Podcast: The Hearing – Houman Shadab, Professor of Law NYLS

From the producers… Bitcoin: bringing FOMO since 2013.

What would your scream sound like if you had dismissed Bitcoin as a joke in your law class in 2013 at $100 dollars – when it sits at $60,000 today? Joe’s guest this week is Houman Shadab, the Director of the Innovation Center for Law and Technology at New York Law School. He’s here to tell us how lawyers can navigate, benefit from and translate today’s new wave of rapid technological advances.

Houman talks us through the greenroom snacks at the US Capitol before he testified – what we really wanted to know. And, in a throwback to Mark Zuckerberg’s uncomfortable testimony before congress (“Sir, we run ads”), he tells Joe about his experience of sitting in front of the US government explaining the implications of various securities laws on hedge funds.

We’re a curious bunch at The Hearing, so we asked Houman to tell us what lawyers and legal students can do to better enable themselves for success. The answer seems to lie in no-code. Houman explains what the heck this is and why it matters to the legal ecosystem. So, get your notepad and digital wallet ready and press play!

Podcast:

Apple Podcasts https://podcasts.apple.com/gb/podcast/ep-86-houman-shadab-new-york-law-school-icme/id1389813956?i=1000541095827

Spotifyhttps://open.spotify.com/episode/44txkHGm3JqLe3EKgewSCd

SoundCloud https://soundcloud.com/user-264672855/the-hearing-episode-86-houman-shadab-new-york-law-school-icme?si=1b56a97e30e5402397fb3bbca4c2b613

The Metaverse is coming: Is the legal market prepared?

Are you ready for the Metaverse? Probably not, but please bear with me, because the legal implications will be enormous. Open your creative mind first, and at the very end apply your critical thinking legal intellect. Here we go.

Originally published on Thomson Reuters Institute.

Imagine, if you will, a world resembling our physical one, but a completely virtual, immersive, colorful, all-encompassing one with land, rivers, houses, farms, people, animals, full cities, stores, businesses, concerts, and everything else contained in our physical world. Sauntering down a bustling city street, minus the smells, is as easy as walking on a moon that orbits an earthlike place. Platforms with full replication of our physical world are being built through a wearable device to create this Metaverse. Why? That seems a tad ridiculous.

Yet, before the iPhone was launched 14 years ago, we didn’t imagine the myriad of things we could accomplish by simply touching a piece of glass-faced, hand-held technology today. It would have been a leap of faith to see where we sit now. Thus, the Metaverse is that next leap.

Over the next 18 months, following an era of Zoom and Teams virtual meetings on laptops and mobile devices, Apple will be releasing the first mixed or virtual reality headset, allowing for people to interact virtually. Initially the focus will be on new Zoom-like meetings with far more immersive business engagements, but then it gets more profound. Wait for it.

MetaverseConcept of virtual reality glasses

Why now?

The Metaverse, or Web 3.0, is developing, but what led us here? First came layer one: blockchain, an immutable database to store information, in concert with the proliferation of cryptocurrencies, an ability to transfer value akin to currency initially, but later representing all assets. The tokenization of assets is a seminal concept and means that anything physical, or more important in this instance, digital, can be proven and has authority via code on an immutable ledger.

The latest manifestation of this authenticated representation of ownership are NFTs (Non-Fungible Tokens), and their popularity is the slippery slope of the Metaverse. Initially, people are buying digital art. In building out the Metaverse, art will be displayed on the walls of homes. However, the assets, living in smart contracts on the blockchain represent all assets. Homes, offices, land and even designer clothing of this world — legally represented by deeds, contracts, and leases — have been tokenized. This means you can buy digital land, homes, and other objects on a platform like OpenSea, to prove you own it. That value creates a network effect, enabling interactions within an ecosystem, and therefore a new Metaverse (world) is born.

