The impact of blockchain, cryptocurrencies, and NFTs on the legal industry with Joseph Raczynski

It was a ton of fun recording this podcast with the omniscient and ever engaging Joseph Gartner at the ABA Center for Innovation – (full transparency, I sit on the Council). With Joey’s new role as Director and Counsel, we chatted all things #blockchain#cryptocurrencies, and #NFTs and their impact on the legal industry.  It is fantastic to be a part of a group pushing on #innovation in the legal industry at the ABA with Chair, Don Bivens and the entire Center for Innovation Governing Council.

https://www.buzzsprout.com/1784333/8764341-the-impact-of-blockchain-cryptocurrencies-and-nfts-on-the-legal-industry-with-joseph-raczynski

Legal technology conference (r)evolution—the launch of Legal Geek North America

Originally published in Legal Insights Europe.

By Joseph Raczynski

Like the legal industry itself, legal technology conferences are transforming and Legal Geek is leading the change. These industry events are finally beginning to mirror the, more, customer centric start-up community perspective. Taking a step back, a decade ago the most renown and popular legal industry conferences in the US included International Legal Technology Association (ILTA), now ILTACON, and LegalTech now rebranded Legalweek. Both conferences have established a forum by ushering in a global audience for multi-day events centred on a mixture of vendor products and industry specific legal technology discussions. LegalWeek itself is a spectacle with hundreds of vendors vying for compact, tightly knit cubicals in a midtown New York City hotel in the middle of January. ILTACON, a mega conference, roams from city to city each year in late August with a five-day event in some of the largest hotels in the US. While the original intent was to educate, the creep of vendors and suppliers into the space may have watered down the primary mission. With the recent upheaval at ILTA and their executive leadership, one can almost sense the tug and pull of the shift in focus.

As all things evolve, hopefully, the next iteration of this evolution is the British Legal Technology Forum. This conference has mixed up the notion of what a legal conference looks and acts like. With an open mimosa bar in the morning bleeding into a beer fest for the rest of the day, this environment is starkly different than the traditional suit-clad legal technology events. In addition to the social-centric aspect of the one-day event, the British Legal Technology Forum has quicker sessions, sometime only 15 minutes enabling speakers to discuss a specific topic that is tight on scope. Vendor presence is strong at this event, but not as fully emmeshed in the fabric of the event sessions.

Legal Geek, the prime example of the conference revolution, originated in San Francisco in 2015, but gained favour in London—and so made it ‘home base’. This is the latest iteration of collaboration in the legal tech community. Over the last several years Legal Geek London has received rave reviews among legal technologists, consultants, investors, lawyers, and legal students alike. It has built a bit of a cult-like following. The founder, Jimmy Vestbirk, offers perspective on why Legal Geek has such fandom. The philosophy: come to make friends, not to sell; dress comfortably (please, please, no ties); come to learn and to teach; look after your fellow law-gends, you may need their help someday; and, this is your community, please pitch in and help. You will be rewarded. This elicits a mental shift of mindset for all who come to this legal technology event—from the typical conservative, staid legal conference approach—to the hip, cool, cutting-edge vibe of a grass-roots start-up company. There’s even promptings to ‘high-five’ your fellow delegates throughout the day.

Recently I attended the first Legal Geek North America in Brooklyn, New York. There was a buzz about this event weeks prior. Attendance reach over capacity with 450 people from around the world. A waiting list of dozens were reported—and understandable with an enterprising agenda of 60 presenters, from six different countries, speaking between 8-12 minutes each—and only three vendors present. The speaker line-up was geared to technologists and lawyers, from both private practice and in-house—on what legal technology is out there and why it matters.

This event had potential to be an earthquake event in the industry. The biggest difference at this conference, presenters are not supposed to talk about their products, at least until the very end of their 10-minute spiel. It was effective.

Highlights

Blockchain for non-disclosure agreements (NDAs): Jim Brock, CEO of TrustBot, is working on creating a tool that creates NDAs very quickly through a document automation system. Its primary goal is to solve for the problem for the user accepting the agreement. Anyone can adopt the agreement, then you share the URL. Each party is adopting the NDA prospectively—so that when you agree to it, anyone else who has already agreed to it is already set. You are accepting the ‘hash’ or the signature stored on a blockchain. This is all verifiable.

