Blockchain gave rise to the concept of smart contracts; legal agreements programmed, executed and automated in computer code. While the automation associated with smart contracts has proceeded, legal standards supporting that automation have been slow to emerge. Legal practices who want to adopt this new technology need to be aware of the essentials for smart legal contract drafting.
Smart Legal contracts as a new opportunity for legals
Smart contracts can work in several ways. We won’t attempt to cover each. Instead, we will focus on two:
- How it may be used by law firms
- How it may be used to improve access to legal forms and improve the delivery of services
With smart contracts, the monitoring of and compliance with contracts is automatised and can be operated at any time without human interference. Because of the blockchain’s resistance to manipulation, trust between the parties is not required. This also makes intermediaries redundant, which helps users save time and money.
One way law firms could use smart contracts is by making it easier to create and finalize retainer agreements. Information related to the relationship between the parties is inserted and the smart contract is generated. It is faster and could help law firms avoid common mistakes that are often found even if law firms use templates. For example, forgetting to remove the previous client name in one spot. Using a smart contract, the correct name would be found throughout the document.
Legaltech and blockchain
A big part of legaltech these days is blockchain. In fact, blockchain is one of the essentials for smart legal contract drafting. Applications are being developed with blockchain at the core, taking advantage of all the best parts of the blockchain mindset to improve law practice and case management applications. To that end, here are some reasons why blockchain and legaltech go together so well:
Companies seeking to develop, implement or transact through the technology need legal advice against a fast-moving regulatory landscape. Lawyers who understand blockchain technology, its benefits and drawbacks and combine this with their legal expertise can provide focused and actionable advice for clients, spot issues others may miss and will be in high demand. Beyond legal advice, lawyers may end up the de facto project managers and communicators between different stakeholders in a digitisation project, able to speak the language of each while advancing the overriding concern of advising on and meeting the client’s objectives.
Smart contract dispute resolution mechanisms offer innovative (albeit as yet untested) ways to resolve disputes.
Smart contracts could also be used by law firms to provide affordable access to basic contracts. Those in need of a contract could choose the type from the firm’s website, provide the necessary information to create the contract, and pay for the document. The system would then create and deliver the contract to the purchaser for their use.
Blockchain is changing the world in ways people are not even aware of. It is also changing what we do in the legaltech sector. That’s because blockchain and legaltech go together so very well. Using blockchain, lawyers can concentrate their efforts on solving more significant tasks that require high qualifications and professional involvement.
Trakti can help you by implementing smart contracts for your legal practice. We automate and cover all essentials for smart legal contract drafting.