By Joseph Raczynski
Las Vegas, NV – ITLACON – Sarah Burno, Partner, Arent Fox and Joseph Raczynski, a technologist at Thomson Reuters, explore how blockchain will impact the Legal industry and discuss the beginnings of the cryptocurrency crazy.
Tag Archives: Blockchain
MIT Legal Forum on AI & Blockchain Busts Open New Thinking
By Joseph Raczynski
Massachusetts Institute of Technology’s Media Lab – Cambridge MA – October 2017 – In one of the more unique and unusual conferences I have participated, the inaugural MIT Legal Forum on AI & Blockchain was a meeting of 200 minds from across academia, law firm, and corporations big and small. It included IBM Watson as well as CodeX, NASA scientists, Baker & Hostetler, a host of other Am Law firms, and startups galore. Led by the gregarious MIT visiting scientist, Daniel “Dazza” Greenwood, who served as the master of ceremonies for the two day workshop.
Dazza Greenwood – MIT Scientist – summarizing the day
What was so unusual was that after the keynote each day, the planning for the remainder of the breakouts happened in real-time. Dazza asked the crowd who would like to run a session and to describe the topic. Once that individual did so, Dazza then asked who would like to join that working session. The sessions were added to the agenda immediately followed by the commencing of those sessions. From the attendees the following topics bubbled up on day one:
- Identity Management & Records Keeping – Chris Jagers and Joseph Raczynski
- How do we begin the discussion of digital records on blockchain?
- Automated LLC – James Miller and Harrison Perl
- Project to checklist requirements to incorporate or register legal entities in all 50 states
- VAT Coin – Joseph Kessler and Brian Ulicny
- Governance is 75% of entities. Is that correct? Does it fit this context?
- Energy Utility Token – Jonathan, Michael, and Harrison
- How can such a process be securitized and how do we get the revenue back in a way that is sustainable and trusted by investors?
- Supply Chain – Jaipat and Gurvinder
- Is there a need for a new area of law called, “Provenance Law”?
- Bankruptcy – Bob Craig and Nina Kilbride
- With cryptocurrency as collateral, how do you classify the property? How do you perfect ownership rights?
I had the opportunity to join several of these discussions over the two days. Honestly there were one or two slight misses, where the tables were large and attendees from various backgrounds of familiarity on blockchain and AI led to a mixed conversation. However, the hits – they were transformative. How often do you have top legal minds from Am Law firms, NASA engineers, MIT data scientists and nonprofits mix together on a process surrounding “smart contracts” that leverage algorithms to develop an automated workflow? The session called ditDIY Composable Smart Contracts, Modular Law – led by Vienna Loi, was a hit. The NASA scientist and her team are actively building this concept out. Think of it as code (smart contract) that when a certain event is triggered kicks off another event which continues to invoke other acts, all of which are recorded and maintained on a blockchain. It is the future of this space.
The excitement was palpable. You could see the evolution that is beginning to take place in Legal as we go from a general awareness of these technologies, to conceptual design of possible solutions. MIT is fostering the creativity through this platform in their first attempt at bringing all parties to the table.
In the next post, I will dive deeper into Digital Identity using blockchains.
Exploring Blockchain Proof of Concepts in Deployments and use Cases in the Finance Industry
By Joseph Raczynski
October 2017 – Blockchain 360 IoT Conference – InterContinental New York Times Square – An esteemed panel took the stage to discuss the state of the union surrounding proof of concepts in the financial industry. The focus of the six; to delve into what is working with blockchain, what is not, and what is ahead for the industry.
I had the good fortunate to moderate the group including Igor Telyatnikov, President & Chief Operating Officer at AlphaPoint; Ron Quaranta, Chairman, Wall Street Blockchain Alliance; Scott Matsumuto, CISO, Circle; Morgan Hill, Managing Partner, AxionV; and Yorke E. Rhodes III, Global Business Strategist, Microsoft.
The first topic lent itself to a deep dive in our current perspective within finance. Quaranta, who comes from a background in the financial markets spoke about how blockchain has developed incredibly fast. He has the perspective of an association where many groups of all sizes engage with the Wall Street Blockchain Alliance. While the financial institutions have been involved with this for several years, there are other groups flocking into the space. He said, “Now that you see the lawyers and accountants opening their eyes to it, you know it has legs”. They need to be involved because those two groups will help “aid the industry” and create structure around the new technology as it is applied to the financial industry. There was a bunch of head nodding on the panel in agreement.
