Podcast: The Technology of Blockchain & Cryptocurrencies with Judith Alison Lee of Gibson Dunn (Part 2)

Originally published in the Legal Executive Institute.

By Joseph Raczynski, Gregg Wirth, and Judith Alison Lee

In the second part of our podcast on the technology behind blockchain and cryptocurrencies like Bitcoin, I speak with Judith Alison Lee, a partner in the Washington, D.C. office of Gibson Dunn & Crutcher and Co-Chair of the firm’s International Trade Practice Group.

Gibson Dunn

Judith Alison Lee of Gibson Dunn & Crutcher

Among her other areas of expertise, Ms. Lee advises clients on issues relating to virtual and digital currencies and related blockchain technologies.


Podcast: The Technology of Blockchain & Cryptocurrencies with Judith Alison Lee of Gibson Dunn (Part 1)

Originally published in the Legal Executive Institute.

By Joseph Raczynski, Gregg Wirth, and Judith Alison Lee

In the first part of our podcast on the technology behind blockchain and cryptocurrencies like Bitcoin, I speak with Judith Alison Lee, a partner in the Washington, D.C. office of Gibson Dunn & Crutcher and Co-Chair of the firm’s International Trade Practice Group.

Among her other areas of expertise, Ms. Lee advises clients on Gibson Dunn

issues relating to virtual and digital currencies and related blockchain technologies.

Judith Alison Lee of Gibson Dunn & Crutcher

 


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.

Increasingly Cloudy — Law Firms Continue the Flight into the Storage Heavens and What the Future Holds

Originally published on the Legal Executive Institute

By Joseph Raczynski

With the recently released ILTA Technology Survey there is little question that Cloud adoption is drifting upward at law firms. I have also seen this trend through recent conversations with law firm CIOs and CTOs. The shift is real. ILTA’s survey qualified this change to outsourced storage, rising to 62% in 2016, from 51% in 2015. This is a solid leap forward year over year.

cloud

ILTA Annual Legal Technology Survey 2016

While the majority of responding law firms lean in favor of Cloud technology, a certain subset of firms will stay the course and continue to opt-out. The primary reason given for avoiding the Cloud is client demand. That said, I have seen some cracks developing in the tough exterior of this conservative approach.

Given recent data breaches at law firms, I more frequently hear that clients tend to feel increasingly comfortable with a secured and vetted provider than allowing their law firms to continue hosting the data themselves. Security is the overarching reason. If a firm chooses a reliable Cloud provider, the likelihood of that provider having real-time monitoring, enhanced security application layers, and the most up-to-date services — especially compared to a typical law firm — is much more likely. In short, most firms would be better suited to use a top Cloud service rather than subjecting themselves to a multitude of cybersecurity issues by manning the wall alone.

Indeed, the resources and skills needed for the level of protection clients are demanding — demands that are growing more complicated daily — is normally beyond most law firms’ resources with regard to personnel and technology. The old adage is fitting in this case: “Do what you do best.” And maintaining storage may no longer fall into this space for the typical law firm.

Infinite Storage and What Comes Next

The largest Cloud providers are preparing for a meaningful change in this space over the next 10 years of growth. Clearly, storage is becoming very inexpensive as hardware prices drop. This leads us to what I have previously discussed — a time of Infinite Memory. When this happens (and we are very close now), the next significant change will be to the services model in this space. Five of the largest Cloud providers — Google, Amazon, Microsoft, SalesForce and IBM — are all preparing for it.

Artificial Intelligence as a Service (AIaaS)

More importantly, no longer will the Cloud be solely about storage. Instead, it will be more about the services — this has existed with SaaS- (Software as a Service)-based solutions for a while, but this is going to change even more in the next several years. The philosophy is that these large Cloud providers will probably start giving storage away for free. The next phase is leveraging some of the more emerging technologies in the Cloud, with Artificial Intelligence as a Service (AIaaS) being the next great jump forward.

The simple idea is that these providers will start charging for add-on services that nearly every organization will have to have in order to compete. If you do not have the latest AI, you may be out of the game quickly. These new services will compel those firms and companies still sitting on the sidelines into the game.

