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.
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.”