Rhodes focused on what is preventing wider adoption of blockchain. One of the primary areas he cites is a lack of trusted sources or oracles in the space. These are known entities which can be a verifiable source of information. Think of the Social Security Administration and their records of death certificates, or a known source which can verify the price of Facebook’s stock on a particular date. While this data might be available currently it is not as well developed and built out to interact with the blockchain just yet.
Hill jumped into the fray by discussing integration and interoperability. Right now most blockchain’s cannot interact with other blockchain’s. They are siloed. Rhodes said that Microsoft is looking at how to resolve this issue.
The panel discussed how ICOs (Initial Coin Offerings) impact POCs. Telyatnikov described this phase as a mania that is currently a bit frothy, but noted this is a “new asset class” that will be here for the foreseeable future. The ICOs are almost POCs, but in the nascent stages, as “often these companies have concepts, which are not built out yet”. It is hard to have a POC when a company only has an idea spelled out via a whitepaper – with no working model.
The panel answered questions from the audience, including one around regulation. What is ahead for the law makers when it comes to blockchain and the financial industry? The panel chucked. Quaranta and Yorke summed it up for everyone by stating these are the early days of blockchain. “Legislators and other agencies are in the information gathering stage. We are beginning to get a sense from them about guidance, but much more is on the horizon.
Legal Technology/Internet 4.0 – How will Legal Technology Change the Industry?
By Joseph Raczynski
INSOL Europe 2017 Annual Congress
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?
Raczynski 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.
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.
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.”
Blockchain, a Disruptive Force Now Impacting the Legal Industry
Originally published in LegalBusinessWorld
By Joseph Raczynski
Blockchain, a Disruptive Force Now Impacting the Legal Industry
Defining the technology and citing real world examples in Legal
Basics of Blockchain
We are at the precipice of transformative change in nearly every industry. Blockchain or Distributed Ledger Technology (DLT) is the cornerstone of this rapidly evolving new era of efficiency and disruption impacting the legal industry. Blockchain is generally defined as a distributed database or ledger. This differs from the traditional record, in that a database is usually centralized, generally in one location or system. With DLT, it evolves from a central database (a single store of information), to a database that is spread among multiple computers (sometimes thousands) saving a copy of the information. Ultimately each computer will have a duplicate of the data. It is encrypted, immutable (cannot be changed), driven by consensus (all computers have to agree), and is not owned by any single entity.
A natural question that arises. Why would anyone want a database to be distributed? The financial crisis of 2008 taught us many valuable lessons, one of which was that massive organizations who wielded all of the power (think a single database) can be a weak link for the broader system. If that one entity should fail, the entire system likely will follow. From these financial reverberations, Bitcoin was born, which has as its underlining technology, the original Blockchain. The intent, distribute data over a massive network, for verification, authentication, and transparency without one person or organization having dominate control over the system or data. At its heart these are ideological motives that clearly have anti-establishment roots. However the technology it is starting to flourish at an exponential rate.
Real World Blockchain Examples
As you may gather there is certainly much hype around what can be done with this technology. Below you will find several examples that I discussed recently with industry experts at Consensus 2017, a massive Blockchain conference in New York City. Here I met with and examined several smaller startups and their quest to build out solutions with DLT which will impact the legal industry.
Government – Blockchain Powered Land Registry: Thomson Reuters Tax and Accounting states that 70% of the world’s land is unregistered. Ownership of land leads to significant empowerment and growth of wealth for individuals. An organization called BenBen is endeavoring to help lock in property rights for citizens of Ghana, Africa using the Blockchain.
Problem: In this use case, land records are stored in a centralized database with no other benefits besides a paper registry. BenBen states, “It is virtually impossible to collateralize property rights in Ghana because other paper registry system is unenforceable in court. Because of unenforceability, banks will not accept land as collateral. This situation leaves millions without the possibility of leveraging their property to rely on the rule of law for protection – continuing the ongoing cycle of poverty for much of the population”.
