Legal Technology/Internet 4.0 – How will Legal Technology Change the Industry?

By Joseph Raczynski

INSOL Europe 2017 Annual Congress

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Warsaw, Poland – Sofitel Victoria. Before the full contingent of 400 attendees at the INSOL Europe Annual Congress a panel of three stepped into the future of legal technology and its impact on insolvency and the courts in Europe.  The panel consisted of Judge Erik Boerma – Court of the Nertherlands; Gunther Theis – CEO, STP Informationstechnologie, Germany; and Joseph Raczynski from Thomson Reuters, US; with Moderator – Joanna Goodman, United Kingdom.

Goodman introduced the session by discussing Internet 4.0 and AI, which is described as the fourth industrial revolution.  The concept is that we are now in a new era which will be as impactful as the machinery that was introduced to the assembly lines of the first factories. She went on to mention that each panelist offered various perspectives on technology transformation to insolvency cases in different ways. Erik Boerma as a judge is involved in digitizing courts in The Netherlands; Gunther Thies is a tech pioneer, whose software is used by 80% of German insolvency practitioners and (since 1991) to improve coordination between practitioners and the courts, and Joseph Raczynski works on emerging technology at Thomson Reuters, specializing in assisting law firms in understanding AI and Blockchain and how they can be applied to legal services.

Goodman set the stage for the first question by stating an important event within the industry, “In the past decade – since the UK’s liberalization of the legal market via the Legal Services Act – legal services delivery everywhere has changed beyond recognition.” Goodman noted that until recently the courts were lagging behind, with arcane processes and procedures, including inflexible schedules for court dates and piles of paper.  “Now at last all that is changing and many jurisdictions are involved in courts modernization projects, which include taking documentation and administrative procedures online.”

The panel first turned toward court digitization. Theis, described the current state of most courts, which are in general still struggling to deal with the pace of change and how to handle documentation and workflow.  He spoke about his organization STP Informationstechnologie which develops software and related services for insolvency administrators, insolvency courts, and corporate law firms. Judge Boerma mentioned one of his projects in The Netherlands where he cited how the obvious benefits of digitization around access to justice, legal advice and information, and some less obvious challenges around ensuring that automation does not compromise human needs.  That is, he attempts to adopt “a holistic strategy that balances economic, environment, and social access to legal advice, access to justice, and the human considerations in insolvency space. Goodman surmised that, “It’s about opening up information and not taking a blinkered view of cases that focuses only on the detail.”

The conversation then turned to what may be just ahead for Europe as they deal with insolvency.  Goodman posed the question about how the world in general is moving online and asked Raczynski, “How personal assets, which are now going digital – from tangible to virtual – will be handled with documents in the cloud, AI technologies that improve productivity and cryptocurrencies?

INSOL19Raczynski launched into an impassioned discussion around the rate of change that is happening for all of us personally and professionally.  He briefly discussed the impact of algorithms which are becoming more sophisticated and intuitive.  Saying these could help service up better information for attorneys and judges alike around bankruptcy.  He went on to state that there will be a clear push for change in the next several years for the courts, which are lagging behind.  The efficiencies, transparency and access for all will make this all but a necessity.

Goodman pushed on the digitization of assets and inquired about the Blockchain and cryptocurrencies and the impact of those on insolvency.  Raczynski first described Blockchain to level set with the attendees having asked by a show of hands who felt comfortable defining the technology – not many hands were raised.  Once that baseline was established, he dove into what he sees as the first “killer app” for Blockchain technology, cryptocurrency or tokens.  “In the not too distance future every asset with be represented by a digital token – saved to the Blockchain.”  He sees the full “tokenization of the world’s assets” including, cars, real-estate, collectibles, and these things are starting to happen now.

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Clearly this struck a chord with the audience as this will be a monumental shift in how they handle insolvency cases with their clients and within the courts.  He went on to discuss the positives of the Blockchain showing a history of ownership which could assist with rights to property and creditors.  However, he noted, “there are challenges ahead as some of these tokens or digital coins are specifically developed to hide assets.”  He summed it up by stating this is going to be a wild ride into digitization which will certainly impact the insolvency landscape.

