Blockchain also is known as Distributed Ledger Technology (DLT). Blockchain makes digital assets unchangeable and transparent using decentralization and cryptographic hashing. In short terms, blockchain is a decentralized and distributed ledger technology that records the provenance of a digital asset. Google Doc is a simple analogy for understanding blockchain technology. When a person creates a document and shares the document with the people, then it is distributed and this document is not being copied or transferred. Therefore, a decentralized distribution chain is created that gives everyone access to the document at the same time. On blockchain transactions are recorded anonymously in a distributed ledger .It means the transaction ledger is maintained simultaneously across a network on unrelated computers or any servers, which are also known as nodes such as a spreadsheet that can be duplicated thousands of times across a network of computers.
Since the days of a clay tablet, people have recorded the exchange of goods and services. As people evolved into the digital age, recording these transactions has become much more complicated whether it’s about the exchange of money between two parties or making contractual agreements. The growth of global commerce and trade has created a network of disparate ledger system that is vulnerable to errors, frauds, and misinterpretations.
For example, the journey of a diamond from mine to consumer involves a complex landscape of legal, regulatory, financial, manufacturing, and commercial practices. Current supply must rely on intermediaries every step of the way from government officials to lawyers, accountants, dealers, and banks. It adds time and cost. The smuggling of diamonds can lead to loss of governments in collecting fair export taxes, and consumers and retailers face the prospect of purchasing counterfeit, and this is where hyper ledger blockchain technology comes in.
This technology can eliminate these vulnerabilities with transparent transactions. Blockchain offers a secure and synchronized record of transactions to all parties involved in a business network. Blockchain ledger records every sequence of transactions from beginning to end such as a single online chain or several steps in the supply chain. When each transaction occurs, then it is put into a block, and each block is connected to the one before.
The group of the transactions is blocked together, and the fingerprint of each block is added to the next creating an irreversible chain. Therefore, blockchain is ideal for recording the mining, refining, and distribution of one of the most valuable goods in the world. It can trace a diamond’s path from the mine to the hands of the consumer with exceptional security and transparency.
Nowadays, most of the lawyers are taking advantage of blockchain technology to simplify their traditional work, digitally sign and immutably store legal agreements. When the lawyers use scripted text, smart contracts, and automated contract management, their time consumption is reduced on preparing, personalizing, and maintaining standard law documents. A smart contract is a certain computer code built within the blockchain cryptocurrency networks that computer or the nodes execute and once the computers /the nodes execute this contract, they update the ledger. Smart contracts give assistance to credible transactions without third parties. Automated Contract Management’s aim is to do improvement in admin tasks, reduce a business’s overheads, and facilitate a unified view of each contract.
Blockchain technology set to become as revolutionary as the Internet. This technology has a positive impact on the legal sector regarding the ways firms serve clients and how law practices operated. Smart Contracts is the main area which is transformed by the blockchain technology because smart contracts are blockchain’s version of traditional contracts. A smart contract is self-executing with the terms written in code and residing in a decentralized immutable blockchain. The ideal space of smart contract storing is blockchain, and it does not require intermediaries which to be present at the time of realizing transactions. A smart contract is stored in the distributed registry as a one-time written code. Thus, when code is written properly nobody will change it.
A smart contract runs through Ethereum. Ethereum is an open software platform that is based on the blockchain. When the contract initiator launches the smart contract, it performs without further action from the initiator. Smart contract resides in millions on computers throughout the blockchain so it is decentralized and can execute the terms of the contract on its own according to the programming that involves distributing and involving money. The manual task is carried out automatically that decreases the hours to allocate drafting and amending legal documenting. Cost is put forward to clients that that pushes hourly lawyer fees to astronomical rates. A smart contract accelerates and lowers the cost of transactions between parties.
The legal industry is the most matured industry in the world, but most people can see that the legal industry is slow to move away from its dependency on paper workflows. Nowadays, digitization has taken place all over the world. Blockchain technology has been introduced in the business, therefore, it is, required by the lawyers in their ecosystem. Successful businesses such as IBM and Facebook give advertisements for blockchain-based lawyers frequently. This indicates that there are several use cases for blockchain in the legal industry. Blockchain technology is transparent and a secure distributed ledger that assists lawyers to solve various types of legal matters. Blockchain can provide the legal system with multiple uses such as smart contracts, intellectual property, chain of custody, litigation and settlements.
Nowadays, legal contracts are written with physical signatures and that require a lot of time to accomplish for a binding legal agreement. Legal documentation has been done through manual processing, therefore, there is a lot of chance of human error. Here, blockchain has an important role in making legal documentation more accessible and transparent.
Intellectual Property (IP) Filings have to undergo various manual processes, which are very time-consuming, therefore, it causes difficulty in registering new IPs and transferring ownership and updating filings. The approval process is very lengthy, so it becomes difficult to examine who created the IP first. Blockchain brings disturbance in the handling of patents and trademarks by reducing approval wait times and required resources. The world has gone digital, and so have the cases of intellectual property theft record. Maintaining and securing intellectual property rights has almost become impossible that put the livelihoods of authors in jeopardy. Blockchain can help IP lawyers in providing evidence if first use, creation, and rights management.
Chain of custody documentation gives information about the collection, storage, transportation, and handling of the electronic evidence. It is very difficult to maintain paper-based documentation for the chain of custody. When electronic evidence is stored in the centralized database, then it is challenging to maintain evidence securely. Therefore, blockchain brings auditability and traceability to the system by facilitating time-stamped cryptographic records.
At last, litigation is the formal court process through which one party attempts to enforce or defend its legal rights against another party in a lawsuit. There are various types of litigations such as criminal litigation, family law, business litigation, trust and estate litigation, etc. Litigation includes lots of paper documentation, and it is also a very time-consuming process. When litigation will move towards blockchain, there will be a reduction in the time consumption along with more transparency in the system.