Solution: BenBen is working with BigchainDB, a new Blockchain organization to create a “top-of-stack” land registry verification platform. Essentially it is a new infrastructure built on a Blockchain and integrated with financial institutions to update current registries. Essentially BigChainDB are “enabling smart contracts and distributing private keys for clients to allow an automated and trusted property transaction between all parties.” So people would be able to verify that they own something in order to more easily obtain loans and build wealth.
Intellectual Property – Music Ownership and Distribution: Currently there are dozens of entities that get paid out on a single song that you may download from iTunes. The labels, marketers, distributors, and finally the artists all get a cut of the proceeds. The current payout model looks like a bowl of spaghetti with a myriad of entangled strings connected, each piece of the business seeking their $auce.
Problem: The control of the music in the traditional model is in the hands of the corporations and labels. A fraction of the funds are eventually paid back to the artist.
Solution: Resonate, another Blockchain startup, is working on a solution to use this technology to bypass the corporations and labels. As you listen to music, you can make micropayments to artists – directly to them. Micropayments are cents or fractions of cents that are possible through the newer cryptocurrencies, which may be divisible by tiny fractions of a penny USD. All of these transactions are stored on the distributed ledger, essentially cutting out all of the middlemen. Baked into this are smart contracts which are encoded into the chain and automatically perform actions that normally humans would be oversee, i.e. the payouts.
Identity – Verified Identity Credentials: When a job is posted, how do you know that the person applying for the role graduated from the school they listed? One area being explored is how to leverage the Blockchain to verify who someone is and what they are stating is true.
Problem: In the traditional Resume or CV people sometimes forge, alter, or falsify documents in order to buoy their chances.
Solution: Recruit Technologies has built a prototype resume authentication database for people looking for jobs and employers. BigchainDB is working to leverage DLT to store applications and their documents. Through the natural immutability, the files offer greater trust and auditability. Built on this platform, a company could be better positioned and hold less liability.
With hundreds if not thousands of use cases forming that leverage Blockchain technology, the legal industry is perfectly positioned to adapt and assist in this space. The three aforementioned use cases are directly connected to people and business; therefore have a direct play within legal. While Blockchain may impact certain parts of how a law firm works, government agency interacts with people or a corporation works, there is little doubt that the early adopters will have a major head start compared to their counterparts by engaging in Blockchain.
Blockchain Takes the Stage at the British Legal Technology Forum 2017
Originally published in the Legal Executive Institute
By Joseph Raczynski
LONDON — The recent British Legal Technology Forum 2017 — Europe’s largest event with more than 1,400 attendees and emceed by Richard Susskind — peered into the future of the legal industry by hosting a provocative talk on Blockchain technology.
I spoke at the event on how Blockchain has the potential to disrupt the legal industry greatly over the coming years. The initial focus for those in attendance was to “level set” or explain Blockchain technology or Distributed Ledger Technology (DLT). In short, Blockchain tech allows for a decentralized accounting of information into a “database” or “ledger” which is not owned by one entity, rather is stored by a multitude. Initially the concept seems counterintuitive, but in reality, it is vastly more secure, redundant and transparent than traditional transactional models of recording events or data, e.g. bank accounting, credit cards purchases or even legal verifications, such as notary publics. (You can read more about the fundamentals of Blockchain here.)
Thomson Reuters’ Joe Raczynski
As with most discussions, I built on the premise of the Exponential Growth of technology and the Trinity of Forces. These are core concepts to nearly everything happening around us now with technology; they are a set of unique influences that allow for this new technology to emerge today. These three pieces — infinite cloud storage, infinite processing power of computers and artificial intelligence — are enabling Blockchain to explode as a new Internet technology.
Blockchain’s Immediate History & Future within Legal
It may be valuable to trace Blockchain’s recent timeline:
2016 — The legal world began to wrap their collective minds around the technology. I spent time with chief information officers (CIOs) and practice heads at law firms, discussing the basics of this technology. They became evangelists to their attorneys and helped them to engage practice area experts on an awareness campaign to better understand Blockchain.
