There’s been much hype over the last couple of years about blockchain, what it might do in terms of simplifying and documenting transactions and digital information and how it may affect lawyers and what they do. While it’s admittedly hard for many to get their heads around how the blockchain works, there has been gradual acceptance among businesses of its value.
Lawyers, on the other hand, have by and large looked askew at the whole concept of blockchain and how it may impact how they do their work and, for that matter, the kind of work they may be doing in the future. For most lawyers, the blockchain has been mostly noise.
That’s why a recent proof of concept being developed by Thomson Reuters and OpenLaw caught my eye. As most know, Thomson Reuters is one of the largest suppliers of products and services to lawyers. From its Westlaw products to its automated contract applications to all things in between, Thomson Reuters is a name most lawyers recognize, trust, and rely on.
OpenLaw builds blockchain based applications for businesses. OpenLaw developed the first decentralized peer-to-peer protocol for creating legal agreements.
One of the tools Thomson Reuters offers is called Contract Express. Contract Express automates and simplifies the contractual drafting process, automating the preparation of complex legal documents in a more intuitive and simplified fashion. Contract Express allows other users to manipulate a document once created using a pre-defined questionnaire to apply client specific details and preferences.
The two companies recently got together to undertake a proof of concept described as Thomson Reuters and OpenLaw as a look at the potential future of legal documents. More specifically, according to materials from Thompson Reuters and OpenLaw, the proof of concept demonstrates how the Contract Express product can be used to create a contract from standard document templates and then in a step by step fashion how the OpenLaw protocols can turn specific provisions into smart contracts to be executed on the Ethereum blockchain.
Thomson Reuters and OpenLaw believe that the efficiency and security of such smart contracts would facilitate real-time payments and swift settlements of financial transactions, enabling the transformation of financial and commercial industries, as an example. Here’s a link to a video demonstrating the proof in an understandable format.
Smart contract technology can be integrated into the automation tools that lawyers are using today
“Smart contract technology can be integrated into the automation tools that lawyers are using today,” says Aaron Wright, co-founder of OpenLaw. “This opens up the possibility for lawyers to capitalize on the future benefits of blockchain-enabled legal services, and this proof of concept represents a first step in exploring how blockchain-based smart contracts can be applied to a full commercial transaction.”
Says Andy Wishart, Global Head of Drafting Tools & Productivity Solutions at Thomson Reuters “This proof of concept demonstrates how users could incorporate blockchain-enabled smart contract provisions into any legal template they create within Contract Express, including the many automated standard documents available from Practical Law,…the process is seamless and intuitive to the extent that lawyers will not need specialized technical or blockchain expertise to create smart contracts. This represents a jumping-off point for further efforts to make blockchain technology and smart contracts more accessible to the mainstream legal industry.”
Neither Thomson Reuters nor OpenLaw has felt the need to state the obvious: this process will inevitability reduce billable hours for lawyers.
The proof of concept is, for now, at least focused on whether the Thomson Reuters’ contract automation tools can create promissory notes that could then be uplifted to a blockchain and monitored and performed without human intervention as a smart contract. If the proof works, the full promissory note contractual process from creation to performance could be essentially accomplished with reduced or even no human input.
And if it works, Thomson Reuters and OpenLaw will no doubt expand the idea to lots of other areas, creating greater efficiencies in the contract preparation and performance contexts. And, of course, neither Thomson Reuters nor OpenLaw has felt the need to state the obvious: this process will inevitability reduce billable hours for lawyers.
Why Is This Noteworthy?
Why is this noteworthy? Mainly because Thomson Reuters is now applying its panache, stature, and know-how in the blockchain area and legal context. If the proof is successful, I have little doubt that in-house legal departments will take notice of the opportunity to eliminate waste and inefficiency. Thomson Reuters’ move in this market is also further evidence that blockchain is now a relevant “thing”–a thing of which lawyers may soon have to take into account. If Thomson Reuters is doing it, then so will lots of others in the legal field.