By Zach Warren Manager for Enterprise Content for Technology & Innovation / Thomson Reuters Institute
NATIONAL HARBOR, Maryland — At the opening keynote of the 2022 International Legal Technology Association Conference (ILTACON), futurist Patrick Schwerdtfeger had a warning for the attendees: “When things change, there are winners and there are losers. We need to make sure we’re some of the winners.”
However, there was one crucial detail he may have forgotten: Schwerdtfeger was speaking to a room filled with veterans of the legal industry, which of course, is built on precedent, mixed with a healthy dose of risk aversion. Indeed, an industry that has earned a reputation over the years of never even trying to explore use cases for next-generation technologies.
Recently, however, a funny thing happened: Law firms and corporate law departments alike have gotten more intelligent about both being a part of the conversation surrounding these technologies’ development, and exploring novel ways to separate themselves from their peers. In doing so, as ILTACON revealed, many within the legal industry have started to take a proactive stance on innovations like the blockchain and the metaverse, with not just technologists but leading attorneys themselves jumping on board.
Blockchain by blockchain
Blockchain has received a lot of attention for being the underlying technology behind digital assets such as cryptocurrency and non-fungible tokens (NFTs). Some innovators in legal envision blockchain being used to explore more business-oriented applications of distributed ledger technology.
Law firm Hogan Lovells, for example, sees blockchain technology as an opportunity to reform its real estate processes. The firm has developed DriveChain, a collaboration between the firm, banking company BNP Paribas, and blockchain technology provider Integra Ledger, to automate parts of the real estate process. DriveChain looks to eliminate manual data entry or multiple layers of approvals by automatically coding deal details such as parties, sale price or amount for rent, and more, into the document. That generates a unique deal ID, which is put on the blockchain. The data is then given a unique code called a hash, through which all parties are notified if any details of the deal are changed.
“What we are doing with blockchain is validat[ing] that the document they received, that the metadata within the document, is still validated,” says Bob Shaeffer, senior manager of architecture and integrations at Hogan Lovells, during a panel on the use of blockchain in professional services firms.
Shaeffer is quick to add that DriveChain is not a piece of blockchain technology itself, but rather the name for the new real estate-centric workflow. Blockchain technology simply functions as a piece of the overall puzzle, and only the hash and the unique ID for the data actually sit within the blockchain architecture. This way, the firm still holds crucial deal details inside its own walls for the protection of clients, but it still utilizes the new technology to cut time out of the process for approvals.
It’s this type of practical application that more and more firms are exploring on the blockchain, adds Joseph Raczynski, a technologist and futurist with Thomson Reuters, from “smart” contracts that are automatically executed once specifically-coded parameters are hit, to decentralized finance (DeFi) marketplaces that are increasingly becoming a hub for business transactions. Raczynski even pointed to one firm, Rose Law Group, that executed a legal wedding online, with both a pre-nuptial agreement and a marriage license coded as a legally-binding NFT.
“They moved down the road of taking documents that are unique and making them an NFT, which is what we’re going to see in the not too distant future,” Raczynski explains.
