The Potential of Blockchain In the Legal Industry : Blockchain and Law

Ever heard of the phrase “game-changer”? Well, get ready to hear a lot more as we delve into the captivating world where advanced technology meets the complexities of the law. 

Picture a digital ledger, unhackable and immutable. Imagine this ledger offering an unparalleled level of accuracy and transparency. That’s the promise blockchain in the legal industry brings to the table. As blockchain makes its foray into the legal sector, we stand on the precipice of a new era. 

Legal processes, which are traditionally heavy with paperwork and bureaucracy, stand to gain immensely from this technology. Now, as we step into this world of technological revolution, let’s explore how blockchain is set to rewrite the rules in the legal industry. 

How Blockchain Reworks the Legal Landscape?

Welcome to the Future. Imagine a world where every sector is reimagined, invigorated by an underlying technology promising precision, transparency, and security – welcome to the world of blockchain. 

This isn’t just a buzzword; it’s a game-changing force permeating global industries, right from finance to logistics, and now, onto the legal field.

Dispelling the Paper Pile-Up

Picture this: an attorney’s office, overflowing with paper trails, stacked sky-high with historical records of case files. It’s a universal struggle for law professionals worldwide, grappling with this laborious task. 

But what if we told you there’s an alternative, a means to simplify this process while increasing efficiency? Enter blockchain.

Revolutionizing Legal Operations

Blockchain isn’t just about cryptocurrencies. It’s about harnessing the power of a decentralized, distributed ledger, which allows for record-keeping that’s near impossible to tamper with. It’s an enticing prospect for the legal industry, and many are getting on board. 

As an example, the Global Legal Blockchain Consortium advocates for blockchain integration into legal processes.

The Power of Smart Contracts

In a world where speed, accuracy, and reliability are everything, smart contracts become the go-to solution. A PwC survey back in 2017 hinted at this shift – a majority, about 70% of law firms, indicated a keen interest in utilizing smart contracts for transactional services. 

That’s not all. Another 41% of firms showed interest in using blockchain for transactional legal services. Meanwhile, 21% and 31% aimed to leverage it for support of their businesses and high-value services, respectively.

Extending the Blockchain Impact

When we say blockchain is versatile, we mean it. Its secure, unalterable nature allows lawyers to address various legal concerns more efficiently. Whether it’s maintaining property records, chains of custody, court records, UCC filings, or handling fund transfers and contracts, blockchain simplifies the process.

Blockchains can be used for smart contracts, land registrations, intellectual property protection, and settlements. Its impact is far-reaching and transformative, redefining how we understand and navigate the legal landscape.

Imagine having a dedicated team on your side, extending the impact of blockchain into every corner of your business. Well, that’s Webisoft. With a specialty in crafting top-tier blockchain applications and more, we’re the real deal in the blockchain development world.

Blockchain Use Cases in the Legal Industry

As we delve deeper, we’ll explore the various ways in which blockchain is reshaping the legal landscape, offering increased efficiency, transparency, and trust.

1. The Dawn of Smart Contracts

Legal agreements traditionally rely on physical signatures – a method that is both time-consuming and prone to human error. Blockchain promises to streamline legal paperwork, enhance accessibility, and promote transparency by disrupting this age-old system. 

Using blockchain, contractual agreements can be created and secured instantly once certain predefined conditions are met.

Let’s delve into the transformation of traditional legal documents into smart contracts.

Key Players in the Transition to Blockchain-Based Legal Documents

The creation of a blockchain-based contract involves several actors —

• Approving Entity: This person is responsible for giving the final nod to the contracts crafted by an attorney.

• Attorneys: They manage the legal intricacies and formulate contracts.

• Contractual Parties: These are the individuals who have a stake in the legal matter.

Technical Infrastructure for Various Users

Front-end and back-end technologies contribute to the efficiency of the system:

Front-End Technology

• Web portal or Mobile App for Attorneys
• Web portal or Mobile App for Contractual Parties
• Web portal for Approving Entity

Backend Technology

• Node.js programmed Microservices
• Permissioned Blockchain Component

The Process of Creating Blockchain-Based Legal Contracts

Here’s a step-by-step breakdown of how smart contracts come to life in a blockchain environment:

1. User Registration on the Platform

Every stakeholder, including attorneys, contractual parties, and the approving entity, signs up on the platform. They provide government-approved identification documents and other critical information.

Attorneys, for instance, must register with their ID proof, proof of work experience, and their affiliated legal firm’s name, if applicable. Likewise, the approving entity must register with ID proof and a government-issued license as a signing authority. 

