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A Primer on Blockchain for the Legal Industry

Blockchain technology is a hot topic. Worldwide spending on blockchain initiatives is expected to triple to over $14 billion by 2023. The legal industry is a sector especially prone to disruption by this trend. Legal professionals should inform themselves of the implications to stay ahead of the curve and reap the benefits of this game-changing technology. 

A true disruptor

The legal industry is a notorious slow mover when it comes to technological adoption. While practices such as automated billing, digital document storage, and the use of accounting software are all commonplace today, you will still find plenty of good, old-fashioned paper documents in any law firm.

In the case of blockchain, however, slow-adopters may find themselves suddenly uncompetitive. That’s because the technology has many important benefits that could transform how the industry operates. But first, a quick introduction to the main concepts. 

What is blockchain, exactly?

Many legal professionals have heard the term but may not understand what blockchain technology actually does. It’s okay, you’re busy folk. 

So, your 22-year old nephew drives a nicer car than you since he struck it rich in the Bitcoin game a few years ago. That’s blockchain, right? Yes, blockchain technology powers cryptocurrencies such as Bitcoin, but it is so much more than that. 

A blockchain is a category of Distributed Ledger Technology. It can record transactional information in a way that cannot be altered. These transactions are verified by individual computers called nodes on a decentralized network. 

Transaction data is stored on “blocks”, which, when verified, are pooled and added to a “chain” of previous blocks.  Each block has a unique, cryptographic alphanumeric “hash” assigned to it. A block contains its hash and the hash of the previous block. 

Once a block is on the chain, information within the block can’t be changed. If there are any alterations, the unique hash changes, which changes all subsequent hashes up the chain, breaking it. The blockchain is carried by all of the nodes in a given network. This means if a single node is hacked to alter a transaction, all of the other nodes see it as invalid and the changed blockchain is voided. 

This makes a blockchain a very secure way to register transactions. But, how could it apply to the legal industry?

Benefits to the legal industry

There are two main benefits to integrating blockchain into your Legal Tech strategy: cost reduction and increased data integrity. 

The savings possible through the use of blockchain technology is enormous. Blockchain can automate many tedious legal procedures. Smart contracts and digital signatures could be used to reduce the amount of manual paperwork that needs to be filled. This alone would save money on paralegals and low-skill labor you typically have to bill your clients. 

This increases accessibility to the legal system. Lower-income people can afford to become clients when they aren’t charged for the mundane aspects that chew up a significant amount of time. Lawyers can either charge less or receive better margins, depending on their goals. A firm that can charge lower prices and save time for their clients would have a major competitive advantage in the marketplace. 

Superior data integrity is the other important benefit. Legal files are some of the most sought-after data targeted by hackers. Files are typically not stored on a blockchain, as the blocks tend to hold relatively small amounts of data. However, transactional info about where and to whom the files were sent can be stored on the blockchain. This allows for undeniable chain-of-custody verification. Remember, data on a blockchain can’t be altered without the malicious agent gaining control of the majority of the nodes on the network. With hundreds or even thousands of nodes, this becomes impractical. Therefore blockchain becomes an essential tool for confidential contracts or digital evidence sequestration.  

The power of smart contracts

While smart contracts have been mentioned as important, you may not understand the term. It’s an important concept when analyzing blockchain’s effect on the legal profession. 

Legal professionals are obviously familiar with standard contracts. Perhaps Party A agrees to buy certain property from Party B, if certain conditions are met by Party B before a specific time. Traditionally, this transaction could take days or weeks to complete. Smart contracts aim to reduce the transactional friction.

A smart contract is a piece of code integrated into a blockchain that holds all the necessary conditions for a potential transaction. Once these conditions are met by both parties, the smart contract executes and the transaction is made. Essentially, they automate the agreement without the need for human verification. And, since it takes place on the blockchain, it is not able to be reversed. 

While smart contracts won’t completely erase the need for traditional legal contracts, they could disrupt business-as-usual. If future regulation confirms smart contracts are legally binding documents, lawyers will need to inform themselves about the technology and integrate it into their offerings. 

Interesting potential use-cases

Presently, it’s a real Wild West out there regarding blockchain and the legal industry. While there are a few scattered firms accepting cryptocurrency as payment, the wide adoption of blockchain technology still lags. Regulatory uncertainty and the overall inertia against the adoption of new technology have contributed to this reluctance. Dig a bit deeper into the untapped possibilities, however, and you’ll find some very exciting applications. 

Blockchain could disrupt the field of IP (Intellectual Property) law. Through the use of non-fungible tokens, unique work or property can be represented and timestamped on an immutable ledger. This would go a long way toward clearing up IP disputes between parties. It would be an irrefutable way to prove ownership. 

As previously mentioned,  another useful application is related to chain-of-custody. This term refers to how evidence in a legal proceeding is handled from point A to point B. Blockchains could prevent tampering, as every piece of evidence would have to be logged in the ledger. It closes many weak points throughout the chain and inconsistencies would be spotted immediately. 

Property law could also transform due to blockchain technology. It’s one of the areas where a reduction in paperwork and intermediaries would lower transaction costs substantially. Once widely available, it’s difficult to imagine the majority of clients opting for the more manual version. 

Additionally, Blockchain could be used to host public documents and process Freedom of Information Act (FOIA) requests. Attorneys in need of a theoretically public document can find themselves waiting for months or years! If these documents were all put on a blockchain, there would be no worry about manipulation or hacking. The public could search for the necessary information without the need of a meandering bureaucrat to pour through what can only be imagined as an Indiana Jones-esque secret warehouse of long-forgotten files. 

