Baker Donelson has always been at the tip of the spear when it comes to their focus on blockchain and other digital assets in legal. Today, I spoke with Justin Daniels, Shareholder, Corporate M&A Technology Attorney and all around NFT, blockchain, and cybersecurity guru. Those are my words, not his.
What I enjoyed about the discussion was Justin’s focus on the importance of cybersecurity for all emerging technologies as they develop, not as an afterthought. We touch on the FTX fiasco, ChatGPT, and the future of identity.
Baker has a practice group called the Blockchain and Digital Assets Technology where attorneys offer clients multi-disciplinary representation in the growing area of blockchain and digital asset technology, including corporate and business matters, securities, Anti-Money Laundering and Know-Your-Customer (AML/KYC), money transmitter, Office of Foreign Assets Control (OFAC), cybersecurity, privacy, intellectual property, litigation, government relations, and public policy. Clients benefit from working with a group that understands the underlying technology to help frame the legal issues affecting blockchain and digital assets, enabling them to collaborate to develop thoughtful, effective business solutions.
For the past decade, I have been consistently extolling the virtues and concerns of the impending “Exponential Technology” era. Well, it’s here.
The first manifestation of this was OpenAI’s DALL-E product, which I encountered at an MIT conference in April 2022. DALL-E 2 is a website that allows users to type in concepts or phrases and instantly generate corresponding artwork or images in any desired form. The results can be continuously refined to produce truly extraordinary creations.
Here are a few examples:
“A hamburger in the shape of a Rubik’s cube, professional food photography”
Image credit: Michael Howe-Ely
“A BBQ that is alive, in the style of a Pixar animated movie”
Image credit: Michael Howe-Ely
I recently had the opportunity to present these ideas, along with their likely implications, to a legal audience at Thomson Reuters’ Synergy 2022 conference. It quickly became clear that the effects of this technology will extend far beyond the realm of law, touching upon fields as diverse as writing, coding, financial modeling, prediction markets, business planning, and more.
Just a few weeks after my presentation, OpenAI released ChatGPT, a tool that demonstrates similar capabilities with language as DALL-E 2 does with images. I have spent the past month experimenting with ChatGPT, and the results are nothing short of astounding. Though it is not yet perfect, ChatGPT is incredibly powerful and can produce impressive results with minimal input. For instance, within just ten seconds, it was able to generate a fully-fledged lease document, complete with all necessary parameters.
Here is an example.
Within 10 seconds a full lease is produced with all parameters added. Just a portion displayed below.
Similarly, ChatGPT was able to create code for a smart contract to establish a law firm’s own blockchain-based token system in just 15 seconds. This one would allow for a law firm to have its own token, as an incentive for clients to use them, earning them a discount each matter they brought.
Having built these before, this was very impressive as a first pass and completed in 15 seconds.
It is becoming increasingly clear that AI will have a profound impact on “white collar” jobs in the coming years, contrary to the initial belief that it would primarily affect manual labor first. The potential implications of this technology are truly staggering and will likely bring about significant changes to the way we work and live.
There are a ton of other nuances to this, which I will be writing and vlogging about in the coming weeks.
How did you discover your passion for all things innovation and technology related?
When I was a young boy, I watched a movie that transformed my life then and by happenstance altered my path forward. War Games, starring Matthew Broderick was about an inquisitive kid who unintentionally almost started World War 3 by hacking into a U.S. Government mainframe computer. Broderick’s approach to solving problems was mind altering for me at the time. More than anything that movie taught me the power of creativity in thinking and designing processes to accomplish tasks in a novel way leveraging technology, sometimes with computer code, sometimes by tying disparate technologies together. Since that day I have been immersed in technology, starting with the beginning of the Internet via BBS (Bulletin Boards), setting up networks, peer-to-peer file sharing, designing websites World Wide Web, testing of mining cryptocurrency, creating my own tokens, white hat hacking, and then tinkering with electronics of all sizes. Eventually, I added the professional layers from an undergraduate degrees of economics and sociology and a Masters in Business Administration and eCommerce, combined with my own interests in geopolitical trends, finance, and the legal implications of it all. All of this really excites me to no end!