Once approved by a community of admins, the signing authority is welcomed onto the blockchain-based platform.

2. Digital Contract Creation and Legal Validation

Parties involved in a legal matter draft a digital contract encapsulating specific terms and conditions. 

Once the contract’s clauses are finalized, a notification is sent to the attorneys. They must then validate the contract, ensuring its alignment with existing laws and regulations.

3. Official Approval of the Legal Contract

The finalized contract is then forwarded to the involved parties for approval and to verify if any modifications are necessary. 

The contract is subsequently sent to the approving entity, who possesses the authority to enter the organization into a binding agreement.

4. Blockchain Integration of Contracts

Post the approving entity’s signature, the contract evolves into a smart contract and is deployed on the blockchain.

Smart contracts are powerful tools that streamline legal operations, mitigate legal issues, and minimize the need for attorneys.

Unlike conventional agreements, these blockchain-based contracts eliminate the requirement to manage cumbersome paper files susceptible to human error. 

Once certain conditions are met, smart contracts autonomously trigger the execution of the legal agreement, marking a new era in the legal industry

2. Revolutionizing Intellectual Property Management with Blockchain

The arena of Intellectual Property (IP) is teeming with action. Back in 2017, the US Patent and Trademark Office (USPTO) found itself swamped with over 440,000 new trademark applications.

Digging into their annual report for the Fiscal Year 2017, it came to light that USPTO was dealing with an average initial action pendency of about 16.3 months (time from application filing to the first office action) and an average total pendency of around 24.2 months (time from filing the application to the final resolution – issued patent or abandoned application).

The majority of IP Filings had to weather a manual review process that is not just stretched out over time but also painstakingly laborious. Not only is it cumbersome to register new IP, but also a Herculean task to transfer ownership and update filings.

With such a time-intensive approval procedure, it’s indeed a tall order to determine the original creator of the IP.

Enter blockchain! This technology holds the potential to upset the apple cart of patents and trademarks handling by trimming down approval timeframes and resource necessities.

Let’s dive deeper into the application of Blockchain in IP Rights.

Key Participants in Blockchain-Driven IP Management

Several entities are involved in blockchain-based IP management —

Content Originators 

The individuals with a creative spark, who produce unique content. This could include authors, artists, photographers, designers, software developers, musicians, writers, and basically anyone who owns original data.

Content Enthusiasts

Those who enjoy digital content and support the creative works of content originators.

IP Guardians (Lawyers)

Committed professionals who work towards safeguarding the intellectual property rights of content creators.

Technological Elements for Users in the System

Both front-end and back-end technologies ensure the smooth operation of the system —

Front-End Technology

• Web Portal or Mobile App for Content Originators
• Web Portal or Mobile App for Content Enthusiasts
• Web Portal for Lawyers

Back-End Technology

• Permissioned Blockchain Component
• Node.js programmed Microservices

The Mechanism of Blockchain-Based IP Management

The process of using blockchain for managing intellectual property (IP) unfolds as follows —

1. Onboarding of Content Originators onto the Platform

Content creators wishing to secure patents for their creative work would need to register themselves on the IP management platform based on blockchain technology, where they can upload their intellectual property.

When originators sign up for the platform, they provide the following details —

• Full Name
• Communication Details
• Residential Address
• Birth Date
• Professional Title

Given that this personal data resides on the blockchain, there is no risk of unauthorized data disclosure, ensuring maximum user privacy.

2. Placing Intellectual Property into the Blockchain Universe

Once content creators have successfully registered on the platform, the path is clear for them to bring their intellectual property into the limelight. The aim is to file a patent application. Creators can comfortably upload all the IP-related information onto the blockchain network.

Uploading IP on blockchain requires providing the following details —

• Headline
• Author’s name
• Owner’s name
• Classification (Type)
• Keywords
• Synopsis

After submitting the necessary information, creators can proudly upload their unique content. Securing it on the blockchain facilitates a trackable and auditable trail, protecting the data from any tampering or duplication.

When the intellectual property makes its debut on the blockchain, it becomes accessible to the entire network, with no possibility of changes to it.

3. Paving the Way for Content Enthusiasts to Access Digital Content

Enthusiasts who are eager to enjoy the digital content need to become a part of the platform too.

Their registration process mirrors that of the content creators. Once they have their profiles up and running, enthusiasts can reach out to creators with requests to access their digital content for specific uses.

Before a creator green-lights the request, smart contracts only allow enthusiasts to peek at owner details, ratings, and synopsis.