MetraverseDigital land for sale on Decentraland

Indeed, OpenSea is just one of several marketplaces where individuals can buy the future of asset ownership in the Metaverse. All asset ownership, both digitally and physically, could be ported over to an NFT on blockchains. All of these critical pieces are then layered on top of a platform of animation — the actual space inside the headset, which has been with us for many years. It is the asset tokenization that makes this paradigm shift most pivotal. Transactional attorneys should beware, and litigators should feel their eyes widening at the possibilities ahead.

The virtual spaces being developed have cities in which you can buy almost anything. Land, upon which you can build your house, then you can fill that house with pieces of art (via NFT), and wear an outfit that is a verifiable Ralph Lauren suit with Nike shoes. The concert you attend requires a ticket (another NFT), and the subsequent music you want to purchase is also digitally saved and copyright enabled. Again, all of this is purchased from companies with underlining NFT ownership.

These digital worlds will likely be our future in the next decade, and a substantial amount of your time will be inside of these worlds. I know, it’s terrifying. If you are skeptical, however, note that OpenSea processed transactions of more than $3.3 billion in August alone, and this is just the beginning.

In the Metaverse, people will interact, transact, own assets, have relationships, build things and companies, create intellectual property (IP), have copyright issues, and advertise. Further, crimes may happen, insurance likely will be developed, and a massive host of other IRL (In Real Life) concepts that now all now require will evolve — and that will require legal professionals to be involved.

Not to mention the scaling of DeFi (Decentralized Finance), which has already begun and will continue to ramp up. Clearly, this is a burgeoning market. While I have been engaged in this space for several years, a recent white paper from Reed Smith on the Metaverse underlined its importance for the legal industry. It is a worthy read if you wish to continue down the rabbit hole.

What’s next?

What is on the horizon as we move into the Metaverse? DAOs, for one,

DAOs (Decentralized Autonomous Organizations) are entities that have been built by humans. Likely a business initially, but once the code has been written, the code acts as the law and it runs the business autonomously. These DAOs will proliferate both inside, but more importantly for the foreseeable future, outside of the Metaverse. They are already very successful, supporting $25 billion on one DeFi DAO right now. (I will examine the magnitude of DAOs in an upcoming post.)

The implications of the Metaverse for the legal community and within the regulatory community as well as every other facet is enormous. While this space is being built, it is still early. Over the course of the next several years, the Metaverse and all its implications will move from the fringe to a more important arena for lawyers to contemplate and eventually address. Now is time for those lawyers to apply their critical thinking legal intellect.

Podcast: The Hearing – Andy Wishart, CPO Agiloft

From the producer… This week, Joe takes a break from legal futurology and tries his hand at being a pub singer. We’re here for it. And so (much to his horror) is Andy Wishart – Chief Product Officer at Agiloft and all round technology guru.

Joe and Andy discuss the beginnings of Contract Express, Andy’s 21 years in legal tech, and the changes and challenges he’s seen along the way. They also chat about the power of document automation, how the legal industry has evolved alongside this technology and Andy’s rather cool career journey.

If you’re one for tech leaders in band t-shirts, Scottish accents (good and bad) or just want to know more about lawtech’s underground karaoke scene, this episode is for you. You’ll also hear some rather excellent efficiency advice too.

Listen Here:

Apple Podcasts – https://podcasts.apple.com/gb/podcast/ep-84-andy-wishart-agiloft/id1389813956?i=1000536724372

Spotify – https://open.spotify.com/episode/7opWHeuPOO8Sjux4WpGstX

SoundCloud – https://soundcloud.com/user-264672855/the-hearing-episode-84-andy-wishart-agiloft

3 Geeks and A Law Blog – The Geek in Review Ep. 128 – Joseph Raczynski – The Red and Blue Pill Matrix of AI and Emerging Legal Tech

This was a ton of fun! I had the chance to record this “holding Joe’s feet to the fire” 😉 conversation about the future of legal industry and where we all may be going with dynamic duo of Marlene Gebauer and Greg Lambert. Thanks to both of them for the opportunity to go down the rabbit hole of technology and the legal industry!

