Being a technology lawyer is hard these days.
For years we have been in the background working with blue sky thinkers on the next big thing, disrupting industries and generally feeling smug because we were helping to bring to life the new technologies that would disrupt the establishment and make everyone’s life easier. But now technology is coming for us?
Artificial Intelligence is creeping in to create efficiencies in areas like conducting due diligence that younger lawyers once cut their teeth on. Already companies are looking to Watson and similar technologies to help their compliance teams. We always thought lawyers will be needed for contracts – has that changed too with the advent of smart contracts?
The ideal behind smart contracts is a noble one: self-executing and self-enforcing eliminates the need for lawyers to draft, negotiate and even adjudicate the contract. This makes the process for entering into contracts more efficient and, in theory, reduces the risk of dispute because the code, applying Boolean logic (if, then, else), will simply execute the parties’ intent without any need for intervention.
Let’s look at the classic example of a vending machine used by Nick Szabo (the man who coined the phrase “smart contracts”). A vending machine controls and executes the basic elements of a contract. It offers goods for sale and if a person selects one of those goods (i.e. accepts the offer) and enters the correct amount of money (consideration and demonstrating intent to create legally binding relations), then the machine will deliver the good. The “else” of Boolean logic comes in where an incorrect amount is entered (but do we reasonably expect a vending machine to accept counter-offers?). Thinking about smart contracts this way shows us that we are not looking at something entirely new. Rather we are dealing with the next evolution of contracts as we move towards an increasingly digital world.
Blockchain has facilitated the application of smart contracts in new and interesting ways that will certainly change how people think about a contract. Want your travel insurance claim to be processed without the hassle of all those forms? Now there is an app for that (seriously, it’s called AXA Fizzy). The question is: will this change how we think about contract law? I am of the view that contract law and lawyers will remain relevant because a contract is so much more than simply executing an exchange of assets or services. This is why we have concepts of quality or skill and care that will be implied into a contract in most jurisdictions where the contract itself isn’t explicit on these issues. Software code is not (yet) sophisticated enough to deal with these nuances.
In my opinion smart contracts and smart lawyers can co-exist. In the meantime, we just might need to become a bit smarter and learn the language of code to help our clients continue to deliver those big ideas.