You’ve written about the Metaverse and the preparedness of lawyers, how widespread do you think use of this will be in the near future, and how can lawyers make sure they are sufficiently prepared?
If by the near future we are saying 3-5 years, I would say 100% that the Metaverse will be used in various forms by the majority of the population in the industrialized world. It has already started. There are two forces at play which are enabling the Metaverse; one, blockchain, which is a unique way to store information in a provable, unalterable way. Secondly, the coming hardware is key. Likely to hit the mainstream when Apple releases their Virtual Reality or Mixed Reality headset in the coming year or so, this will force all of us to head into the Metaverse. Just for perspective, VR is fully immersive, while MR allows you to see the physical world and places digital imagery on top of that.
I have likely spoken to thousands of lawyers over the last several years. Extraordinarily bright to a one that I have interacted with, the one limiting factor in this sense, is their dedication to their own craft. Meaning, most often and understandably, they do not have the time to pick up their heads and see what is coming. All of these emerging technologies will impact their practice in some way, as well as the business of law. At a minimum, lawyers need the opportunity to focus on the big four: AI, Blockchain, Workflow, and the grab bag of General Emerging Technology. There are a multitude of places to learn about these things, including at Joetechnologist.com but I would include some of the classics with Google alerts, Twitter threads on these topics and magazines like Wired, which should be a staple for everyone.
What kind of opportunities could the Metaverse give lawyers?
Imagine a world, much like what we have now, but only digital. It is nearly as immersive and interactive, and then extrapolate out all the problems, issues, benefits, and challenges we have currently in real life, and think about where lawyers play a role. It will be similar. In the beginning much of legal’s play will be on IP issues and copyright. Soon thereafter, insurance and contractual disagreements will ensue, but these contract issues could be interesting because of the nature of the platform a metaverse will be built upon. Since it should rely on blockchain and smart contracts, these disputes could likely be easier to solve at the lower tier, leaving lawyers to resolve more complex issues.
We’ve heard that tech adoption rapidly increased during the pandemic — what are some of the significant ways this has changed the way lawyers work, or indeed the legal profession?
The adoption of technology has been fascinating to watch across the legal landscape over the last two years. My favorite part was how lawyers who were technologically phobic were gently pushed into the space and most thrived. Bigger picture, the acceptance and now reliance on the Cloud has been massive. Once upon a time, most law firms would have shuttered at the thought of its use. Now Cloud has become nearly ubiquitous. With that adoption has come greater use of workflow tools around document automation processing transactional documents much faster and more reliably for clients. I have also seen greater openness to this idea of a Legal Platform, meaning an ecosystem like a portal which is first secure, yet open to applications, that can be used in a “containerized” fashion. What that means are apps that are interoperable and secure, resulting in greater efficiency and productivity. The last area of growth was around law firms open to APIs, or data feeds which allows them to bring in information, comingle it with their own, create new workflows, and leverage out of the box analytics tools to garner greater insights into both the business and the practice of law.
What can lawyers do to ensure they access all opportunities offered by the variety of tech innovations?
I firmly believe lawyers need to dedicated time, almost every day, be it 30 minutes, to read up on current awareness in technology. Some days they will find a topic they could spend a week on, but they should try to unpack that in time, to better position themselves for the future of the industry, and more tangibly, in the short term to help their clients.
How does our engagement with digital worlds/environments shape the way we work and the kind of work we carry out?