https://anchor.fm/geekinreview/embed/episodes/Joseph-Raczynski—The-Red-and-Blue-Pill-Matrix-of-AI-and-Emerging-Legal-Tech-e164hli/a-a6ciluq

The Geek in Review Ep. 128 – Joseph Raczynski – The Red and Blue Pill Matrix of AI and Emerging Legal Tech

Podcast: The Hearing – Stan Litow, Professor Duke and Columbia University

From the producer… The achievements of this episode’s guest have been celebrated by the Council on Foreign Relations, Harvard Business Review, The Economist, The New York Times, Forbes and Wired. Joe is talking to the founder of P-TECH, and author of Breaking Barriers, Stan Litow.

They begin by discussing Stan’s early career – working for the mayor of New York City – which opened his eyes to issues in the education system. This stuck with Stan through roles in public service, the not-for-profit sector and into IBM – where he created “the private sector version of a Peace Corps”.

P-TECH is a global program that blends high school with higher education and on-the-job learning. It bridges the gap between employment and academic systems that lack the provision of workplace skills. These opportunities are available to all students, regardless of race or financial status, in a way that benefits the private sector as well as society. This episode is for lawyers who want to see change in the industry but aren’t sure where to start.

Listen here:

Apple Podcasts: https://podcasts.apple.com/gb/podcast/ep-81-stanley-litow-p-tech/id1389813956?i=1000529324591

Spotify: https://open.spotify.com/episode/16SLcBXiom5ObeGlkCITpb

SoundCloud: https://soundcloud.com/user-264672855/the-hearing-episode-81-stanley-litow-p-tech

The impact of blockchain, cryptocurrencies, and NFTs on the legal industry with Joseph Raczynski

It was a ton of fun recording this podcast with the omniscient and ever engaging Joseph Gartner at the ABA Center for Innovation – (full transparency, I sit on the Council). With Joey’s new role as Director and Counsel, we chatted all things #blockchain#cryptocurrencies, and #NFTs and their impact on the legal industry.  It is fantastic to be a part of a group pushing on #innovation in the legal industry at the ABA with Chair, Don Bivens and the entire Center for Innovation Governing Council.

https://www.buzzsprout.com/1784333/8764341-the-impact-of-blockchain-cryptocurrencies-and-nfts-on-the-legal-industry-with-joseph-raczynski

Podcast: The Hearing – Stevie Ghiassi, Co-founder Legaler and Legaler Aid

Question: What do the Iranian national football team, NFTs, Hotel Rwanda and tennis great, Andy Murray have in common?

Answer: Stevie Ghiassi, Co-founder of Legaler and Legaler Aid. And my guest this week!

In this episode, Stevie chats with me about his unlikely journey from running a chain of souvenir shops to becoming a legal tech entrepreneur. He also talks about the important work that Legaler Aid is doing, and ways in which legal tech and blockchain have helped them pivot after Covid took away traditional fundraising streams.

Yet again we’re seeing innovative ways that cryptocurrency and blockchain are being used, and how they offer real opportunities for the legal industry.

Apple:

https://podcasts.apple.com/us/podcast/ep-78-stevie-ghiassi-legaler/id1389813956?i=1000524478029

Google: https://podcasts.google.com/feed/aHR0cHM6Ly9wb3J0YWwtYXBpLnRoaXNpc2Rpc3RvcnRlZC5jb20veG1sL3RoZS1oZWFyaW5n/episode/aHR0cDovL2F1ZGlvLnRoaXNpc2Rpc3RvcnRlZC5jb20vcmVwb3NpdG9yeS9hdWRpby9lcGlzb2Rlcy9FcDc4X1N0ZXZpZV9HaGlhc3NpX21peGRvd24tMTYyMjgxMTgwNDQ2MjA3MzUyNi1NekkyT1RFdE56VTVNelkxTkRBPS5tcDM?sa=X&ved=0CAUQkfYCahcKEwjAm42r05XxAhUAAAAAHQAAAAAQCg&hl=en

Bye-bye, banks! Hello DeFi… Our bankless society has officially begun

Decentralized Finance (DeFi) is a multi-billion-dollar movement that may end up changing the way we all bank

Imagine a time where banks are not needed. Think about all the financial instruments we use today — currency, loans, insurance, bonds, credit cards, stocks, futures, options, interest bearing accounts — being converted to a new model, one that doesn’t require a traditional banking institution.