To gain full access to the original information published by the content creator, enthusiasts need to part with certain tokens or fiat currency as fees.

With the creator’s approval, an NDA agreement comes into play between the two parties. This agreement finds its home on the blockchain, ensuring that the enthusiast acknowledges and agrees to the terms and conditions. It also eliminates the necessity of dealing with stacks of paper documents.

4. Leveraging Blockchain to Resolve Disputes with the Assistance of Copyright Professionals

Blockchain technology can be instrumental in addressing a wide range of issues, whether it’s to certify authorship, share classified information with partners, transfer IP rights, or even for defensive publishing. Copyright professionals can effectively mediate various types of disputes by harnessing the power of blockchain.

Picture this: An individual uses a line from a poem to use as a catchy slogan for their company, without seeking the poet’s permission. A few months down the line, the poet stumbles upon an advertisement featuring the line they penned. They decide to confront the company.

In the event the company declares the line as their original creation, the poet might decide to bring in a lawyer.

Instead of setting up a traditional meeting with the lawyer, they can give the lawyer access to the original publication stored on the blockchain.

With blockchain’s unique capability to store timestamped and auditable records, the lawyer can swiftly validate if the company is telling the truth or not.

3. Tracking the Trail of Evidence

The cornerstone of any probing process lies in the meticulous gathering of evidence. Authenticating these discoveries and keeping thorough records is paramount, especially when cases drag on for years.

Proof gathered at the dawn of a case can assume grave importance as the case matures. With a meticulously maintained and regularly updated evidence trail, legal personnel can effortlessly locate critical information when the need arises.

Documenting evidence goes beyond just what is collected; it also encapsulates who had a hand in gathering the information, the timeline of its collection, and other details that lend credibility to the evidence.

This documentation illuminates the journey of the electronic evidence – its collection, storage, transportation, and handling.

However, managing a paper trail for this can be an onerous task, prone to mistakes and alterations due to human error. Stashing electronic evidence in a central database has its own share of security worries. Safeguarding evidence amassed half a decade ago is no small feat.

That’s where blockchain technology can step in, introducing auditability and traceability into the system via timestamped cryptographic records.

Let’s delve into how blockchain can revolutionize the evidence-tracking procedure and aid legal personnel in expediting their decisions. These are the roles that can contribute to the blockchain implementation of the evidence trail —

Crime Scene Connoisseur/Evidence Gatherer 

This individual collects the evidence from the precise site of the incident.

Digital Investigation Guru 

This person is adept at deciphering information tied to the collected data.

Evidence Keeper 

This individual is entrusted with the job of storing the evidence, logging access to it, and ensuring its readiness for courtroom presentation.

Technical Elements for roles in the system

Front-end technology —

• Web portal/Mobile app tailored for the crime scene connoisseurs/evidence gatherers.
• Web portal/Mobile app designed for digital investigation gurus.
• Web portal dedicated to the evidence keeper.

Back-end technology —

• Privileged Blockchain Component
• Microservices engineered using node.js

How Could a Chain of Custody Based on a Blockchain System Work?

In the ever-evolving digital world, imagine if we had a foolproof, transparent system to track and manage evidence, right from its collection to its use in a court of law. That’s exactly what a blockchain-based chain of custody could provide.

Hold onto your hats, this is where cutting-edge technology meets law enforcement —

1. The Evidence Gatherer’s Role: Collect and Catalogue

Picture this – a crime scene expert, also known as an evidence gatherer, scours an incident location for vital clues. They harvest the proof, both seen and unseen, to build a case.

These clues, coupled with related information, are then stowed securely on the blockchain.

As the evidence gatherer catalogs the findings on the blockchain, they might detail the following aspects:

• The nature of the evidence – is it physical, digital, personal, scientific, or trace evidence? Could it be linked to relationships or personal information?
• The precise coordinates of its discovery.
• The moment of its unearthing.
• The method used to secure it.

In stark contrast to the traditional method of data hoarding in a single repository, evidence information can be dispersed across all nodes in the network, bypassing the threat of a single point of failure.

Given blockchain’s indelible and auditable features, it’s next to impossible for anyone to tamper with the records. Thus, longevity doesn’t affect historical entries, maintaining their integrity over time.

2. The Digital Investigation Guru: Unraveling the Mysteries

Once the evidence gatherer populates the blockchain with their discoveries, the baton is passed to the digital investigation guru.

These experts dissect the evidence provided by the crime scene specialist, crafting reports that could play a crucial role in untangling legal knots.

After gleaning specific statistics and details, they store their forensic findings on the blockchain.