A bit further out, I see Cloud providers also getting into the Blockchain space. Essentially Blockchain is a decentralized database which stores encrypted information. It makes that data easily available to those who are allowed access to it. All of this information runs on services, and the Cloud will be able to handle this with aplomb.

Without a doubt, law firms’ reliance on the Cloud is growing quickly, and it is only a matter of time before it becomes more ubiquitous and accepted than our current state of 63% adoption.

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.

Is Virtual Reality Finally Ready for Business Use?

Originally published on Practice Innovations

By Joseph Raczynski

“It’s like dreaming with your eyes open”VR Developer

We are rapidly entering a time where space – the distance between people – will have little relevance. Even at this moment, distance is verging on extraneous. A news story breaks in Tokyo and seconds later a goat herder on the Serengeti in Africa can view it on his mobile device. The speed of communication and information dissemination is bridging communication gaps that existed for eternity. The next evolution will allow people to interact with others unlike ever before. Virtual Reality (VR) is this emerging technology ushering us into this new realm. We will delve into VR momentarily, but first we need to understand its underpinnings of why now.

How did we get here?

We are experiencing an era of exponential growth in several key technological spheres. I call this the Trinity of Forces: processing speed, memory, and AI. The first force states that computer processing speeds are growing exponentially. Known as Moore’s Law, the concept is that computer chip speed doubles every 12-18 months. This is significant. Think of it this way, the $1,000 computer you purchased in 2001 had the processing power of a gnat’s brain. In 2010, that new $1,000 computer processed as fast as a mouse brain. In 2024 it will process as fast as the human brain. Roughly by 2040 that $1,000 computer you buy from Amazon.com will process as fast as the collective brains of all of humankind. This is exponential growth of processing power.

The second of the trinity is the exponential growth of memory. Cloud computing has become cheaper and more easily accessible than ever before. In fact, we are at a point where infinite memory will almost be free. Viewing the graphic you can gauge the direction we are headed. In 1956 a memory device the size of a closet had 5MB and cost $120,000. Fast forward to 2005 and 128 MB totaled $99, but then in 2014 we were able to jump to 128 GB priced at $99. This is exponential growth of memory.

The third force of the trinity is Artificial Intelligence (AI), that is, the creation of code-based algorithms which are adaptive and able to evolve rapidly (i.e. computers teaching themselves to learn).

When weaving these three elements together you have a platform for technology to thrive in an explosive fashion.

The Year of VR

VR is a slice of sci-fi we have been anticipating for decades. Incubating in a state of inertia, it has been waiting to leverage the Trinity of Forces to rise. Widely discussed, 2016 is the year of VR. Virtual Reality in all of its forms is reliant on technology becoming faster, smaller, and more adaptive, which is happening all around us right now and is pivotal to understanding the business evolution for VR.

The Nomenclature of VR

  • Virtual Reality (VR)—typically refers to computer technologies that use software to generate realistic images, sounds and other sensations that replicate a real environment1 using something over the eyes and ears to view and hear. No question VR is the term that gets bantered about most frequently, however there are two other terms that are integral.
  • Augmented Reality (AR)—essentially uses a device over your eyes and layers digital information on top of what you see in front of you. This could be text on top of what you are looking at (a text message that just came in) or notifications popping up on your viewing lens as you walk down the street—perhaps 30 percent off if you walk into Starbucks immediately.
  • Mixed Reality (MR)—is the newbie of the trifecta and some industry experts believe it has the most potential for adoption. MR is a newly minted phrase that mixes the best of VR and AR into one package. This medium places extremely realistic imagery over and around what you currently see with your eyes. The largest player in the VR space is Magic Leap, more on that in a moment.