Access to Justice: Stevie Ghiassi, CEO of Legaler, is endeavoring to help legal services reach 1 billion people. Through the use of all of the latest buzz words—digital scarcity, smart contracts, programable value, internet of value, digital identity—Legaler is creating a blockchain operating system for legal services. One component of this is LegalAid—you can donate money to this fund using a blockchain and see who the money goes to using a smart contract. This enables the tracking of your donation and you can see how it impacts an individual’s life. Another aspect of the operating system is a Litigation Fund which pools people’s money together, raising money for a group of people who want to sue a mega company in a class action suit.

Distributed Law Firm: James M. Fisher II, Founder & Managing Partner of FisherBroyles, LLP has created the first distributed law firm in the world. It has just cracked the AmLaw 200. Their platform is based on compensation, people, location, and technology. They use smart contracts on a distributed network where all partners can see how everyone is billing, it’s automated and in the clear. Partners get 80 percent of all billable work for their clients. If you work with another partner, you receive 48 percent of the earnings. The cost savings comes from having no physical office space as every partner is geographically distributed as well. Their people join the programme from some of the biggest firms in the world with the attraction of no commutes, no overhead, increased professional growth potential, and an extremely diverse partnership. Lastly, their technology is a mix of both cutting edge and traditional tools to help their clients.   

Legal Geek North America, still in its infancy, is primed to shake up the legal technology community. The shortened sessions and its focus on the customers and not product is something to watch for the next several years. Likely the North American event will soon rival the mega-success of the Legal Geek Conference in London.

Classification of Cryptocurrency: Coins, Tokens & Securitized Tokens

Originally published in the Legal Executive Institute

By Joseph Raczynski

One of the most contentious debates in the cryptocurrency world surrounds classification of blockchain-based digital assets, tokens and cryptocurrencies. A panel at the recent Thomson Reuters Regulation of Financial Services Conference discussing the basics of cryptocurrenciesexamined this argument. With more than 1,650 cryptocurrencies or tokens trading in the public domain, it is important to understand their nuanced differences.

Cryptocurrency

Dominating this conversation in the United States is whether specific coins are securities, and secondly, if a utility token can exist. In addressing the first part, the US Securities and Exchange Commission (SEC) recently shed some light by declaring both Bitcoin and Ethereum non-securities. This assertion defines that there is no expectation of equity or return on any investment in these virtual currencies. The overarching belief had held that Bitcoin is a currency and thus a competitor to the US Dollar or Euro; and Ethereum is more complicated.

Tokens

The original intent behind Ethereum was that it supported smart contracts by using their blockchain token called Ether or ETH. In this case, a token stands as a digitized tool to perform a service, similar to those physical token coins used in some video game arcades or laundromats. In this digitized version, the Ethereum platform was intended to perform a service and store more complex, automated, yet immutable code on their blockchain (for example, storing a contract on the blockchain that dictates a sell order if the stock of Amazon reaches $2,000 per share on January 1, 2020).

What differentiates Ethereum from Bitcoin is that the token ETH is used to upload and save that smart contract to a blockchain using “gas”, basically the payment of ETH for each transaction. Therefore, many argue that ETH is a “utility token”, performing a service, i.e. saving that contract to the blockchain. What complicates this is that many start-up tech companies are using Initial Coin Offerings (ICOs) on the Ethereum platform to launch crowd-funding campaigns and raising money. The complication — raising money in this form — have some regulators and industry watchers arguing that these ICOs are more like securities, similar to stocks, even if they are sitting atop of the Ethereum token-based platform rather than on a stock exchange.

Tokenized Securities

Now, a hybrid product that is emerging quickly is the tokenized security. Recently at Consensus in New York City, a company called Polymath created a platform for anyone who wishes to raise money for their company quickly can do so by issuing tokenized securities. The primary difference with this model is that the issuer is offering shares or portions of ownership of the company. There is also a belief that these types of securities will eventually adhere to SEC regulation, which is yet to be determined. What drives the regulatory discussion is a 1946 Supreme Court ruling now called the Howey Test, which determine if something is a security or not. The tenets of the Howey Test are as follows:

  1.  It is an investment of money
  2.  There is an expectation of profits from the investment
  3.  The investment of money is in a common enterprise
  4.  Any profit comes from the efforts of a promoter or third party

 

For a token to be considered a security, each of the above must be true. The primary point of contention is around point four, “Any profit comes from the efforts of a promoter or third party”. This aspect is typically out of the hands of the investor and not something they can control. When these tokens are launched on third-party exchanges, this falls outside of that individual investors domain, and for many, nullifies the Howey Test.