If we presume we are moving increasingly into a digital world, then every nuance surrounding that space will become increasingly important. Start with AI. Algorithms will increasingly be able to make decisions for us. Yes, this includes much of the lawyerly work out there. These algos start of simply, but will become far more complex, freeing us from some decisions or work. Stack on top of that blockchain, which is a trustless (trusted) database, meaning both AI and blockchain can work in tandem to begin doing some pretty impressive workflows that are automated. When we move into the Metaverse for both fun and business, everything can be quantified, e.g. the house, shoes, art, tickets to a concert, via an NFT (Non-Fungible Token) which uses a blockchain. Processes will increasingly be leveraging data and AI to make decisions which will rely less on human intervention. I know this can sound frightening, and it could be, which is why as this progresses, we need the best legal minds to understand the implications, yet keep a progressive mindset to guide the path forward. We do not merely wish to replicate everything we have in the real world, but try to evolve it to the best we humanly can, until AI takes over, kidding, not kidding.
The list is out! Last year was an amazing one for LegalTech talks and thought leadership. I presented over 70 times on Blockchain, Cryptocurrency, AI, Workflow, and the Legal Platform. It was also a fascinating year where edgy concepts entered the LegalTech space, including the Metaverse and NFTs. In all likelihood, these will continue to flourish in 2022.
If you’re game, you can watch the top sessions from the past year on a huge swath of LegalTech and general tech topics below:
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.
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!
Attorneys look to precedent to solve today’s legal problems. “Steeped in tradition” is how we often describe the legal profession. As result, it’s no surprise that there is inherent tension between emerging technology and the legal profession. The American Bar Association’s 2020 TechReport, which surveys firms and tracks attorney use of technology in their practices, reported that only 7% of attorneys are using tech tools, such as Artificial Intelligence (AI), for document review and research. Firms with more than 100 attorneys are more likely to use AI, as well as firms that engage in mass tort litigation. Despite promises of increased efficiency, productivity, and profitability, a significant number of attorneys cite distrust of the technology and underlying algorithms.
Even though the legal services market is estimated to be a $1T industry globally, Forbes reports that it is also one of the least digitized:
That is, until the COVID-19 pandemic forced the legal community to remote hearings, yoga pants, and dining room tables seemingly overnight. Prior to the pandemic, the ABA’s 2019 TechReport estimated that the vast majority of law firms of all sizes – other than solos – worked in traditional law firm environments. Now, many managing partners are rethinking their office space needs because technology allows attorneys and staff to work from home. Cloud-based document storage doesn’t demand the physical space once required for the paper detritus of the legal practice.
According to commercial real estate brokers with expertise in law firm office space, firms have been downsizing for some time – and the trend is expected to intensify post-pandemic. It’s anticipated that firms will increasingly implement a hybrid model where employees schedule the use of a community workspace or a conference room, but otherwise work remotely. This provides the opportunity for collaboration and meetings with clients in a professional and inviting setting – think chic hotel lobby – while reducing the real estate footprint and attendant expense.
Despite the occasional mishap of appearing in virtual court as a cute kitten, the legal profession has progressed in dog years with respect to the use of technology during the pandemic. Remote hearings provide greater access for certain types of cases and hearings. Litigants and their attorneys are saving time and money by not having the hassle of travelling back and forth to court. It’s easier for litigants to attend hearings remotely without having to take off as much time from work or to arrange for child care. Corporate clients are now accustomed to remote environments and online meetings. Many companies, such as Salesforce, American Express, and Microsoft, have reverted to permanent work-from-home arrangements for some employees. A silver lining of the pandemic is that the legal industry has had no choice but to embrace technology. So, what will the practice of law be like in the next twenty years?
Fortunately, we don’t have to guess how technology will transform the legal profession in the years to come nor do we need to rely on a DeLorean time machine with a mad scientist sidekick. Thomson Reuters Corporation has a forward-thinking technology specialist on the payroll with the title of “Futurist.” Joseph Raczynski is a Technologist & Futurist, Manager of Technical Client Management for the cutting-edge legal products and services company. Raczynski, who is based in Washington, DC and focuses globally specializes in the future of technology and its impact on the legal profession. He has expertise in cybersecurity, blockchain, artificial intelligence, cryptocurrency, and drone technology. Raczynski also hosts a popular podcast, The Hearing, which focuses on legal innovation.