Virtual Reality Emerging All Around Us

The aforementioned advancements in tech are leading us directly to the virtual door of VR for the enterprise. The investment in this space is moving forward faster than ever. In fact, according to Digi-Capital, who tracks this space, “almost $1.2 billion was invested in the first quarter of this year alone, with around $800 million going into Magic Leap. To put this in perspective, $1.2 billion dollars is 25x the level of AR/VR investment 2 years ago in Q2 2014.” 2 Initially, many of the dollars are being spent on building out platforms. In addition, the gaming sector is certainly ahead of the curve on investment. Microsoft built the HaloLens which is one of the best examples of Mixed Reality in the market. HaloLens helps with a mundane task where we all might find ourselves needing assistance. For example, a pipe under the kitchen sink is cracked and needs to be replaced. Donning the HaloLens, you open the cabinet door to see the ailing pipe next to your disposal. The HaloLens kicks in and layers graphics on top of the real pipe with arrows and directions for how to dismantle the pipes with the proper plumber’s wrench. The Lens helps you through each step, offering guidance on how to fix the broken pipe. This technology can be envisioned in a myriad of ways to help in the enterprise.

There are several companies that have received the largest investments in this space. Most notably is Oculus ($2 billion) who has partnered up with Facebook to introduce VR to the masses. There is little question Mark Zuckerberg predicts his company will be virtual reality based. Have you seen 360 degree pictures or videos on Facebook recently?

A little known company Magic Leap ($4.5 billion) is the best funded. This quiet startup based out of sandy Ft. Lauderdale is making major waves in the industry. Remaining under radar, they coined the term Mixed Reality (MR). Checkout the video which shows what their lenses could do in the near future: (VIDEO). Aside from these companies, other names of note include Blippar ($1.5 billion) and Mindmaze ($1 billion).3

The Reality of VR in the Enterprise—the Forming of an Experience

Google Smart Contact Lens

The enterprise is probably five years from adoption of VR or honestly, MR. One of the first uses will undoubtedly be connecting people from around the world in one location. Imagine your team of four people needing to meet to discuss a project, Donna in London, Isabelle in Jakarta, Atif in Pakistan, and Neal in South Africa. Currently you could conduct a conference call, WebEx, GoToMeeting, or the best option, a Cisco Telepresence meeting. Soon you will be able to connect to all four people using a set of spectacles. Choose your location for the meeting, the surface of the moon, Amazon rainforest, or sitting on a coral reef. Using glasses you can see each person, as if they were with you. Read their gestures, hear the intonations and feel tactile feedback with devices held in your hands while experiencing what it feels like to be in the Amazon.

Another impact on the enterprise will be the eventual disappearance of computer screens, monitors and even mobile phones as we use them now. Instead the lenses we wear will display all of the information for our eyes to read and interpret. Picture sitting at a desk with a large wall near you. Your lenses project multiple screens into your eyes which you interpret as on the walls, email, a video chat, your kids photos on one side, and perhaps a document you are writing. MR allows for people to interact with their tangible physical environment, adding a layer of realistic information on top. One day soon you will not be able to tell the difference between reality and VR/AR/MR with the advances in vision displays and tactile sensors. Google is another company in this space. It recently patented contact lenses with the ability to take pictures of the user’s field of vision.

The key to this evolution in for businesses is shrinking technology. Currently the stigma of wearing a large boxy contraption over the eyes is not palatable for work. That said, as we inch closer to VR, one of the reasons 2016 has become the year of VR is due to better screens on mobile devices (true HD video), which can be slid into a headset to interpret. Quite simply the headsets we see on the market now, like the Samsung Gear VR by Oculus, have two magnifying glasses an inch from your phone, powered by software that splits your screen into two related, but slightly different perspectives of what you are seeing. Combine that with the internal accelerometer and gyroscope that all phones have currently and the device knows when you are moving your head so that the screen can react to the motion. You feel like you are seeing something first hand.

Amazing times are ahead with VR/AR/MR. The enterprise will be forever altered by this form of information delivery. As an aside, I would encourage you to dip your toe into this space if you have not already done so. For $2.85 Google Cardboard is a device which allows you to turn your iPhone or Android into VR. There is truly no way to explain it better than experiencing the technology for yourself and, because it is so inexpensive, it is worth the effort. With this experience you can begin to see the transformative affect that VR will have on the enterprise.