Or as Ash Bennington of CoinDesk phrased it:

A long time ago, someone named Howey owned an orange grove.

Howey said: “I’ve got this orange grove and I’ve got no way to make money out of it — because I need money to make money.”

Tell you what. I’m going to sell you this orange grove and, in exchange, you get whatever profits are made from that little plot.

I’ll work the land. I’m going to pick the oranges. I’m going to squeeze the juice. You just pay me the money.

The plaintiffs said: “That’s a security.”

The SEC said: “That’s a security.”

Howey said: ‘No, no. That’s just selling plots of oranges.”

Ultimately, the Supreme Court said: “That’s a security” – because it passed this test: There was an investment of money. And a common enterprise. With the expectation of profit, primarily from the efforts of others.

Governments around the world are grappling with the classification of cryptocurrencies in what should become a multi-trillion-dollar industry within the next decade. With so much at stake for everyone from the garage startups to the Morgan Stanleys of the world, some regulation is inevitable. Most are merely hoping for clarity, not confines, which could hurt the innovation stemming from the once-a-generation revolutionary platform technology called 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 DeedsIn 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 ContractsBelieve 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.

Legal Technology is “Thriving”: Richard Susskind Hosts the British Legal Technology Forum 2017

Originally posted on the Legal Executive Institute

By Joseph Raczynski

Susskind

LONDON — The British Legal Technology Forum 2017, Europe’s largest event focused on legal technology, was held recently at the exquisite Old Billingsgate along the Thames River. The event showcased 55 speakers on five stages, with more than 1,400 in attendance. Event organizers use a TED Talk-style of shorter presentations, each between 15 and 45 minutes, held in rapid succession to keep the audience engaged. It was refreshingly unlike any of the major legal tech events held in the U.S.

None other than the world renowned legal futurist and author, Richard Susskind served as the master of ceremonies for the event on the main stage. (I had the good fortunate to speak on a panel, Blockchain in the Legal Sector – Taking the Smart Approach, which I will write about in a future post.)

Current State of Legal Technology

With standing room only, Prof. Susskind spoke about where he sees the legal industry today. In what may have surprising for some to hear, he described the space as “thriving”. He went on to state: “It may even be booming”. In almost a giddy state, he surmised that, “There’s a level of engagement, a level of activity, that we’ve never seen before.” His observations set the tenor for the day.

Artificial Intelligence

Susskind spent his initial comments in his address focused on what turned out to be the dominate theme at the event, Artificial Intelligence. The wide-spectrum, legal-focused audience leaned in when he stated that, “People are probably over-estimating what AI can do in the near term, but unfortunately [they] are underestimating what its impact is going to be long term in the industry.”

With all of the hullabaloo from larger vendors on AI, two young law students from Cambridge University made the biggest splash — and also caught fire over social media. Rebecca Agliolo, Commercial Director, and Nadia Abdul, Head of Legal Research, of LawBot, created the “chatbot” — an AI software program that assists you in determining whether you have been a victim of a crime. Using the application, the user explains in plain English what happened to them. The bot then begins to ask questions to help narrow down the possible offenses. It the first iteration it covers most of the criminal offenses in England. In version 2.0, the company will likely use the Facebook Bot platform so that the LawBot can conclude if a crime occurred. Further out there are thoughts of moving beyond the UK and into other jurisdictions. Once this augmented intelligence is provided to the user, they can choose to report it as a crime if it is deemed as such.


“There’s a level of engagement, a level of activity, that we’ve never seen before.”


Speaking of augmented intelligence, there were numerous examples from various presenters talking about the greater efficiencies that are being wrought through AI. Clearly the phraseology “augmented intelligence” has been chosen carefully by vendors and speakers alike to not create discomfort for the general audience. In one clear example of automation that struck the audience, Emily Foges, CEO of Luminance, spoke about the speed of their due diligence software, stating that their contract clause detection software can spot anomalies far better than most associates. In reviewing tens of thousands of 400-page contracts, the typical human will miss the distinction between the terms “limited” verses “unlimited.” Which begs the question, why are law firms still hiring top notch talent out of school to review documents when humans are no longer really needed for these exercises?