Then there’s the burgeoning market for blockchain-savvy lawyers. In case you hadn’t noticed, blockchain is big business these days (your nephew’s Porsche is proof enough). Businesses and consumers alike need legal assistance on cryptocurrency holdings, smart contracts, digital IP, and all else blockchain. It’s an entirely new field where those truly invested will be able to make a name for themselves and flourish. 

Hopefully, you now see how blockchain is poised to change the legal industry forever. Even If your firm is not planning to work with any blockchain-related clients, it would be good to investigate its practical usefulness. And, with the technology becoming more ubiquitous, you may even be presented with blockchain legal scenarios from current clients in the near future. Don’t get caught unaware. 

A secure solution for your sensitive information

Few professions require the file privacy lawyers do. Those in the legal industry need solutions that ensure their documents are accessible and secure.

AXEL is at the forefront of the data security movement. Our revolutionary file-sharing platform, AXEL Go, is the perfect application for legal professionals. AXEL Go is an intuitive file-sharing program backed by blockchain technology. Files aren’t housed in a central location. Instead, they’re divided into many pieces and distributed to our verified network of nodes. This, combined with our optional AES-256 password encryptions guarantees privacy. Keep your sensitive data out of the hands of malicious agents with the help of AXEL Go.  Download it today and receive 2GB of free storage. 

The Distributed Future

According to Blade Runner, we only have 7 months left for the invention of sentient androids, but that seems unlikely at this point (I’m still hoping though). And we’re already four years late for Back to the Future’s flying cars and hover-boards. 

Looking back, all of these predictions seem a little bit silly in comparison to how fast technology has actually progressed. We don’t have androids, we don’t have flying cars, we don’t even have a printer that works without having to beg and plead for it to just print your document correctly for once. Physical tech has lagged behind our predictions. No matter how hard we work, there’s only so efficient you can make a chemical process, like the one that powers the batteries any of this tech would require. 

But what hasn’t slowed down… is digital technology. Smaller, lighter, and faster than anybody ever imagined even 30 years ago. Look at Blade Runner, they had sentient androids and still worked with magnetic tape recordings for data storage, not exactly a great prediction there Ridley Scott… 

The computing power in your cell phone dwarfs even the most advanced supercomputer of the early 1990s. And it doesn’t take up an entire warehouse and enough power to run a small town. And all you use it for is to watch cat videos on Youtube… really? 

So in a world where we’re all carrying around a supercomputer in our pocket, what are we going to do with it? (And please… don’t just say watch more cat videos, yes I know they’re adorable but come on, aim a little higher, please?) Why not run the internet ourselves? 

When we’re all running around with supercomputers, why should we be putting our trust in these large tech conglomerates when they’ve continually shown themselves, at best as ambivalent and at worst as downright negligible when it comes to our data privacy. Every other day it seems like there’s a new data breach, hack, or the company itself selling our private data to advertisers. They haven’t earned our trust, and even if they did at some point, they’ve certainly lost it by now. 

But we don’t have to anymore. We aren’t beholden to big tech if we are willing to take the plunge and dive into the distributed web. A web like our predecessors in the 80s imagined it, free to surf, send, and share without someone looking over your shoulder. A web free of censorship, where the only boundaries are our imaginations. A web hosted by people for people, not advertisers and tech monopolies. 

The distributed web is not the web like you’re used to though. It’s not some massive server farm hidden away in a warehouse, its independent server operators sharing the network load among them. It’s every one of us having the opportunity to participate in the governance of the internet. It’s freedom from control and freedom from censorship. 

It’s not just about escaping big tech though; it’s about building something better. Joining the distributed web doesn’t mean you don’t get to share photos and videos with your friends, it means sharing content in a way that doesn’t compromise your data privacy. It’s about creating a web where you are in ultimate control of your data, your privacy, and your life. 

Welcome to the future of the internet.

AXEL IPFS Is Out Now

Two weeks ago we released the AXEL Wallet, the window into our blockchain and the basis of everything we plan to do. And now, it’s only getting better!

Not only have we released one of the best-designed blockchains on Earth, but we also integrated it with the most advanced IPFS platform out there. You no longer have to make a choice between privacy or convenience, you can have both. There already are ways to stay private online, but privacy often comes at the cost of your experience and is inconvenient. AXEL IPFS is the best of both worlds, it’s secure and encryption-enabled, while still being fast and free!

But more important than just the technology of the distributed web is the team who built it. No matter how great their product is, would you really want one of those big-tech conglomerates, who have continually monitored you, sold your data and abused your trust, starting the distributed web? Do you really trust them to have your best interest at heart? While they may have the right technology, their past behavior should make you wary of trusting them with something as important as the distributed web.

Unlike most tech companies our business is not in advertising, we don’t host ads and we don’t sell data. Our business is privacy; specifically, your privacy. It has always been our business and it always will be.

That’s why we started this project. Our entire company is based around privacy and data custody. For over a decade, our team has been working on products to give you back your data, and give you the option to divorce yourselves from the surveillance-web that’s been forced upon us by big tech. Every product and project we’ve worked on has been building towards this moment.

The distributed web is no longer something to talk about as something that’s coming, it’s here. We built it, for you. AXEL IPFS is already the most advanced IPFS-integrated blockchain, and it’s just going to keep getting better with time! But now it’s your turn, show us what you can do with it, how you’d live your life, free from surveillance and censorship.

Welcome to the future of the internet, welcome… to AXEL IPFS.