Blockchain And Your Legal Practice: Innovative Ways Blockchain Technology Can Be Used in Law Firms
The last ten years have seen monumental changes when it comes to technology. The digital revolution has transformed how we use computers, phones, buy and sell, bank, listen to music, read books, and more. There is another technology causing a big sea change. It’s called blockchain, and it could have a huge impact in the legal field.
What is blockchain?
First, blockchain is not actually new. It’s been around since 2009, however it has recently come into the mainstream as more companies seek to streamline data and make it more secure in an age of increased cyber attacks and data breaches.
Blockchain is also known as “decentralized cryptocurrency”. It uses a database to keep track of all transactions in a distributed ledger. According to law360, “Blockchain is essentially a computerized public ledger that can apply to almost anything a person might typically save into a database or spreadsheet. Whatever content is uploaded to the blockchain is shared among users so that all participants to the transaction can view the blockchain and be in sync.”
Since the ledgers are distributed across multiple networks, there is no centralized keeper of the data, like a bank or store. Bitcoin and PayPal are some of the most well known companies using blockchain technology today, and more companies are incorporating the technology in the computer, music, energy, healthcare, and real estate sectors.
Blockchain and the protection of data
Blockchain offers a better way to safeguard sensitive information. First, all data in the ledgers is encrypted. Second, it is almost hack-proof. According to Law Technology Today, “A blockchain is time-stamped upon creation and the data can never be changed. If someone attempts to change the data it will be rejected by the network…Once data enters the blockchain, it is resistant to alteration, hacking, or deletion.”
Using blockchain in the legal industry
Blockchain can have many uses in the legal profession:
- Record keeping – Storing and sharing documents among multiple parties could be easier and more secure than ever. Changes can be made to documents as long as all parties agree to them. It could minimize human error and reduce the need for reams of paperwork. Blockchain might also be used to process legal notices, especially if a party involved does not have a set or known address.
- Legal contracts – Think of this as “smart contracts.” First, distributing a contract through blockchain makes it instantly transparent. Enforcement can also be automatic. According to law360, “If the parties to a contract agree that a certain amount of money shall be transferred to a party from the other party on a certain day, enforcement of this payment can be made automatic through blockchain.” This can apply to everything from the sale of real estate, stock trades, banking, health care services, and more.
- Intellectual property management – Blockchain is the ultimate copyright. In fact, it might be better because it provides an immediate trademark that is time-stamped to protect things like music, books, video games, and hardware/software, etc.
- Storing land records and deed management – First, it would provide a digital database that would be easy to share among all parties. It would also simplify the process of conveyances, liens, and title searches.
- Financial transactions – Bitcoin may be increasingly used as a form of payment from client to firm and client-to-client, especially for international parties. Other areas of the law that deal most often with the distribution of assets – such as estate planning, probate, divorce settlements and bankruptcy – might find uses for blockchain technology as well.
- Identity – Identity theft is a huge issue these days. Blockchain technology could be used to prove you are you, without revealing sensitive personal data.
- Chain of custody – One of the most important elements of any legal case concerns where and when information or evidence was moved and who had custody of it. Blockchain can be used to track and timestamp exactly who had control of certain data or evidence in real time.
- Blockchain is just one of the new technologies coming on board that can be applied to the legal field and your practice. In the coming years, law firms across the country may be using it in all aspects of business.