Clearly the British Legal Technology Forum 2017 was a great success based on the heavy attendance, as well as the level of participation and engagement. Certainly having Richard Susskind act as emcee helped people understand the impact and importance that technology is having on the legal industry and how topical this discussion has become for the legal industry.

360 Video: Design Thinking Workshop – Thomson Reuters Innovation Lab at Communitech

By Joseph Raczynski

360 Degree Video of a Design Thinking Workshop at Communitech, Kitchener, Ontario, Canada. Led by Dave Inglis we start down the path of a Design Thinking Workshop with Alston & Bird. Shot with the #SamsungGear360.

*With 360 Video you can move the video around to whichever view you would like at any point. Please click and hold the video and move the screen around in any direction.

ILTACON 2016: When Will Blockchain and Smart Contracts Be Important in Legal?

By Joseph Raczynski

“Blockchain is Hot: More than $1.5 Billion has Been Invested in Blockchain in the Last 18 Months”

  • Tori Adams, Booz Allen Hamilton

 

NATIONAL HARBOR, Md. — If someone had told you in 1993 that the Web would be integral to your life today, would you have believed them? Well, the discussion around blockchain technology at ILTACON 2016 harkened back to that same scenario of the early ‘90s. This is a reboot, where another new technology will revolutionize the world.

Moderated by the esteemed Ron Friedmann, Partner at Fireman & Company, we were led down the path of what to expect with blockchain. Rohit Talwar, CEO of Fast Future Research, started us off with his futuristic vision on what we can expect over the next five years. Joe Dewey, Partner at Holland & Knight, who specializes in blockchain, discussed the law and smart contracts. Lastly, Tori Adams, a data scientist at Booz Allen Hamilton, illustrated her predictions on the reality of this technology in the near term.

Current Landscape

All major industries are looking toward blockchain — most pointedly, the financial sector. Talwar focused on one platform that is pushing this new space forward quickly — Ethereum — a pseudo-Bitcoin 2.0 that allows users to code on top of the blockchain. This can create huge advances in how the blockchain can interact with the world; utlizing smart contracts and digital identities, an even executing stock trades. In fact, Talwar stated that Goldman Sachs estimated a legal savings of $11 billion to $12 billion per year from streamlining clearing and settlement of cash and securities through such technology.

Near Future

The next significant phase developing now is the DAO (Decentralized Autonomous Organizations) which means that processes and companies are completely autonomous. This technology has the ability to disrupt a disrupter, e.g. Airbnb. Let’s say you visit a DAO-enabled travel site. The condo owner places an ad on the site to rent their place weekly. You choose their place in Miami, agree to the terms (date of check-in and -out, etc.) and agree to the fee and deposit (paid automatically). When you arrive at the condo to check-in, simply enter the password at the door through an Internet of Things (IoT) tech-enabled doorknob (check out Slock.it) and you gain access. That lock at the front door knows who you are and how much you paid, and it can also see your contract for the rental of the condo and knows when you are to be out. The DAO can do all of this with one employee running the entire operation.

Law Firms Start to Embrace Blockchain

Several law firms are starting to make a foray into this space. Recently Steptoe & Johnson began a multi-disciplinarian practice to help manage the blockchain for clients. They will also be accepting Bitcoin as payment. Most importantly, they co-founded the Blockchain Alliance6, a coalition of 25 blockchain companies and 25 regulatory and law enforcement agencies — including Interpol, Europol, the Securities and Exchange Commission (SEC) and the FBI — to educate enforcement agencies about digital currencies and blockchain technology. Other law firms including Holland & Knight see exponential growth of attorneys laboring in this discipline.

Smart Contracts

Holland & Knight’s Dewey said he believes the definition around smart contracts can be varied. For the purposes of this conversation, it is snippets of code that can change the ledger or a legal contract that is implemented on the blockchain. Of course, he outlined several benefits and challenges to this new innovation in the area of smart contracts:

Benefits:

  • Smart contracts are coded so there is less ambiguity than prose;
  • Verification can be achieved even within a trustless environment;
  • Self-executing; so once released, it is difficult to impede execution; and
  • Integrates well with IoT, artificial intelligence (AI) and machine learning.