Mixed Reality Video

Sources

1. “Virtual Reality,” Wikipedia, https://en.wikipedia.org/wiki/Virtual_reality

2. “AR/VR investment hits $1.7 billion in last 12 months,” Digi-Capital, April 2016, Click here

3. Ibid.

Images

1. Somack Holidays, http://www.somak.com/tanzania/arusha

2. Wikimedia Commons, Click here

3. PC World, Click here

4. Forbes, Click here

5. Joseph Raczynski – Magic Leap, https://www.youtube.com/watch?v=hPLKL_B1gGA

Blockchain Has Arrived in Legal: Important Observations from Consensus 2017

By Joseph Raczynski

Originally published in The Legal Executive Institute

blockchain

NEW YORK — There was a real moment of inflection recently for me in how I think about the coupling of the legal industry and Blockchain. Having been involved in Bitcoin since 2011 and an evangelist on the topic with dozens of talks in the U.S. and Europe, I found myself in a very surreal place at the recent Consensus 2017 event.

I would describe my time there as a seminal moment as it pertains to the technology. Consensus is the largest conference covering all things Blockchain in the US with approximated 2,500 attendees.

Of the hundreds of conferences and events and I have attended over the years, there has not been a place with as much genuine euphoria as there was during these three days. Certainly, the fact that newly minted millionaires were everywhere did not temper the mood (more on that in a moment). There are a few reasons for this abounding palpable elation which I will detail below.

Blockchain Has Arrived in Legal

There were a host of companies that where sharing their wares. Some were vaporware, others left me as thrilled and warm-hearted as a father seeing their kid walk for the first time. One example, coming from Deloitte, most clearly demonstrates the cusp upon which the legal industry now finds itself.

Deloitte took their first toddler steps in advancing Blockchain in legal, and I was in awe. They were able to take contract automation software, write a contract and load it onto the Bitcoin Blockchain. This is a concept I had tinkered with myself while coding at Thomson Reuters last year, but Deloitte has since made my childish dream into a reality.

The example used in the demo involved taking the process of drawing up a lease between a landlord and a tenant. The lease agreement had a GUI (General User Interface), or a simple questionnaire which would fill in basic information about who was to rent the fictional apartment on the Upper West side of Manhattan. My name, current address, date of move-in and move-out were automatically populated into the document with the contract automation software. Once the tenant and the landlord agreed to the terms, a button was presented to digitally sign the document — creating a hexadecimal hash (a string of letters and numbers unique to the document). That unique string was then saved to the Bitcoin Blockchain.

If either party ever wanted to reference that document again they could use their private key (another string of numbers and letters) to verify the contract details. If even a lowly comma were to change in the document, the entire hash would be invalid and the document rendered null.

Witnessing this demo was groundbreaking for me and something most transactional attorneys will need to be familiar with soon. There are loads of theoretical examples of how Blockchain will work, but not as many significant current implementations as of yet. As I have been promising, with little tangible proof until now, this will be the initial use of Blockchain technology that all firms will be adopting in the not too distant future.

vending

ICOs & the New Gold Rush

The other main theme at the conference was “New Money Everywhere”. The money is coming from Initial Coin Offerings, or ICOs. This discussion around ICOs permeated nearly every conversation and session held at the event. While I had watched ICOs over the last eight months, I had not bought into the idea completely. For background, the ICO is essentially like an Initial Public Offering (IPO) whereby in the a company raises funds by going public via an offering of stock to the public, usually through an investment banker. That stock is then listed and publicly traded over a public exchange; the company must also register with the Securities and Exchange Commission and make regular public filings.

With the ICO, however, a company raises funds via their own website in a crowdfunding-like manner. Often, they post a whitepaper describing their business and how they plan to use the funds — not unlike a IPO’s initial documents. The magic here is that the fundraising leverages the Blockchain to store the information about who contributed, how much and when. The process of storing the aforementioned information securely on the distributed ledger uses “Smart Contracts” which is an enormous development in this space (again, more on this later).