This is happening now. For those of you who sit on the bleeding edge of technology with me, this has been looming for a few years. However, I have purposely held off writing about it until the data was sound. Now, we have the data.

Decentralized Finance (DeFi) is a multi-billion-dollar movement involving several intermingled concepts. At its core it is blockchain-based and uses an immutable, trustless computer network that verifies transactions without human intervention. The most established platform on which DeFi is built is Ethereum, which was the first major blockchain to move beyond a simple currency replacement, such as Bitcoin. Instead, Ethereum has moved toward completely revolutionizing our ability to automate actions with the introduction of smart contracts, which themselves enable code to facilitate actions stored on that blockchain public ledger.

What is pivotal here is that you can establish complex financial ecosystems that run based on rules; thus, eliminating the need for traditional third parties, like banks and brokerage houses. These rules can dictate action, lock-in value, automate transactions, and create immense efficiencies in the marketplace at a fraction of the cost of our current systems.

DeFi

There are hundreds of examples of DeFi applications on the Ethereum ecosystem today. For context, Ethereum has a $475 billion market capitalization, just shy of JPMorgan Chase and Visa, making it the 14th largest company in the world. We are extremely early, and I project Ethereum to be the most valuable asset in the world within the next few years; and there is $90 billion invested in Ethereum-based DeFi protocols as of this writing. Addressing concerns since its inception, the platform is currently being upgraded to speed transactions — that is, provide scalability — as well as moving from proof of work to proof of stake, meaning that the previous maladaptive environmental impact will be reduce dramatically.

Prepping for DeFi

Practically speaking, how does this all work, and where is it going? Your blockchain-based “digital wallet” — such MetaMask — is your new on-ramp to DeFi. This will be a nearly universal tool all over the world in the coming years. And while the majority of people in this space now use a wallet stored on a centralized exchange, the path forward will be to “own your own keys”, meaning the private and public keys (which are essentially two elongated number-letter strings) that prove you own that wallet. The private key is akin to your password and should never be given out, while the public key is your address (like your mailing address) to where people can send you assets.

When you use a central exchange, like Coinbase, you do not own your own keys. Once you own your wallet you can load any number of assets into that wallet, including Non-Fungible Tokens (NFTs). Soon this wallet will contain all your assets, including deeds to your house, car, health information, your own digital identity, and much more.

How do you interact with DeFi?

To navigate this process, you begin with an asset (like Ethereum, or ETH, for example) in your wallet. Now you have countless possibilities to go bankless. With that token, you can simply hold it and hope its value appreciates. Each token has a fluctuating value in currencies from around the world.

Another option would be to “stake” that token, which means you are paid to offer that token up as collateral to participate in the network which confirms transactions from one person to another. When you stake a token, a binding smart contract is being created on the blockchain. You are committing to offer your 1 ETH to the network for a set amount of time, and during that time, you may get 10% or more interest. The legal contract is in the code.

Progressing down the complexity scale of DeFi, nearly all financial instruments can be leveraged on this platform through various applications. You could loan out that 1 ETH and receive a yield, which tends to be very high these days, at around 7% to 100% per annum. There are hundreds of tokens on the Ethereum platform that have distinct purpose, although there are other competing blockchain platforms in this space. These platforms too are building out DeFi solutions.

One of the most prominent examples of DeFi is Uniswap. It is the most popular Ethereum-based decentralized exchange (DEX), which allows people to swap tokens that run on the Ethereum network. What is special about Uniswap is that it is an Automated Market Maker (AMM), which means it uses algorithms to price assets instead of buy and sell orders. Individuals can also earn money on the platform by providing liquidity by locking up tokens they own; others can then borrow the tokens and pay interest to the liquidity providers. All of this is using smart contract code without human intervention. All of these assets can be sent from one wallet to another without a bank — this DeFi in action now.