Challenges:

  • Must balance transparency with privacy concerns;
  • Infrastructure needs to be updated;
  • Lack of experience with blockchain technology in IT departments;
  • Lack of education and understanding of the technology in other departments, including compliance;
  • Development of uniform standards and protocols; and (of course)
  • Need to overcoming custom and tradition (e., change is hard.)

So a real world example of how a smart contract was implemented can be seen in how Barclays did it with an interest rate swap prototype. Essentially, the investment bank set up an incubator of coders who worked with their legal department to understand how these swaps (trades) worked legally. They distilled three lines in the process that could be coded — (x) the amount of cash; (y) the interest rate; and (z) the currency. Once this information was garnered, the transaction could be solidified and then stored on a blockchain.

One of the most surprising revelations of the session came from Dewey when he stated: “Big news for attorneys, existing law — passed well before blockchain technology was contemplated —not only validates transactions, including the trading of credit interests accomplished through the use of the technology we are discussing, but as a matter of policy, strongly supports it.”

There is little question that this is an industry that will be growing rapidly over the next few years. Many firms are moving forward with practice areas and educating their attorneys on the technology to better position themselves for the coming wave.

Lastly, Dewey added some additional encouraging words surrounding the future of blockchain. In May, the State of Delaware — which is home to almost two-thirds of the Fortune 500 companies — announced a Blockchain Initiative so that corporate filings can be added to the ledger. “This is a clear sign that blockchain technology will have a significant impact on business,” he said.

ILTACON 2016 SESSION: NEW INTERNATIONAL STANDARD FOR CLOUD DUE DILIGENCE

By Joseph Raczynski

The cloud is becoming increasingly ubiquitous at law firms. In fact, a recent ABA Technology Survey stated that 46 percent of cloudless firms will be transitioning in the next 6-12 months. In the session on the “New International Standard for Cloud Due Diligence,” Gregg Brown, senior director Technical Strategy, Computer Standards at Microsoft, and Patrick Oot, partner at Shook, Hardy & Bacon, discussed the changes to the cloud over the last six years and what is coming down the road.

Small- and medium-sized firms have embraced the cloud, while the largest firms have been more reluctant, saddled with restraints placed by their clients – especially in the financial industry. That said, there now seems to be some loosening of the straps in that particular space.

Benefits of the cloud:

The duo argued multiple reasons for jumping to the cloud. First, firms can take advantage of the latest innovations, features and capabilities with updates released every month, compared to waiting years for internal upgrades to their current systems. In addition, the cloud offers greater agility – not having to retrain or rebuild as needs expand.

Oftentimes, clients require more capacity on short notice, which the cloud can easily accommodate. At a base level, the cloud is a fraction of the cost of on-premises solutions – though add-ons can sometime raise the price close to that of an in-house solution.

As more firms adopt BYOD (bring your own device), the cloud enables firms to meet workforce demands with a per-user license. But with BYOD comes another layer of security concern, which the cloud can more readily accommodate as most vendors will be up-to-date with regard to security patches.

As Brown also noted, another inherent benefit to cloud technology is access to analytics. With all of its data in the cloud, a firm can easily deploy search and analytics across all of its information/eDiscovery, compared to what one might have with an on-premises solution.

Risks in the cloud:

As firms move to the cloud, one of the most persistent risks associated with the technology is multitenancy, means that a software application may not work well as designed in the cloud with multiple users trying to gain simultaneous access to it.  And of course, with complexity tied to data transfer laws, particularly between the US and EU, firms should consider the challenges of data access and the courts, Oot noted.

New ISO Standard Impacting the cloud in 2016:

Brown also described that by the end of 2016, there will be a new “Cloud Service Level Agreement (SLA) Framework” – known as ISO/IEC 19086-1 – published, which will offer a set of considerations for cloud agreements. He noted this will be a boon for law firms as it will lay out a guidance standard verses the normal compliance standard. This should have a positive impact, although Brown cautioned that these guidance standards will raise key questions and require analysis and evaluation.

Reflecting on the session, Oot and Brown surmised that technology still has a few pessimists, but that the forecast is looking positive as more and more firms opt-in. With its waxing advantages and waning risks, it appears that greater cloud adoption is near.

As they concluded, Oot and Brown pointed out one last benefit of the cloud – terms of service from providers can now be negotiated, where previously this was not permitted.