Closing out the session, Goodman asked for final thoughts from each of the panelists.  The takeaway was that everyone in every role needs to think about how technology will impact the legal industry.  There are a myriad of opportunities to be had, but Judge Boerma emphasized it has to be done in a way that humans are still at the center of the equation – we have to develop systems that are reflective of our humanity and enable access to justice for all.

 

Some quotes and notes above from Joanna Goodman who has written Robots in Law: How Artificial Intelligence is Transforming Legal Services is now available from ARK Group https://www.ark-group.com/product/robots-law-how-artificial-intelligence-transforming-legal-services-0

2017 Emerging Legal Technology Forum: Examining the Blockchain Business Revolution

Originally published in the Legal Executive Institute.

By Joseph Raczynski

TORONTO — With a nearly palpable pre-session buzz, the blockchain panel at the Thomson Reuters 2017 Emerging Legal Technology Forum finally took stage in the afternoon, titillating attendees with an in-depth overview surrounding the technology’s pending impact on the legal landscape.

The primary focus of the panel discussion was on how blockchain technology is poised to transform the contemporary business scene. As it progresses across a wide swath of different business sectors, the technology will force both in-house and outside counsel to cultivate a thorough understanding of this nascent technology in order to better service clients, the panel discussed. I was honored to mediate the panel that included Bob Craig, Chief Information Officer at Baker & Hostetler; Steve Kirby, Senior Counsel at IBM Canada; Casey Kuhlman, CEO of Monax.io; Ted Mlynar, Partner & Chair of the Blockchain-Smart Contracts IPMT Working Group at Hogan Lovells US; and Houman Shadab, Co-Founder of Clause.io and Professor of Law at New York Law School.

Craig addressed the new Global Legal Blockchain Consortium, a group of 10 law firms and several universities that have banded together to create standards with the emphasis on addressing security and common terminology. On a personal note, Craig mentioned that blockchain technology is ripe for explosive growth but will have some setbacks along the way.

“There will be huge public failures with blockchain but much positive growth lies ahead — thus allowing for huge opportunities specifically for law firms to lead, not follow,” he said.  Following on that thought, Ted Mlynar pushed further by saying that there is little doubt that blockchain is growing. “Lawyers need to adopt and adapt now,” he added, citing the need for attorneys to learn quickly as a myriad of legal issues have to be sorted out, including the right to privacy, data security and many others.

The conversation turned toward the power of the applicability of smart contracts within blockchain. Kuhlman described it as the ability for technology to be trusted, where agreements are automatically acted upon when specific conditions are met. In a business where trust in documents is invaluable, this advancement would be a boon. A key to the success of the smart contract is developing oracles — or trusted sources of information — that would offer data, such as the price of a stock on a given day or a death record.

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Also, you could see the audience lean in when the topic of cryptocurrencies sprung up — another innovation tethered tightly to blockchain technology. The proliferation of companies now raising money by launching an ICO (Initial Coin Offering) and the millionaires it has produced seemed to leave mouths agape for the final portion of the panel discussion. A graphic showed that the $150 billion market cap for all of virtual currencies dwarfed some bricks & mortar businesses and underscored the power of this burgeoning industry.

There was a clear line drawn between a currency, e.g. Bitcoin, and the tokens e.g. Ethereum, that populate this arena. The latter is what is beginning to proliferate, especially as the legal industry turns to smart contracts. Tokens help pay for the saving or recording of contracts to the blockchain, i.e. database. Shadab clarified this by saying, “Tokens are not money; in fact, in the future law firms may issue tokens to give access to attorneys’ work product, i.e. advice.”

Based on this panel conversation, there is little question that the first true killer app for blockchain technology is the ICO. Though there will be huge volatility in the market as governments around the world begin to sort this incarnation out.

Alas, the panel seemed to agree that the genie is out of the bottle and the age of the token economy and blockchain has begun. Craig closed the session by saying, “Once you understand what the layers of blockchain entail, the more you see that it will change things permanently.”