law firms are tripping over themselves to be identified with the growing
blockchain bandwagon and be seen as a leader in this rapidly emerging field.
If you don’t believe me, check out some recent
In October, Gowling WLG announced the creation of a
dedicated blockchain and smart contracts practice group, claiming to be one of
the first of its kind in Canada.
In November, Bennett Jones joined the Enterprise
Ethereum Alliance, an open-source blockchain group, while Dentons in December
announced it was the first Canadian law firm to join the Global Legal
Blockchain Consortium, which is pushing for the use of blockchain technology to
enhance the privacy, security, productivity and interoperability within the
legal industry ecosystem.
In January, securities law boutique Wildeboer Dellelce
LLP upped the ante, putting its money where its mouth is by announcing it would
accept crypto-currency payment for legal fees. Crypto-currency relies on
Heck, even Ontario legal insurance provider LawPRO got
in on the action, posting a video and infographic in January that explains
blockchain basics for lawyers.
I won’t explain blockchain technology in any great
detail other than to say it is “smart” computer coding that creates a
distributed form of secured record-keeping among a group of parties that form
for a common purpose. Members of the group are encouraged and incentivized to
share information and advance the safekeeping of the ledger that records
transactions among group members, whatever those may be. Because the ledger is
distributed among the group members, whose job is to verify and update it as
business progresses, it is considered more secure than a central ledger
controlled by a single party.
So, is “blockchain law” a passing fad that will wither
on the legal vine (remember Y2K litigation practice groups or the early
e-commerce practice groups)? Or is it an emerging new practice field that will
fill law firm coffers with crypto-currency gold?
Beth Wilson, CEO of Dentons Canada, hails blockchain
as a “new and emerging area,” likening it to cannabis, which is also
experiencing a similar gold rush, as law firms elbow each other to be seen as
the regulatory leader in this fast-developing sector. “This is not a passing
fad at all,” she says of blockchain. “I really believe that blockchain is going
to have exponential impact on so many areas.”
Geoffrey Cher, a lawyer at Wildeboer, likens it to
double-entry bookkeeping, which “changed the way that businesses operated.”
The technology is about transparency, he says, and
taking things such as tracking the value of goods and audit functions to the
next level. It will create safer, new environments for doing business.
Integrate artificial intelligence into the group’s mix and it will take
innovation among organizations to new heights in a digital era.
A June 2017 podcast from Futurethinkers.org identified
19 industries or fields that will be disrupted by blockchain technology.
Among the biggies are banking, insurance, retail,
energy services, the public sector, transportation and health care. Areas such
as supply chain management, cybersecurity, capital raising and even voting will
evolve, thanks to blockchain.
Blair Wiley, a corporate lawyer at Osler Hoskin &
Harcourt LLP, who advises clients on the regulatory aspects of blockchain and
crypto-currency, says blockchain technology “allows multiple parties to
exchange value and record information” in a secure ledger that “no one owns or
controls.” He says it “will change the way that businesses interact.”
“We are still in the early days” and he expects new
business models to spring up using blockchain that go well beyond uses, like
crypto-currency and crowdfunding.
However, “describing yourself as a blockchain lawyer
is like describing yourself as an internet lawyer,” he says. Rather, blockchain
involves a comprehensive discipline of legal talent to sort through the issues.
Legal work is needed to draft the contracts that will
govern these new business models and how groups will use blockchain to further
their goals. There are intellectual properties issues, privacy questions,
contractual and financing hurdles and much of it involves applying old laws and
thinking of new ways of doing business in a purely digital environment, not to
mention the legal work needed to support the new startups that are entering
this field, which are often already well financed.
More interesting, though, remains blockchain’s
potential. “Some of the more interesting and profound applications of
blockchain haven’t been thought through yet,” Wiley says. Some argue that
blockchain technology has the potential to disrupt controlled social networks
such as Google and Facebook, where users sign in to participate and give up
control of their personal information and data about their habits and patterns.
Wiley says some blockchain proponents are now trying to “disrupt” that and
return control and power to individuals over how their personal information is
stored and used. “Whether they will succeed or not remains to be seen.”
dislodging Facebook and all those annoying status updates I get each day? Now
that sounds like a practice group that is worthwhile and one that I could get
Jim Middlemiss is a principal at