Based on what they outlined, there is little question that fewer barriers remain to adopting the cloud.

Joseph Raczynski is manager, Technical Client Management, Thomson Reuters 

ILTACON 2016: Re-Imagining Legal Technology for the 21st Century

By Joseph Raczynski

“The story of disruption was just the first act of 21st century business, now begins the tale of total transformation.”

— Mike Walsh

NATIONAL HARBOR, Md. — So reverberated the words of Mike Walsh a Futurist/CEO of Tomorrow, across an audience of more than 3,000 legal professionals at ILTACON 2016, a four-day conference that centers on the intersection of technology and the legal industry.

Walsh gave the keynote on the opening day of the annual conference, and the lens he cast enlightened the onlookers to a futuristic view of our current world. He then bridged that technological vision to the 21st Century Legal realm and focused on several thought provoking questions.

Can you think like an 8-year-old?

The key to transformation is to be ahead of it. Through the optics of an eight-year-old we can view the direction that technology is shifting. They embrace mobile — why? Because parents have pacified their kids for years with iPads and mobile phones. Their learnings began on those platforms which became almost intuitive to them and will now dictate our future.

When will we be a truly data-driven world?

Now! The biggest social shifts are shaped by the data-driven world. Disney World offers the most advanced of data collection and use. Their MagicBands are linked to a credit card and function as a park entry pass as well as a room key. They know who you are, where you are, and increasingly know what you want — predictively. Food can be delivered to you without you ever specifying a location. All of this is using data and machine learning to better understand consumer, and thus human behavior.

disney

WeChat, an app primarily used in China, was also offered as a good example of where we are going. With this app, people in China can play games, pay for things and buy insurance — the whole time interacting with a bot that is constantly gathering data and learning. This is what we will begin to see in all businesses in the near future.

In preparation for his transition into a discussion around legal, Walsh offered another thought. The children of today will be the first generation to be raised partly by artificial intelligence (AI). If you think about the platforms that are prevalent now, kids are interacting with them increasingly — Alexa, Google and Siri. Law firms have to start thinking about how these eventual employees will work and interact with each other both inside and outside of the firm.

How will a 21st century law firm differ from a 20th century firm?

The world is now global. The largest corporations and law firms have back office and operations support overseas. As an example, Walsh talked about something he saw in India which illustrated where we are headed. An AI machine (physical computer) is situated alongside other staff in a cubical at an office center in India. It is fully embraced and accepted as a highly efficient employee — and continues to improve rapidly with its own productivity.

Speaking of actual human employees, recruiting people will transform, Walsh noted. The next generation of hiring future lawyers, and collaborating with clients should focus on rethinking how we hire. Offer a prospect a clean sheet of paper and ask them to come up with a solution to a problem. Another idea, after a month on the job, ask what processes the newbie might change based on what they are seeing.

int-about-mike

What kind of mental software are you new hires running?

Going forward, the operating system of a 21st century lawyer is as much about the culture as it is about the code. All firms will have to be agile, and firms will have to hire people that think that way. Everything around our traditional culture and space is changing. People will increasingly be working from other locations, so this concept has to be reimagined. Walsh’s suggestion was to think about the person you are hiring — are they energized by solving problems? Additionally, environments have to be reconsidered. How do you design an office for people that do not need one?

Lastly, are you leveraging all of your data?

Law firms are rife with all sorts of data. One question that Walsh suggested was worth posing is how are firms using that data? Increased productivity can be gained by applying analytics to the whole.

In closing, Walsh pleaded for the legal space to adjust their mindsets, how we see and use data, which people are hired, and what technological processes are in place. We need to think like an eight-year-old to see how the world will change and adapt now, he explained.

The data inside law firms has to be better leveraged and analyzed with new tools. When hiring, do so by unearthing agile people and creating more social workspaces. One of the best ways to do that is by rethinking your communities, picking some high-profile projects and challenging those new teams to experiment.

In conclusion, Walsh noted: “When preparing for this new future, embrace that the future means challenging everything we know to be true.”

ILTACON 2016: Looking into the Future & Building the Exponential Law Firm

By Joseph Raczynski

“In the not too distant future, exponential technology could upend the $650-billion-dollar legal industry — or, there will be a $78 to $120 trillion-dollar opportunity for agile players who are prepared.”

