Given the current trends, it is expected that blockchain will become conventional by 2020. Concerning blockchain in the legal industry, a preponderance of the disruption lies in a scripting language and a set of protocols generally known as smart contracts. One can see those obstructing banking, payment industries, financial services for now, though these interruptions are not limited to merely these industries. In simpler terms, smart agreements use blockchain to facilitate transactions, and their use is favored over traditional methods because of their ability to store payment and business costs and facilitate the instantaneous clearing of trades.
Given the disrupting impacts that blockchain has generated over the years, by delivering heightened convenience, decreased risk, efficiency for service consumers and inexpensive cost of operations for financial services providers, it has become almost imperative for lawyers to understand how to communicate securely and preserve their client data. Here are a few ways of how blockchain can be used in the legal industry.
E-discovery and Proof
Given the fact that blockchain is a permanent and virtually infinite log, it is natural to assume that a majority of legal procedures will be supplemented with blockchain in preventing most evidentiary issues. But this also raises several complex problems, for instance, treating blockchain data as evidence will be a significant problem in making blockchain legally accessible. For example, in the United States, the criterion for admissibility of evidence is subject upon whether a witness has sworn under penalty of lie that the information is correct. Stand-alone documentary exhibit such as blockchain documents are normally not permissible and are categorized as mere ‘report.’
It has been seen from prior instances that law firms are relatively weak in terms of information governance and exercise control methodologies that are easily subject to infringement. For instance, data break-ins at big law firms have ended in stolen client data, apart from reputational havoc. Blockchain can secure this privileged information contained by large law firms, especially those about contracts and other data that is legally protected. Experts are working on accomplishing this vision as to how the blockchain will transform the way lawyers operate.
Transforming Privacy laws
Like any legal ledger, blockchain can become an official record for tracking the validity of activities and other information. Though this record is sufficiently visible to all, individual elements of the sales are encrypted and not plainly viewable. On the flip side, there also subsists the possibility of tyrannical misuse of blockchain in breaching privacy laws. Treacherous transactions such as the sale of illicit goods or supporting a ransomware payment model can be efficiently facilitated via public blockchains, due to its anonymous character.
Traditionally, there are complex rules for accepting a digital signature; nevertheless, the use of it in this area provides for an efficient and safe method in activities. On the blockchain, if signature information is kept, it is simpler to later authenticate the transaction record by pointing to the digital signature used to authenticate the transaction. This will help satisfy the evidentiary requirement that the blockchain account “is what the advocate claims it is,” that is the blockchain receipt for the particular transaction. Moreover, in most legal systems, blockchain testimony can be considered but only with the guidance of expensive expert witnesses to describe what it means. This process reduces the potential efficiencies gained through the application of blockchain technology, and would instead develop court costs and decrease passage to justice.
Blockchain, the disseminated database technology with the capability to perform smart contracts, is more than a platform for cryptography. The world of use cases in governance is expanding exponentially. Though blockchain is converting mainstream in everyday use, it has also caused forth tricky challenges and complicated legal issues and is pushing the limits of existing laws.