commercial transactions, requiring the use of private blockchains, and the decentralisation is only as good as the number of people who have copies of the relevant blockchain.

The discussion on ‘regulatory protocols’ is interesting, and it is the first commentary I have seen on the potential need for ‘plugins’ to allow regulators to intervene in smart contracts, with the example given of a contract concluded under duress needing to be reversed. This is fascinating, and is something to consider in a lot more detail. It seems to me that this could entail revisiting the cyberlaw notions of ‘east coast code’ and ‘west coast code’, and determining who, in fact, holds authority — and, if protocol developers or blockchain operators have to make way for regulatory intervention directly into the system, whether this is quite what many of the proponents of blockchain, or of smart contracts, have in mind.

There are also some interesting comments about the possibility of creating a whole new, alternative, legal system (‘Bitnation’ also comes up in chapter 2) but, much like discussion of ‘cyberlaw’ and a unified ‘law of the Internet’, the discussion stumbles against the undeniable relevance of real-world jurisdictions. Cyberlaw is still an idea which I still find appealing, but the increasing balkanisation of legal frameworks regulating online activity suggest it is a forlorn hope rather than something achievable, and I suspect the same is true of an alternative, blockchain-based, legal system.

This was one of the stronger chapters in the book.

Chapter 5 takes a US-centric look at the enforceability of smart contracts, chapter 6 deals with chains of custody with a focus on computer forensics labs, chapter 7 deals with digital archiving and the role the blockchain might play, and chapter 9 comments on fundraising via tokens and Initial Coin Offerings, again from a US perspective.

While any (or all) of these might be of interest to some in the legal profession, they lack substantive commentary on what they mean for the legal profession. They feel to me like essays written for different audiences, re-used for this book, but, whether that is the case or not, they could really have benefitted from stronger focus on the ‘legal profession’, as opposed to broader impacts or regulatory issues arising from the use of blockchains.

Chapter 8 is primarily a list of patent filings — US only — relating to blockchain, again with no clear application to the legal profession. Flipping through the list of patent filings gives an indication of how, at a high, one sentence, level, some are considering the use of blockchain and a motivated reader could apply their own mind to determining whether there is a role for any of these in the legal profession, but it is disappointing that this is an exercise left to the reader. Again, applying the facts to the problem — what this means to the legal profession — could have been far stronger, and it would have been ideal to see a discussion beyond US filings.

I went into this book with high hopes and, at roughly £1.50 per page, I don’t think that that is unreasonable. But I was, ultimately, disappointed.

As someone with a tech law firm, I didn’t put this book down full of ideas as to how I could use blockchain to enhance my practice and my clients’ experiences, or how it might affect the profession overall in any substantive sense.

I had wondered if there would be discussion about lawyers putting their advice into blockchains, so that there can be no dispute later as to who said what based on what facts and instructions, or an exploration of the use of smart contracts to define legal deliverables, linked to client auto-payment, to be used by the legal profession, or other tangible means of using the blockchain in legal practices, but it did not deliver for me in this regard. I could move my engagement letters and client onboarding onto the blockchain, but I’m struggling to see the benefits in doing so, especially since a private blockchain for this appears to confer little advantage over a suitably-backed up private storage system. Perhaps something to do with ensuring the integrity of the identification documents I have validated?

I felt that it lacked cohesion, and that it was a collection of disparate articles rather than a logical, methodical exploration of the way the blockchain might impact the legal profession. I expected a far stronger focus on ‘and this is what it means to the legal profession’ and the absence of this was the real let-down. While some chapters are stronger on this than others, even those are more speculative and enthusiastic than they are grounded and revelatory.

I loved the authors’ enthusiasm, but it comes at the cost of the book feeling rather like the collated outcome of a blockchain-lovers conference: lots of aspiration, lots of excitement for the future, but too little in the way of actionable advice, critical commentary, or robust application to the legal profession.

There are some gems to be found in this book, but, even at just 100 pages, it felt like hard work trying to extract them.

Blockchain and the Legal Profession was published by Ark Group in June 2018 (100 pp, £149.53 for paperback, ISBN 978-1-78358-338-6).

Neil Brown runs decoded:Legal, a law firm specialising in advising on telecoms, tech, and Internet law matters. He won’t be accepting payment in Bitcoin just yet.


Published: 2018-10-04T11:50:00

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