— Rohit Talwar

NATIONAL HARBOR, Md. — At ILTACON 2016, Rohit Talwar, CEO of Fast Future, spoke about the disruption in the legal industry occurring around us and more precisely which technologies will have the largest impact on law firms in the near future.

In his discussion “Building the Exponential Law Firm,” Talwar began with the baseline of Moore’s Law — the theory that processing speeds of computers double roughly every 12 to 18 months. Building on that, he added what he considers to be the core of this exponential growth: machine learning. These are machines with the ability to create visual perception, reasoning, planning, intuition and decision-making all starting from a simple ruleset.


The Faster Pace of AI

In his fascinating discussion, Talwar pointed to a recent development with Google, using DeepMind, its artificial intelligence (AI) computer, and playing Go — one of the most complicated games known to man. In this scenario, Google did not program the computer, only gave it rules of the game.

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In short order, the world Go champion lost 4-to-1 to DeepMind in dominate fashion. While this happened in early 2016, this was not expected to be possible until 2026 — a full decade in the future.

What Talwar was illustrating through the AlphaGo example and countless others is that AI is here and is being used all around us. It is becoming pervasive, embedded, augmented, immersive, and connected to a multi-sensory network.

There were a host of various legal sector applications he cited as occurring now, such as those in areas such as:

  • Automation of Legal tasks and Processes — Firms have developed a computer program that can sift through government regulatory registers to check client names for banks, processing thousands of names overnight. Others have created an automated personal injury claim case assessment program.
  • Decision Support and Outcome Prediction — This includes advancement in document review in M&A, that extracts and analyzes key contract provisions and provides rapid summary and analysis; or analyzes entire briefs to find potential missing points of law, or alternative arguments not cited; and premonition programs can predict which lawyers win with which case types and which judges.
  • Creation of New Product and Service Offerings — This includes development of online document generation for startup formation; online education impact analysis; and online chatbots that can advise on privacy law and generating client-specific compliance policy in real-time.
  • Process Design and Matter Management — Firms have developed automated generation of process flows and project plans; real-time impact assessment of process changes on timeframes, resources and costs; and come up with suggested narratives based on how clients react to and prefer to receive information
  • Practice Management — This involves benchmarking across practice areas for comparable tasks from document production through to completion of key stages in a matter; identifying potential human resource challenges using social media sentiment analysis of comments; and providing dynamic modelling of alternative billing approaches and matter-team formation based on personal characteristics.
  • In-house Legal Applications — Some firms have developed a lawyer advisory app that can, for example, create an ordering of corporate contract negotiations; other tech entities have created apps or programs that can streamline and standardize regulated superannuation funds’ breach assessment processes, and that can help financial institutions meet requirements, determine applicable regulations in terms of situations concerning money laundering, liquidity risk and financial crimes.

The Coming Blockchain Revolution

Over the next several years Talwar said that he believes blockchain technology will have a monumental impact on law firms, providing firms with the ability to store information in a secure distributed ledger. In fact, Goldman Sachs estimates a cost saving of $4 billion annually on its legal bill by moving real estate titles to distributed ledgers that use blockchain technology.


Talwar pointed out that law firms have a huge potential upside with all of the technology that is emerging. However, he warned, if a firm does not adapt and become agile it will be very difficult for it to keep up with the pace of change that will be occurring, and ultimately its intransigence will make it difficult for the firm to win business.


In the second phase, being tested right now, the Decentralized Autonomous Organizations (DAOs) will execute contracts free of human intervention; and in the future, we’ll reach Algocracy, a full automation of the law.

In this scenario, we would have a complete rewriting of the law that would be embedded in software. This would allow for automatic fines, standardized open source legal documents and automated judgments. For example, if someone stole a candy bar from a convenience store, their own body camera would catch them and automatically impose a fine on that person. A payment would be removed directly from their bank account, and would be executed without human intervention.

Not surprisingly, Talwar pointed out that law firms have a huge potential upside with all of the technology that is emerging. However, he warned, if a firm does not adapt and become agile it will be very difficult for it to keep up with the pace of change that will be occurring, and ultimately its intransigence will make it difficult for the firm to win business.

The wonderful aspect about this change is that it is all new. Most of these technologies are not governed by law, which creates an incredible opportunity for legal advice because clients have to understand how to handle these new technologies.