Current regulation in the space is generally non-existent. However, to avoid the suspicion of impropriety and any confusing regulations, companies have designed it so that if you wish to invest, you “donate” your funds via Bitcoin or Ether (the second most popular cryptocurrency). Once you offer your Bitcoin to them you are typically given shares in the company referred to as “coins” or “tokens”. Those electronic coins bought at the ICO rate are eventually listed on publicly traded cryptocurrency sites.

Recently, this is where the mania has ensued, and the millionaires flush with digital currency dwell. Often investors see a huge bump in price when their coins hit the exchanges, followed by a seesaw movement in valuation until the next ICO is released. Traders tend to be fickle as they move in and out of flavor-of-the-month coins and onto the next shiny ICO. These offerings now seem to happen multiple times a week compared to handful a month last year.

consensus

Typically, these ICOs have an open window for people to invest for a week or two but one company called EOS which specializes in “Decentralizing Everything,” will have their ICO for the next 360 days. When making a donation to invest in the fledgling company they offer rather large numbers of digital tokens for Bitcoin or Ether. In the example of Civic, which is a secure identity platform, they requested US dollars for their token, called a CVC, at a rate of one token for 10 cents, with a typical order of $1,000 netting the buyer 10,000 tokens. As an order of magnitude, people that bought in would have made seven times their money in about a week, as the currently CVC token is now valued at 70 cents.

The amount of money invested in ICOs is remarkable. While at the conference, the value of all companies’ combined tokens or coins was pegged at more than $100 billion dollars! This valuation was in the few billions not long ago. Put another way, all of the companies who have launched ICOs are worth more than Morgan Stanley at $78.3 billion. according to current stock valuations.

As you may have gathered, there is tremendous opportunity with ICOs for law firms, in-house counsel and government agencies. Blockchain practices within law firms have emerged across the globe, specializing in assisting companies with the process of the ICO. CooleyPerkinsCoie and Holland & Knight are three innovative firms that have highly specialized attorneys working in this space.


The amount of money invested in ICOs is remarkable. While at the conference, the value of all companies’ combined tokens or coins was pegged at more than $100 billion dollars! 


Also, many regulators are carefully watching from the sidelines which was a point of discussion during the event. To that end, some firms are providing guidance in areas considered confusing for all parties: Federal and State money services law, privacy and security, Intellectual Property and Money Laundering as it pertains to these cryptocurrencies and to Blockchain.

While the eruption of these coin offerings are in general considered to be very positive, lately there have been some challenges. Not unlike what happened during the dot-com IPO boom of the late-1990s, the ICO market is increasingly seeing potential phantom companies that are trying to leverage this mania to turn a quick buck without a real business case. In the coming days or months we will likely see an ICO go very wrong, resulting in thousands of people losing millions of dollars and ultimately upsetting the entire ecosystem.

At that point, several aspects of the legal industry will begin to take shape — first and foremost, there will be a call for regulation both domestically and internationally. Beyond that, I would foresee possible class action lawsuits following, also not unlike those that followed the dot-com bust of the early-2000s. Recently ICOs have strictly forbidden citizens of some countries (mainly the U.S.) from participating in their offerings for fear of lawsuits.

The Initial Coin Offering is an incredibly exciting use of Blockchain technology for business and individuals. The Blockchain’s use of the smart contract to record information, execute actions securely and in a distributed manner is revolutionary. At this moment in time, the technology slashes the middle man in what was a very profitable business once reserved for the big banks and whale investors. With that said, we are in early days — so while billions of Euros, Dollars, Yen and every other major currency races toward these new company ICOs, the legal industry is charting a path to assist… or eventually, help sort through the wreckage.

Law Firm of the Future – The Trinity of Forces: Infinite Processing Power, Memory, and Machine Learning

By Joseph Raczynski

In ten years, it is predicted that 40% of the Fortune 500 companies will no longer exist1. This forecast originally cited in Fast Company is from a Babson Olin School of Business study.  This notion is nearly incomprehensible, but may have a significant impact on the legal business.