Every member of the network can peruse this report, but it’s immune to meddling or modification.

3. The Evidence Keeper: Querying and Gathering Information

No longer do evidence keepers need to twiddle their thumbs, waiting for information from evidence gatherers or forensic specialists.

Instead, they can directly shoot their questions through APIs and glean the needed information via smart contracts.

Thanks to blockchain, the time needed to compile documentation shrinks. Moreover, its traceability feature allows the jury to swiftly reach a verdict by retracing the timestamped, real-time records of the information.

Thus, blockchain has the potential to reinforce the trustworthiness of forensic fields, which currently lean heavily on paper-based evidence logs and handwritten scribbles.

4. The Courtroom Chronicles: Making the Case for Blockchain

Imagine a dispute erupts between two parties. One party feels wronged and wants to protect their legal rights. This scenario kicks off a series of events commonly known as litigation. 

In an ideal world, the two parties would come to an agreement, but sometimes they need the help of a judge or jury to make the final call.

The causes for litigation are as varied as the colors in a rainbow. You could be dealing with dubious banking transactions, contract disputes, regulatory problems, restructuring headaches, or mergers that go awry.

The act of litigation involves a host of activities before, during, and after a lawsuit, all aiming to enforce a legal right. This may span everything from discussions before the suit is even filed, to arbitration sessions, appeals, and even conciliations.

Like many things legal, litigation tends to take its sweet time and comes with a mountain of paperwork. But what if we could move litigation to the blockchain? 

It could be a game-changer, slashing time and adding a new level of transparency to the process.

So let’s dive into the ways blockchain can give litigation a makeover.

People in the Blockchain Reimagining of Litigation —

The Claimant

This is the individual or group who believes they’ve been wronged and decides to seek legal redress by filing a case or launching court action.

The Accused

This is the person or group at the receiving end of the lawsuit or the ones accused of a crime.

Legal Eagles

These are the attorneys who stand by the claimant and the accused, aiding them in their pursuit of justice.

The Gavel Holder

The judge or jury who deliberates over the case to arrive at the final decision.

Tools for the Trade in this Blockchain-Based System —

Front-end Technology

• Digital platforms (web portal or mobile app) for the claimant.
• Digital platforms (web portal or mobile app) for the accused.
• Web portal for the legal eagles and the gavel holder.

Back-end Technology

• Permissioned Blockchain Component.
• Microservices, crafted using node.js.

Now, let’s explore how blockchain could revolutionize the litigation process.

Navigating the Legal Labyrinth: Blockchain to the Rescue

1. Attorneys Get Onboard

Imagine an online platform, powered by blockchain technology, where attorneys can sign up. They’d provide crucial details such as their license number, professional achievements, areas of expertise, and contact information.

This information is securely stored on the blockchain. It’s like a library book that everyone can read, but no one can scribble on.

2. Complainants Take the First Step

Anyone wishing to file a complaint can sign up on this platform, providing their personal details such as their name, address, identification, and job title. Once they’re logged into the litigation app, they can explore the roster of available attorneys, each with their own unique set of skills.

As a user (in this case, the complainant) starts to search for attorneys, the smart contracts on the blockchain spring into action. These virtual rulebooks fetch the necessary information from the blockchain. The complainant can then pick an attorney who seems like a good fit.

Once the attorney is selected, the complainant files a formal complaint. This includes all the gritty details of the dispute, the harm caused by the opposing party, and the relevant legal claims. All of this is filed on the blockchain.

The chosen attorney gets notified and has the option to either take up or turn down the case based on the details presented.

3. Defendants Join the Fray

With the complaint filed, the defendant is alerted via email about the need to respond to the allegations.

To access the complaint file, the defendant would need to sign up to the blockchain-based application. The document is stored on the blockchain, ensuring its authenticity and integrity.

Just like the complainant, the defendant would search for an attorney who can help navigate the legal waters. The defendant then files their response, disputing or discrediting the allegations in the complaint.

Here’s the cherry on top: smart contracts can be designed to hold the regulations pertinent to the dispute. This makes resolving the dispute smoother and more efficient.

4. Delivering Verdicts Using the Blockchain

With the rock-solid, unchangeable record keeping of the blockchain, the chances of document tampering by either party (the complainant or the defendant) are a big fat zero.

This is where the judges step in. Thanks to the blockchain network, they can delve into the time-stamped records to dissect the disputes at hand.

The best part? The jury’s decision can also be recorded on the blockchain. It’s like a public announcement, accessible to all members of the network. Using blockchain for legal disputes can be the metaphorical window in the walls of the legal system, letting in much-needed transparency.