DeFi

But what does this mean for the legal industry? In short order, government agencies, law firms, corporations, and others will be impacted by DeFi. Each party will need to look at it through their own lens, examine the benefits and understand the risks as well.

  • If you are a law firm with a big bank as your client, partial short-term disruption is a risk. DeFi offers firms the opportunity to leveraging this technology for the “banks” of the future, which of course, will be code-based. The long-term disruption to the traditional banking sector is real. Unless banks can figure out how to compete when code can facilitate what they’ve been doing for the last 200 years.
  • For government agencies that provide guidance, this technology can usher in opportunities that previously were only available to the wealthiest people and organizations. The vast amount of “unbanked” individuals — those without access to a bank or credit — can now participate in the economy. However, these same agencies need to determine if there are enough regulatory rails to prevent harm to individuals or businesses.
  • As for corporations, if they see themselves as “middlemen” that facilitate loans or provide currency, bonds, credit cards, stocks, futures, options, or interest-bearing accounts, they might have to pivot.

DeFi will change the way we bank and interact with assets of all sizes. This shift is as large as the move onto the internet with the tokenization of all assets and value represented digitally.

The legal industry needs to lean into the conversation now, to better digest how to help their clients, and possibly properly guide regulation for the coming codification of our financial world. Because the next iteration of this space will be Decentralized Autonomous Exchanges (DAOs), which will not only impact the financial industry, but will carry over to any entity — firm, business, or government agency — that can and will be run by code.

Amazon law and innovation take center stage at Legal Geek’s Uncertain Decade summit

What do you enjoy about your Amazon experience? Likely everything. The company’s success is derived from a few simple words of company CEO Jeff Bezos’ ethos: “Delight your customers.”

Yet, when you think about innovation, what does that look like inside a law firm? To be honest, it’s probably very different than perhaps it should look. These were the headline topics of discussion at last week’s Legal Geek Uncertain Decade Summit held virtually with Mark Cohen, Executive Chairman of the Digital Legal Exchange, and Richard Susskind, President of the Society for Computers and Law. In their respective lectures, they laid out in stark fashion where they believe law firms are missing the mark on innovation for their clients.

As was artfully illustrated by Cohen in the first of the two talks, Amazon is a corporate conquistador whose North Star is its customers. His premise is that law could learn a great deal from Amazon, and one day be as much of a disrupting force as the Seattle colossus.

What Cohen suggests the legal industry do, is think more like Bezos. While technology is a core component to the company, it is only an enabler. Where Amazon excels is with data. That means, law firms must get to know their clients much better, in order to delight them, Cohen explains, and that means everything must be measured. “You need to know your customers better than yourself,” he adds.

Unfortunately, very few law firms are operating under this ideal, according to Cohen.

If you think about the entire beginning-to-end process of engaging with that client, can you anticipate how they may feel through each gate? “It’s about what happens when they buy something,” Cohen states. “It’s how they buy something, what they want, and when they want it.” Ultimately, it is an end-to-end customer experience, and tech is an enabler to make it happen.

And Cohen did warn — if you read the clouds forming on the horizon — that Amazon law could enter into the legal industry, noting the company’s early inroads into legal with its IP Accelerator, a trademark registration arm that automates IP registrations for people and or companies. Cohen also mentioned Amazon Marketplace, where legal technology companies can add their wares to a legal app store to be downloaded and used. That means that even though Amazon isn’t involved in the practice of law, it is integrating into this space by enabling legal technology as part of delighting customers.

Legal Geek

In the second section of their talk, Susskind takes law firms to task on innovation, saying many of them have overpromised and underdelivered. Over the last five years, lawyers have spoken a lot about innovation, he said, but it was often vague as to what that meant. For some firms, innovation means process improvement, for others it means transformation, and for yet others it means marketing.

