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Although blockchain technology was first described in 1991, it found its practical application about 10 years ago, and widespread only within the last 2-3 years. Currently, most large companies in various fields, from retail to aircraft construction, are exploring the possibility of integrating blockchain into their business. What is the advantage of this technology?
Main benefits of using blockchain in the legal industry
Blockchain is an immutable ledger that cannot be hacked. It is decentralized, so transactions are recorded simultaneously on all computers that have special software installed.
Each block of data is linked to the previous block. The transaction is synchronized and all nodes (computers) reflect updated data as it occurs. Once a transaction is confirmed, the transaction or asset is theoretically immutable, because it is practically impossible to change all the records along the entire chain at the same time.
There is no doubt that blockchain should be the main force behind the changes that need to take place in the legal industry. In the very near future, this will have a significant impact on the legal sector, both in terms of customer service and in terms of how legal practice is carried out. Let's take a look at 6 benefits of using blockchain in the legal industry.
More affordable services
Lawyers can use blockchain technology to streamline and simplify their transactional work, digitally sign and store legal agreements. Using text scripts, smart contracts and automated contract management reduces the time spent preparing, personalizing and maintaining standard legal documents. These cost savings are passed on to the buyer. In addition, blockchain will democratize access to the justice system, reducing complexity for the consumer of services and lowering huge legal costs.
Transparency and trust
Distributed ledger technology creates a shared ledger that is available to all parties to the agreement. Blockchain-based contracts are fully compliant, do not cause surprises and are not subject to misinterpretation. In addition, thanks to the smart contract, even “non-techies” can easily figure out which services they are paying for.
Reducing costs
Many manual tasks can be performed automatically, significantly reducing the time spent drafting and editing legal documents. This cost is usually passed on to clients, resulting in astronomical hourly attorney fees. The implementation of smart contracts will speed up and reduce the cost of transactions between parties. A cost effective algorithm can automatically and transparently manage escrow accounts at a fraction of the manual cost. Reducing costs will increase the overall demand for legal services and increase their availability.
Process automation
Lawyers spend up to 48% of their time on administrative tasks, including transferring information between software and updating registries. Using a repository of legal agreements and ready-made smart contracts, lawyers can automate administrative tasks, thereby reducing their labor costs. Reducing excessive manual labor will also speed up litigation, which will lower costs for clients.
Improving efficiency
Blockchain technology can streamline, automate and secure many processes in the legal industry without losing any judicial authority. Optimizing various industry characteristics will make the legal and financial sectors more efficient and productive while reducing costs.
Data security and integrity
Legal documents serve as bait for malicious individuals seeking to profit from valuable confidential information created and maintained by lawyers. Rather than sending sensitive data via email, lawyers can store legal information in a decentralized distributed ledger, which improves data integrity. If the evidence is tampered with or altered, the associated hash value on the blockchain network will not match, making it clear that a change has occurred.
Thus, blockchain is the most transformative technology since the advent of the internet. The transformation has already influenced and will continue to affect most aspects of legal practice, including state registration of legal entities and individuals, court cases, dispute resolution, notarization of documents, intellectual property rights, land registries, property rights, the activities of law firms, etc. Lawyers are involved in all these areas. Therefore, the introduction of blockchain into the legal sphere is in the interests of all interested parties, both legal companies and persons using their services. Cryptonis Labs will help make this cooperation as mutually beneficial as possible by introducing smart contracts into legal practice.
FAQ
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In which areas of legal practice will blockchain be most useful?
Blockchain is particularly useful in the following areas:
- contract management (smart contracts),
- registration of property rights, for example in the land registry;
- intellectual property (proof of creation, ownership),
- court and arbitration proceedings where transparency and verification are required;
- evidence chain accounting.
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Can blockchain be used to store evidence in court?
Yes, blockchain can be used to record the chain of custody: each transfer of evidence (e.g., documents or materials) is recorded with a timestamp and hash, making it impossible to forge or replace. This increases confidence in the authenticity of evidence in court proceedings.
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What are the legal risks of implementing blockchain in jurisprudence?
Some of the main risks include:
- possible errors in the code of smart contracts – once deployed, they are difficult to change;
- issues of jurisdiction and legal recognition of smart contracts in different countries;
- conflicts between the irreversibility of blockchain and the requirements of data protection laws (e.g., the right to erasure).
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Should I start with ready-made products, or is it better to create my own blockchain functionality for legal tasks?
It all depends on the uniqueness of the processes. If the business model is standard, ready-made modules will do. If there are specific requirements, it is more expedient to develop your own solution. Our team is engaged in the full implementation of such solutions – from analyzing your current processes and developing architecture to creating smart contracts, integrating them into internal systems, and providing further technical support.