After talking with this fascinating tech expert via halo-conferencing (not really, but made you wonder), it’s clear that technology will play a significant role in the future of the practice of law. While firms were pushed to adapt and use new technology during the pandemic, some firms that have operated for decades with little change, may revert back to that mindset. Firms, however, that buck the system and invest in technology will thrive in the long term. According to Raczynski:
Firms that are willing to embrace technology will provide better services for their clients. They will be better able to quickly sift through and digest immense sums of information. “In the decades ahead, data and services to understand that data will reign supreme,” Raczynski predicts. Facing pressure from corporate clients to cap rates and reduce billings, some firms are incubating legal tech companies to speed development of software and other products to facilitate the efficient delivery of client services. Those that are successful will license their internally developed tech services to other firms or sell the technology to companies. Either way, these entrepreneurial firms are generating new revenue streams while developing tools to better serve their clients. For example, national plaintiff personal injury firm, Parker Waichman, developed case management software, which it licenses to other firms to help them manage mass tort litigation. Not to be left out, smaller firms are banding together in collaborative settings to invest in technologies together that they wouldn’t be able to manage financially on their own.
With insight from Raczynski, let’s zoom ahead for a glimpse into the future.
Raczynski predicts that current roles undertaken by attorneys will change significantly over the next twenty years. “Much of the rote work being performed now, will be gone,” he says. “That said, many new facets which we haven’t even conceived will likely supplant some of those activities.” Certainly, AI imbued eDiscovery tools will be the norm for document review. This technology eliminates the “amounts of eyes on pages,” he says.
AI and machine-learning will continue to facilitate and expedite research and trial practice. Raczynski describes how attorneys will have computer applications at their . Research platforms will have semantic and nuanced understanding of the actual meaning of legal opinions and will go well beyond key-word matching. The applications will quickly access every case and ruling on point and “spit out decisions,” which will likely be “the final decision,” or at the very least be “augmented intelligence” to assist the judge or jury, he predicts. Litigation will become less burdensome and more efficient for the majority of cases. Perhaps, too, this will result in significant financial savings to clients. Interestingly, Raczynski anticipates that technology will reduce courtroom drama as finders of fact will make decisions based on data – and be less influenced by attorney performance. Courts will be virtualized with mixed reality 3D glasses for the judge and jury that will bring crime scenes, accident reconstruction, and other cases to life.
Outside of the courtroom, Raczynski anticipates that technology will automate transactional work. While contract negotiations will still exist, “everything will be interactive, voice automated, templated, intuitive, and securely stored on a blockchain,” he says. Blockchain creates an immutable, digital record of transactions. It eliminates human error, which is commonplace in contract drafting. Retinal scans will be used to confirm the validity of executed documents.
Blockchain technology, according to Raczynski, will be run so that triggering language on this platform will automatically negotiate deals or execute contractual obligations. “What we are talking about is fully codified contracts,” he predicts, “with the ability to interact with factual data and either negotiate on its own, based on Party A’s and B’s preferences, or even self-litigate when something in the code goes awry.” While blockchain is still somewhat nascent and the stuff of computer scientists, it will transform global commerce and the practice of law.
Technology will also transform law practice management and allow attorneys to spend more time serving clients instead of handling administrative issues. Thomson Reuters conducted a study on time management and reported that with smaller firms, approximately 61% of their time was spent practicing law. The balance of their time was spent on the business of running the firm, which is crucial, but not a billable activity. The larger the firm, the less time spent on administrative work. In the future, law practice management will be facilitated through the use of a decentralized autonomous organization or DAO. This is a business model structured on self-executing smart contracts that function without the need for in-person decision-making. Smart contract governance doesn’t require boards of directors or firm management committees to meet, analyze data, and make decisions. Rather, a DAO outsources the analysis through smart contracts allowing for token-holder network consensus. Voting attorneys would hold tokens based upon their seniority, billings or pecking order status.