Why is this happening now, and what impact might it have on the law firm?

We are at an extraordinary moment in time with the evolution of technology on three fronts.  The trinity of forces are colliding at once, propelling change with everything around us.

Gordon Moore, an Intel chip scientist, formulated a well renowned technical law.  Moore’s Law states that roughly every 18 to 24 months, the processing power of computers doubles. That is, the ability for a computer to perform calculations is increasing exponentially.  For some perspective, if you were to buy a $1,000 computer in the year 2000, it would have had the processing power of an insect brain. Buy a new computer in 2010 and you would have the processing power of a mouse brain.  Fast-forward to 2024 and the expectation is that a new computer will be as powerful as the human brain.  In 2045, a $1,000 computer purchased from Amazon.com will process as fast as all of humankind.  The implications of this are staggering.

In the second of the three forces, we couple what amounts to unlimited processing power with the advances to storage and memory for computers. In 1965, IBM built a computer with 5MB of storage.  It was as big as a bedroom and cost $120,000. In 2004, a memory chip the size of a fingernail cost $99 and held 128 MB.  Ten years later, we can purchase a 128 GB chip for $99.  This is the hockey stick picture of momentum with exponential growth accelerating rapidly up the graph for both processing power and memory.

The third and last piece of this triumvirate of significant change is programming and algorithms.  We are at a state where computers are beginning to teach themselves.  Machine learning is becoming an increasingly important part of many businesses.  Through an algorithm, a programmer builds a foundation from which the program can learn and continue to adapt and grow.  There are a plethora of examples that are starting to take hold.  IBM Watson has the most buzz right now with its cognitive computing platform.  Uber uses machine learning to price rides, location drop-offs and pickups. Amazon can couple complementary products with your purchase.  In the legal space, WestSearch®, the fundamental algorithm behind WestlawNext®, learns as people conduct research.  It surfaces up the most pertinent content and good law for the researcher.  Other legal examples include e-Discovery where many products utilize predictive analytics to help reduce the number of eyes necessary to review documents.

The blending of these three forces – processing power, memory, and algorithms – is a mixture for infinite growth and transformation at law firms.  The opportunities are immense.  Here are some possible changes afoot as the trifecta take hold over the next 10 years.

  • As predicted that 40% of the Fortune 500 companies will no longer exist because of these forces, law firms will likely mirror this as some who do not adapt and embrace these technologies will struggle to survive
  • In the next 10 years, because of unlimited storage and processing power, most document review will be completely automated and computerized.  No longer will the first years or contract attorneys be reviewing documents for 18 hours a day
  • Workflow solutions will reign over the next five years, but beyond that the trifecta of forces mentioned will push these solutions into complete automation so that drafting documents will be computer generated.  This is actually happening now with 20 percent of Web news articles written by computer
  • We are in an interstitial period with the Cloud.  Currently, security frightens many firms from taking advantage of its scale and low cost.  In the coming years, most firms will move everything they can to some type of Cloud, including private or hybrid
  • Everything will be outsourced at the firm.  Phone systems, HR systems, back office, administrative and technical support, where the portal will be hosted, office tools like Microsoft® Office, and all things technical will likely be moved away from the firm and managed by vendor experts.  This will greatly reduce costs for the firm as they tap into the three forces
  • As a result of the above, most attorneys will work remotely, and law firm office space will be dramatically smaller
  • Big firms will get bigger and the medium may get smaller.  The mediums who adapt will find their niche as a regional player, local generalist, boutique, or litigation specialist
  • The impact on speed and adaptability on new attorneys will begin in law school.  Some schools have already begun a two-year program with the third focused on technology, lawyer tools, and recalibrating how the attorney will work in the new firm

The law firm of 10 years from now will certainly be different from what we have today.  In this extraordinary time, with the evolution of technology and trinity of forces, firms will have to adapt rapidly.  This fundamental shift will be an opportunity for the firm to become more efficient, create new opportunity, and ultimately serve their clients better.

1 John M. Olin School of Business study