Blockchain in the Legal Industry

After our blockchain discussion last Wednesday, I became interested in learning more about how blockchain is used in industries other than financial services. This past summer I worked as an Intellectual Property intern at Mintz—a Boston law firm. The majority of the work I performed was administrative, and Wednesday’s discussion made me wonder whether blockchain technology could be employed in law firms to make its employees more efficient.


What is Blockchain?

As we discussed in class, blockchain is defined as “an open ledger of information that can be used to record and track transactions, and which is exchanged and verified on a peer-to-peer network” (view article here). Each transaction, or block, is sent to all of the participants in the network. The block must then be verified by the user’s computer before it is added to the ledger or chain. The primary benefits of blockchain technology are that it is both transparent and secure. It is transparent because anyone that has access to the blockchain can review the information on it. It is secure because it is difficult for hackers to tamper with the blockchain. If a hacker attempts to change the entry in one block, the change will be rejected because of the hashes that connect the blocks. In addition, due to the decentralized nature of the blockchain, the hacker would have to attack multiple copies of the ledger. Blockchain’s secure nature makes it a great fit for legal work, an industry that deals with a great deal of confidential information.

Blockchain Applications in the Legal Industry

Smart Contracts

After meeting with clients, lawyers draft contracts containing the client’s needs and personal information. After the contract has been reviewed and agreed upon, lawyers request physical signatures from the participating parties, a time-consuming task.  The contracts are then stored in relatively insecure locations such as email, document management systems, and physical file folders. The process of updating a contract is also laborious, requiring the submission of amendments or waivers. The digitization of this process is referred to as smart contracts. Prominent institutions like JP Morgan and Goldman Sachs have already invested a great deal of time and resources into researching smart contracts. With smart contracts, the terms of the agreement are written as lines of code and then the contracts are stored on the blockchain. Smart contracts are self-executing contracts, meaning that when a certain event occurs, the contract will execute itself based on the coded terms. For example, consider an exporter who wants to send goods to a different country. The company sending the goods does not want to ship them until they have received payment, but the country receiving the goods does not want to pay until the goods are in their possession. To solve this problem, sensors are attached to the shipment and the sensors send updates about the shipments’ whereabouts. These updates are recorded on the blockchain. The code in the smart contract programmatically notifies everyone when the shipment is delivered and at that time, the payment of money is triggered (view article here). Companies like OpenLaw are attempting to make smart contracts more accessible to lawyers who lack blockchain knowledge. OpenLaw provides its users with legal templates that include if/then logic so the contract can be self-executing (click here to see a demo of OpenLaw). The image below helps to illustrate smart contracts.


Intellectual Property


Intellectual property refers to “creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce” (view article here). These creations are protected through patents, copyrights, and trademarks. When a lawyer files for a patent or registers a trademark, they apply to an IP registry such as the United States Patent and Trademark Office (USPTO). The procedure of reviewing and approving inventions is time-consuming. In addition, the amount of time to verify the patent often varies depending on the country. This lengthy process is problematic because it prevents new innovations from being able to quickly enter the market. Blockchain technology can solve these problems by being used as an IP registry. This registry will effectively eliminate the need for a third party—the patent offices. When the invention is registered on the blockchain, the owner, time, and date is recorded, among other data points, providing a proof of ownership. By allowing entrepreneurs access to IP blockchains, they can determine if a patent already exists for an idea they have for a new product or service.

Implications of Blockchain

Blockchain appears poised to disrupt the legal industry. IBM Watson Legal and Integra Ledger, along with law firms and technology companies, have joined together to form the Global Blockchain Legal Consortium (GLBC). The GLBC governs and encourages the adoption of blockchain technology in the legal industry. However, with the wide adoption of blockchain technology, lower level jobs at law firms, like paralegals and legal assistants, may be eliminated. On the other hand, as blockchain becomes more widely used, there will be a greater need for lawyers who understand and specialize in the technology. Similar to AI, blockchain should be viewed as a complement to the legal industry because it makes it more efficient.



3 thoughts on “Blockchain in the Legal Industry

  1. I think this ties in nicely with the TED talk “is technology making us lose jobs?” we all had to watch for class today. I definitely think there is potential for expanding blockchain to the legal industry and in different roles, maybe some taking more time than others. I think smart contracts and documents for validation purposes could really benefit from blockchain technology, and when I worked at City Hall int he small business development office, the process to obtain permits, create and execute the different contracts, etc. had so much red tape surrounding it that it would actually hinder the small business economy because it was so hard to start a small business in Boston. I could, however, see potential for disinclination of adoption to blockchain or even problems implementing and operating it on a case-by-case scenario.


  2. Hey Amy,
    I really enjoy this notion of using blockchain to add efficiency to a variety industries. The legal industry certainly could benefit from online contacts, and save lots of time and space by removing the use of physical documents. Also, I believe that people will be much more comfortable exchanging goods and services overseas if they know the transaction of money will only happen once the product has been fulfilled. There are several questionable clothing stores online that advertise their products on social media, but once you Google the company it is clear that it is a scam. The use of blockchain to ensure safer transactions would help people avoid falling for such stores.


  3. Great post, Amy! I’ve recently found myself reading a lot about advancements in blockchain, and found this blog post very interesting. The use of block chain in the law industry, as well as many other ones such as health care, would make transactions and the storing of sensitive information much more secure. I also think that this kind of technology would impact lower level employees in law firms however.


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