2017 — This is the year of pilots or proof of concepts (POCs). Law firms have begun setting up practice areas on the topic; and some top firms are accepting Bitcoin (Blockchain’s favorite crypto-currency) as payment. As a firm accepts Bitcoin, they are positioned two ways. One, it creates a buzz with the public by indicating that the firm is forward thinking; and two, and more importantly, it helps their internal staff understand how the technology works.
2018 — I believe there will be actual use of the technology for some firms. In discussions with the insurance industry and financial corporations, it’s clear that by next year they will have already built working prototypes. Law firms should be right behind them with smart contracts.
Legal Use Cases
In the presentation, the attendees were taken from understanding the technological concept of Blockchain and its immediate timeline to reviewing actual use cases. I cited 10 use cases for Blockchain in Legal. Honestly, there are probably hundreds that will unfold over time, but for this talk we dove into the following:
- Smart Contracts — This is the most obvious and immediate use within Legal. The ability to create self-executing documents will be instrumental to most firms in the next two to five years. Once a transactional document has been crafted, it can be codified — tossed into program which looks at trigger points in the document — and then it, without human intervention, makes if/then decisions. (See a video example here.)
- Real Estate Deeds — In Honduras, a company called Factom was experimenting by using the Blockchain to keep track of real estate transactions. The rationale being that one day a citizen might trust the government which states the citizen owns a deed to their land that their family has lived on for decades, but the next day that land might be up for auction by that same government. If that deed is recorded on the Blockchain with multiple entities verifying the property’s ownership, it’s much less likely is that a waffling government (which might be open to corruption) would prevail.
- Rental Contracts — Believe it or not, companies like AirBnB are about to be disrupted. A company called Slock.it is using the Internet of Things (IoT) and Blockchain to transform what would be a 2,400-person company and turn it into a five-person establishment — while remaining just as efficient. Their technology uses smart contracts combined with an IoT smart front door lock to establish the who, when, and how a person should enter a rental home. The physical IoT front door knob has all the information needed to legally control the experience, with all being pulled from the Ethereum Blockchain. It knows when the person is to arrive, how much they paid, gives them a code to enter on the device to gain access, and even knows when they leave for the day, so it can automatically call the cleaning staff to straighten up. All of this, without any human intervention, as the Smart Contracts are sent to the IoT front door lock. Lastly, since the efficiencies are so much greater you, the renter of your home can go from paying a 10% to 15% fee to AirBnB to roughly 2% with Slock.it.
- Chain of Custody (CoC) —Another use case in this space is simply tracking from the moment something is entered into evidence all the way through to each person or organization that encounters the item. Any sort of corruption is eliminated as multiple entities have to verify the chain, rather than just one individual. In this case, you have a direct chain from the beginning to its current state.
In the next piece, I will investigate the coming age of the BoT (Blockchain of Things) and its impact on our personal and professional lives as it intersects with the law.
For more on this subject, listen to the related Podcast of Blockchain in The Legal Sector – Taking the Smart Approach from the British Legal Technology Forum 2017.
Emerging Technology in the Legal Industry (Video)
By Joseph Raczynski
In this Vlog, learn about Emerging Technology in the Legal industry. I focus on the impact of the Trinity of Forces (Cloud, Infinite Processing Power and AI) on Emerging Technology in the Legal industry. The Emerging Technologies discussed are: Artificial Intelligence, Blockchain, Analytics, VR/MR/AR (Virtual Reality, Mixed Reality and Augmented Reality) and VPAs (Virtual Personal Assistants) or Bots.
Blockchain Podcast from the British Legal Technology Forum 2017
By Joseph Raczynski
In this recording from NetLawMedia’s British Legal Technology Forum 2017, I present on Blockchain and the evolution of our current technology which allows for this to take place. I eventually dive into how Blockchain will impact the legal industry.
Blockchain Explained (59 mins)
By Joseph Raczynski
This is a talk that I gave recently about Blockchain technology based on my engagement and understanding of the technology since Bitcoin circa 2011. I preface this with how technology is having an impact on all of our lives – exponentially. It serves as a complete overview of what Blockchain technology is today and what we might be able to expect from it going forward. I touch on legal’s impact. This goes through the history and use cases of the technology. Various slides are credited to Joe Guagliardo.
Joe Raczynski Technologist 