Admittedly, much of this technology is difficult to explain let alone visualize in practice. However, there are steps that law firms should be taking now to better position themselves to be able to leverage emerging technology. “Opportunity abounds in the legal market right now,” Raczynski says. He portends a golden age for the practice of law: the intersection of where the legal industry marries technology. While firms of all sizes were once reluctant to spend disposable income on technology – even on network security – large firms, in particular, are starting to increase their IT spend and budget for the future. Planning and budgeting for the proactive use of technology are key first steps.
There has been a significant shift in law firm operational budgets allowing for an increase in technology spending. As attorneys have become more technologically advanced, there has been less need for clerical staff to draft pleadings and correspondence, perform filings, mail letters, and other tasks. Younger lawyers, who have never used a Dictaphone or fax machine, have long been drafting their own briefs. Since the recession in 2008, firms have been increasing attorney-to-clerical ratios and spending less on clerical support staff. A legal secretary, who once supported one or two attorneys, is now working with eight or more. As described earlier, firms are spending less on their office leases by reducing square footage. Technology has filled the void left by these drastic operational changes, while freeing up cash for reinvestment in IT products and infrastructure.
Importantly, technology also levels the playing field. Solo and small firms are poised to benefit as the cost of technology decreases. “If they decide to embrace technology, Raczynski says, “it enables them to automate, find answers quickly, and respond to their clients with aplomb.” He recommends that solo and small firms connect with the growing LegalTech community to see how they can learn, interact, and leverage new ideas to benefit their practices. Additionally, law schools are excellent sources for technology training and incubating new ideas.
In Tomorrowland, there will be significant opportunities for tech forward iGeneration attorneys. Law school graduates, who grew up with mobile devices in their strollers, will have key leadership roles. Attorneys with degrees in engineering, network security, computer science and coding will be valuable hires. As technology is second nature for them, they can undertake important IT operations and reverse-mentor firm members who aren’t as tech savvy.
Finally, corporate clients aren’t going to wait for their hometown attorneys to become comfortable with emerging technology – especially when some firms are deploying high tech tools in their practices. Corporations are investing in their own technology infrastructures and expect the same commitment from their professional service providers. They also expect law firms to engage in vigorous network security to protect sensitive client data from malicious actors, which is a real threat. Ideally, law firms will automate routine research, drafting, and discovery review, so that attorneys can focus on customer service, including responsive and timely communications, learning about their clients’ unique business needs so they can be proactive instead of reactive, and cultivating new client relationships.
There is no time like the present to prepare for the future. Attorneys should attend technology conferences, network with legal service vendors, join cyber law committees, and connect with futurists like Raczynski to gain a better understanding of the technology that is already transforming the practice of law. Learning something new will feel uncomfortable at first, but it will get easier. The DeLorean is idling out front and ready when you are.
Lots of fun this week on The Hearing Podcast with my colleague Andrew Fletcher, Director at the Thomson Reuters Labs. If you enjoy uncovering what the future (and the now) of the legal industry might look like, take a listen. We toss aside the fluff, and meet at the cross section of AI, APIs, Design Thinking, Innovation, and how it all impacts the legal industry.
While the judges deliberated, I gave professors, students, lawyers, and technologists in the UK a glimpse of the technological innovations coming in the near and longer terms and sense of what this could mean for legal advisers.
I had the privilege of being selected to report on how ILTA (International Legal Technology Association) did on their predictions from 2013 up to today, during their 2020 ILTA-ON Conference. Even more fun, predicting what technology and LegalTech will look like from 2020-2025, and then going out to 2060.
Remember back when we had ‘Law Firm 2020 predictions’? In the first part of my ILTA-ON presentation, we will go ‘Back to the Future’ reviewing past predictions to see what came true and what we got wrong. Then, we will blast into a journey of what LegalTech looks like in the next five years. Lastly, for those who get motion sickness, grab your Dramamine, because we will take a 1.21 gigawatts ride, shooting into the future. We will predict what the technological and legal landscape will look like in 2030, 2040, and into the Singularity! Great Scott!