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Implications of blockchain to the law sector

What implications does the use of blockchain present to the finance sector, and how do they need to be managed? Learn more in this article.

In this article, we will cover a selection of important implications that warrant further investigation by the legal profession, with the transition to Web 3.0 likely to be disruptive if not properly managed.

This is partly because current legal practices are typically administratively heavy and largely paper-based, meaning significant time is spent transferring information and keeping records. This likely won’t be the case for blockchain-based systems, which will be based on a store of verified information in a digital ledger that can be accessed with appropriate permissions.

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Another reason that blockchain stands to be disruptive to the legal profession is the potential features offered by digital forms of interactive contracts. These interactive contracts would be able to undertake a range of automated actions based on agreed conditions inside a secure non-sovereign and independent digital ecosystem, which will be much harder to renegotiate after the fact, as is common for current forms of contracts. 

Smart contracts are designed to have actions that are self-executing, meaning that all parties involved are very clear on the terms and conditions and have agreed for such actions to take place when conditions are met. Not only will this save time, but it will also reduce the potential for misinterpretation of contract outcomes. This will reduce the likelihood of such terms being renegotiated in a legal proceeding following the action. However, this is not likely to be a reality for some years, with the current focus typically on simply how a static digital agreement is actioned (such as clicking a box, signing with your finger, or using document signing functions).  

It is conceivable, however, that in the near future law firms will have sets of pre-designed smart contracts that can be tailored to client needs, that are designed to run on, and interact with, a number of blockchain and off-chain databases. This will significantly reduce the administrative burden and allow lawyers to focus on higher value-adding activities. There will also likely be a number of groups that provide services to build smart contracts that will compete with law firms as their use becomes more mainstream.

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A key implication for the legal profession from blockchains is that they can be used to record ownership rights and conditions that can easily be transferred, for example, in the event of a sale, without the use of legal instruments – effectively a form of automated digital conveyancing. For instance, the transfer of entitlement of property currently requires a government department to provide the required verifications. However, a blockchain solution can store verified information about the property and the parties involved and establish a change in owners through the relocation of an associate NFT. Blockchain may also provide the means for automated arbitration, with smart contracts interacting with each other to manage the arbitration process and even enforce awards.

An early mover in this space is the Georgian Government with Papuna Ugrekhelidze, the former chairman of the National Agency of Public Registry in Georgia, saying:

“by building a Blockchain-based property registry and taking full advantage of the security provided by the Blockchain technology, the Republic of Georgia can show the world that we are a modern, transparent and corruption-free country that can lead the world in changing the way land titling is done and pave the way to additional prosperity for all.” [1]
As the uptake of blockchain is in its early days, it is conceivable that there will be new opportunities and implications for legal professionals that are not currently being considered. For instance, the use of non-fungible tokens allows for the ownership of physical assets to be digitised so that they can be used as digital collateral, as well as fractionalised so that small parts can be sold to co-owners. Functionality such as this will bring with it a new set of legal issues and requirements that will need to be carefully designed and navigated.
This gets further complicated by the advent of DAOs, or decentralised autonomous organisations, which are borderless digital entities that operate on blockchains based on a set of coded terms and conditions and are typically governed by a process of member voting. Such entities are considered limited liability companies due to the fact that there is no single entity that controls decisions. However, they will function in ways that are not yet conceived by the legal system, raising potentially significant questions about the liability of those involved in the governance of the DAO.
Although it is clear that the advent of blockchain provides a range of new opportunities, it will also have serious and potentially far-reaching implications for finance professionals. If one is to assume that the transition to blockchains is inevitable, although it may be slow to start, then it would be wise for the finance sector to ensure that the implications are carefully understood in order to capitalise on the opportunities before others in their sector do so.


1. Shin L. Republic Of Georgia To Pilot Land Titling On Blockchain With Economist Hernando De Soto, BitFury [Internet]. Forbes. Available from:

Share your thoughts

In the previous article, Sir Geoffrey Vos was quoted as stating that “every lawyer will require familiarity with the blockchain, smart legal contracts and cryptoassets”. Reflecting on the implications explored in this article, what do you think some of the potential consequences could be if lawyers are not fully aware of these implications that blockchain presents to the legal sector?
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