And if a past legal issue resurfaces under a new judge, the blockchain is ready to come to the rescue. It holds all the necessary documents, saving time and eliminating the need for heaps of paperwork.

Since we’re exploring how blockchain can revolutionize the legal industry, let’s not forget an important question: Does the blockchain itself have legal protection?

Next, let’s delve into the laws and regulations related to blockchain and see how governments are catching up with this novel technology.

The Balancing Act: Regulating Blockchain for A Brighter Future

You’ve likely heard about it – blockchain. It’s the game-changing technology that promises to reshape business landscapes worldwide. But with great power comes great responsibility, and that’s where regulation steps in.

Embracing Disruption and Avoiding Pitfalls

Let’s travel back in time. Every groundbreaking technology has walked this tightrope – the thrill of adoption, the specter of a fall, and finally, the steady hand of regulation. Blockchain is no exception. 

It’s in the throes of regulatory shifts, as governments worldwide bring this transformative technology under legal scrutiny. So let’s dive into how this regulation dance unfolds and what it means for the blockchain’s timeline.

The Blockchain Journey So Far

Flashback to 2015. That’s when “blockchain” first burst onto the scene. It brought with it a promise – secure, tamper-proof data storage. Then, in 2016, Initial Coin Offerings (ICOs) opened up a novel way for businesses to raise capital, sidestepping traditional methods. 

But this groundbreaking move had a dark side, leading to the spread of deceptive financial schemes, famously dubbed “pump-and-dumps.” This led countries like China to ban ICO launches in 2017, prompting governments to begin drafting regulations for blockchain.

Countries Taking the Lead in Blockchain Regulation

So, where are we seeing these regulatory strides? Let’s explore a few countries making notable headway.

Switzerland is among the frontrunners, with the city of Zug emerging as a sanctuary for blockchain startups. It provides legislative cover and tax benefits to blockchain businesses.

Canada, not to be left behind, has sanctioned the issuance of an ETF for blockchain technologies, which now trade on the Toronto Stock Exchange. Moreover, Canada’s National Research Council (NRC) harnesses blockchain to track and publish grant funding data.

Meanwhile, Saudi Arabia is strategizing to create a legal framework for blockchain technology, without sidelining cryptocurrencies.

Looking Forward: Blockchain in Legal Industry

The future of blockchain regulation is not a cause for alarm, but an invitation for businesses to better understand and adapt to this technology. As blockchain matures, its ripple effects on the legal industry will be profound. 

Lawyers will find themselves delving deeper into intricate agreements as smart contracts – automated, blockchain-based contracts – become the norm. These digital contracts will streamline law enforcement and compliance, making the entire process more efficient.

As we stride into the future, one thing is clear – blockchain is here to stay, and its intersection with regulation will be a crucial determinant of its adoption.

Hurdles and Hopes for Blockchain in Law

In Europe, there’s a movement pushing blockchain forward. The European Commission has been advocating blockchain acceptance, rallying support from 26 of its members in 2018, plus Norway and Liechtenstein. 

Together, they initiated the European Blockchain Partnership. This sparked the creation of the European Blockchain Services Infrastructure. Its purpose? To secure and safeguard cross-border digital public services.

Switching gears to America, the Chamber of Digital Commerce, a local advocacy group, recently reported an increase in state legislation related to blockchain. In 2018, 64 bills were introduced, but by May 2019, that number had skyrocketed to 237!

Despite this, only a small number of states are moving forward with introducing these bills. This leaves a gaping hole in the governance of blockchain and might slow its uptake within the U.S. legal world.

Plus, there’s a swirl of queries about whether blockchain is aligned with privacy regulations like GDPR. Another concern is the lack of centralized control when it comes to determining which country’s laws apply if an issue arises.

Final Words

We’ve journeyed through the potential impacts of integrating blockchain in the legal industry. Our world has transformed into one where efficiency and accuracy aren’t just aspirational, but the norm. 

Blockchain’s influence is poised to extend from simplifying paper-laden legal practices to scripting intricate, automated smart contracts. Globalization and government regulation are paving the way for an unprecedented transformation of the legal sector.

This evolution is indeed flourishing, bringing greater transparency, security, and efficiency to a once cumbersome industry. Embrace the change, for the future is already here, and it’s powered by blockchain.Ready to harness the power of blockchain in your business? Get started with Webisoft, a leading authority in blockchain development. From blockchain applications to exchanges, wallets, and more, we’ve got you covered. Reach out to Webisoft today, and let’s navigate the future of your business together.