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From legislated smart contracts to a national blockchain network, disruption of the legal industry is underway. The good news is there are new opportunities for agile lawyers, writes Arthur Marusevich.
In one of the latest strides towards technology adoption, the US state of Illinios has raised the bar by passing a legislation that legalises blockchain technology and smart contracts.
An alarming feature of the legislation, perhaps more so for traditional contract lawyers, is that smart contracts or records are capable of replacing conventional contracts in some contexts. In the words of the legislation, “If a law requires a record to be in writing, submission of a blockchain which electronically contains the record satisfies the law.”
But like all prototypes, the first-of-its-kind legislation comes with certain limitations. For example, what happens if an agreement involves a party beyond the borders of Illinois that does not have similar smart contract laws? Does this render the contract invalid?
Despite the limitations, what is clear from the legislation is the rate at which technology is being adopted and its consequential disruption to the legal industry.
Australia is not far behind in implementing blockchain-based smart contracts. In fact, some may say that Australia is leading the way with its pilot, the Australian National Blockchain (ANB). Spearheaded by CSIRO in collaboration with Herbert Smith Freehills and IBM, the project aims to design and build Australia’s first large-scale, enterprise grade and industry-agnostic digital platform that will enable Australian businesses to collaborate using blockchain-based smart contracts.
Using ANB, businesses will be able to digitally manage their contracts, not just from negotiation to signing, but also tracking performance through the smart clauses that have the ability to record external data sources and self-execute if specific conditions of the contract are met.
Once the platform has been built, banks, law firms and regulators will be invited to participate in the pilot. Depending on the success of the pilot, the technology is expected to be rolled out to other markets.
By overhauling the contract administration function using technology, traditional legal services will get replaced with legaltech services. The role of lawyers will also change and fewer lawyers will be required – redundancies across the profession are expected. Amidst this disruption, the good news is that new opportunities will be created for agile and forward-thinking lawyers.
Lawyers who understand how smart contracts interact with the law will certainly stay in demand.
Ultimately, a smart contract is a platform that combines the benefit of technology with traditional contract framework.
A lawyer who possess both skills will certainly be highly sought after. For example, in the context of the ANB, clients will be seeking the combined legal skills of a traditional contract lawyer and a technology expert to code and run agreements, to keep track of feedback provided by the blockchain, or to action notifications of legislative or regulatory changes related to the contracts.
For this reason, now is a good time for aspiring lawyers to consider whether to back up a law degree with a degree in computer science. The same goes for those of us determined to continue specialising in contract law – perhaps a course in programming would be a good place to start?
Arthur Marusevich is a Canberra-based lawyer.
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Arthur Marusevich