Susskind outlined 10 features that separate law firms on innovation, placing them in two different camps — second-generation innovation firms that baked innovation into their planning; and first-generation innovation firms that just want “quick wins”.

Here, according to Susskind, is what second-generation firms are doing:

1. Process improvement first, rather than new business models — Often law firms are thinking of innovation as “process improvement”, but that is not enough. Firms need to think bigger and ask themselves, “How might we reinvent the business model to delight our customers?”

2. Marketing noise rather than progress — One of the most popular first-generation innovation models is the marketing bullhorn. Many law firms still churn out noisy press releases declaring various “process improvements” as innovation. However, if you pull back the layers, “there isn’t much there,” says Susskind, adding that the focus should be on real innovation, with major steps forward in re-examining their business model.

3. Automation v. transformation — Automation is certainly popular and important, but transformation is even more critical. In the second-generation mindset, the lens is on the long-term vision for the firm — and that’s better for the firm and its clients. With second-generation innovation, the goal is to transform the business and the practice of law.

4. Pilot programs rather than fully operational systems — Pilot programs are playgrounds to learn, even if many of these pilots never make it beyond the jungle gym. And while that is naturally the case with pilots, Susskind emphasizes that second-generation innovation firms push to go beyond the playground. On this new plain, the goal is to learn and create new fully operational systems.

5. Little impact on figures as compared to serious revenue profits — Another concept Susskind discusses is the idea that innovation will have little impact on returns. Attorneys tend to believe revenue generated from innovation is inconsequential. Yet, if an organization pursues the second-generation path, there can and will be serious revenue profits from these new approaches if they’re done thoughtfully.

6. Arguments v. evidence — Many firms are still in the mindset that they can argue for or against the importance of innovation. Indeed, there are many firms that argue against it. Instead, the focus should be using evidence to support the case for innovation, and that evidence is all around us. However, it needs to be uncovered, cited, and then used to support innovative movements inside the organization.

7. Minority of partners involved rather than majority — In the early stages of innovation, it is usually the stakeholders that support it, Susskind says, but that is not always enough. When a firm sees the majority of partners actually buy in, that is when the real innovation takes place. Firms need a collective majority.

8. Intellectual grasp, rather than emotional grasp — In a very relatable narrative, Susskind talks about stakeholders who “get it” intellectually, but again, that is not enough. As he physically pounded his chest with his fist, Susskind says he knows when firms “get it” because that’s when they get emotional about it. You can see that firms leaders feel it in their guts and understand the importance of innovation at its very core. Then they will make sure it is the lifeblood of the organization.

9. Avoiding competitive disadvantage rather than seeking competitive advantage — In first-generation innovation, firms are generally attempting to hold their own against their competition, Susskind describes. They simply try to emphasis preservation, such as asking, “How can we stay alive in this pitch?” Second-generation innovation means firms are thinking differently, and asking “How can we steal the business from our competition?” The latter is far more aggressive as a result of baked-in firm innovation that came from long-term planning.

10. Preference for short-term ‘tactical’ v. long-term ‘strategy’ — Most of the firms that are just wrapping their arms around innovation still think in the short term and tend to be more tactical. Instead, firms should be thinking of how they can think differently along a decade-long strategy rather than a year-to-year outlook that’s focused mainly on profits per partner.

Cohen summarized the landscape in regard to innovation within the legal industry. “We are at the foothills now, and our clients are scaling the mountain.” Both Susskind and Cohen agree that most law firms are lagging behind where they should be in transforming themselves through innovation. And they feel that the Amazon ethos of delighting your customers should be emblazoned on the border bezel of every attorney’s computer.

Indeed, the acceleration of change is only increasing, and law firms face increasing competition from alternative legal service providers (ASLPs), and the Big Four consulting companies. Clearly, the clock is ticking.

“Don’t wait to change your model when you get pressure to do so by your competition,” Susskind warns. “It will be too late.”