Law firms have a reputation for being slow to embrace technological change due to the significant costs and time constraints involved. Traditionally there has been a distinct lack of desire or indeed motivation to change. In a world where time is money, committing resources into technology and innovation has simply not been at the top of their agenda. Until now.
Even those that are stuck in their ways are waking up to the undeniable benefits of automating mundane tasks. Becoming more cost and time efficient is a language that every lawyer can understand. Advancement in technologies such as AI, machine learning and blockchain is already bringing positive change to the industry.
The slow phasing out of legacy data infrastructure is enabling law firms to process much larger scale of data. For example, JPMorgan turned to an AI system called COIN, for Contract Intelligence that can interpret 12,000 commercial loan contracts each year. It can also save the firm 360,000 hours of lawyers’ time annually. Even more impressive it the fact it also has a much lower error rate than human workers.
There are many different examples of how artificial intelligence and blockchain-based technologies can transform legal firms of all sizes. But, technology does not offer a magic wand to fix problems, it’s merely a tool that can help create new business models, processes and ways of working. Here are a few of them.
Essentially, Smart contracts is blockchain’s way of upgrading traditional agreements and make them fit for a digital age. Try to imagine a contract that is self-executing and stored on a decentralized immutable blockchain.
From the moment the contract initiator begins the process, the smart contract immediately becomes auto-sufficient and requires no further action from the initiator. It can even automatically distribute or collect financial transactions if programmed to do so.
One of the most significant benefits of this new way of working is that third-party services such as agents and brokers can finally be removed from any contract implementation. An autonomous, decentralized, and auto-sufficient smart contract will save law firms a significant amount of time and money while also delivering greater efficiencies too.
In an age of instant gratification, we increasingly expect to get our hands on whatever our heart desires immediately. We can leave our wallet or purse at home and can carry our entire life around inside a smartphone that fits into our pocket. However, if you attempt to buy, sell rent a property, it quickly feels like you are taking a step back in time.
Suddenly you are back in the days of paper deeds, land searches and various methods of tracking property ownership that feel awkwardly out of date. For many firms, even the digital transformation involves scanning paperwork and adding to a legacy system or database. The time-consuming flawed system desperately needs a 21st-century upgrade
For example, the minimum timeline of buying a house in the UK is eight to ten weeks. But what is the answer? Blockchain can help drastically reduce the complication and risk that currently exists when buying a home. It’s time to ditch the paper trails and add all stages of any property transaction to an immutable blockchain ledger.
It’s true that there are already examples of legal contracts that can be completed and signed digitally. But, there are still areas that need to be registered manually such as the land registry. However, a combination of blockchain and smart contract technology would enable the offer, acceptance, and exchange of contracts to all be recorded using the blockchain ledger.
Giving all parties the ability to track and view everything easily can only promote greater trust, transparency and reduce frustrations. This can only be a good thing.
Bringing Law into the 21st century
The reality is that every aspect of the legal profession is in dire need of a digital upgrade. The drafting of contracts, recording of commercial transactions or verification of legal documents are all in need of updating. Automatically generating legal agreements and embedding smart contracts that can seamlessly be executed on the blockchain will be a reality sooner than you think.
Rather than replace lawyers, technologies such as blockchain and AI is much more likely to help reduce the time they spend on routine and mundane tasks. By removing the tasks that do not provide value, lawyers will actually have, more time to focus on legal insights.
What problems is this technology really solving? The faster and more efficient processing of information is now expected as standard. Meanwhile, the creation of a single source of truth that is stored on an immutable record with time-stamped signatures could also dramatically reduce legal disputes.
Law firms have a reputation for being incredibly risk-averse when it comes to technology. But, with due diligence, deal-making and almost any aspect of the law, blockchain technology actually helps prevents fraud, reduce risk, and can help their clients with ownership of data
Technologies such as AI and Blockchain are on course to transform the legal industry, but for all the right reasons. Ironically, it will be the law firm’s traditional aversion to risk that will usher in much-needed changes to their industry.