The introduction of the world’s first artificial intelligence robotic lawyer reinforces the pace at which technology is saturating the legal industry.
While the effectiveness of some legal technology outside of traditional mediums remains to be seen, it is undeniable that increasingly nuanced legal technology will continue to emerge.
An example of an emerging technology is the smart contract - a computer program that can facilitate, verify or carry out the terms of a contract. Although currently only used to enforce business rules, it is speculated that in the very near future, smart contracts could be used to codify legal agreements.
The benefits of smart contracts are claimed to be significant. It is thought that they will enable the automation of simple financial and legal transactions, increasing the overall speed and efficiency of those transactions. Common examples of transactions that could be automated under a smart contract include transactions where money is payable on the occurrence of a particular event (such as the delivery of goods) or the division of assets under a Will.
It is thought that these contracts will reduce costs by removing the need for intermediaries such as a settlement agent in a financial transaction, or an executor to distribute estate assets. It is also thought that the self-enforcing nature of smart contracts means that financial and legal transactions could take place in a “guaranteed market” because transactions subject to a smart contract would be conducted in an environment that is free of human error and other external factors.
However, as is often the case, there may be a number of difficulties initially associated with reconciling this new technology with existing legal frameworks. Specific questions have been raised about the regulatory complexities surrounding smart contracts - for example, where a party to a smart contract seeks an injunction on the contract itself.
Assuming that smart contracts can overcome these regulatory discrepancies, will smart contracts remove the need for lawyers? At this point at least, the answer is “no”. On the contrary, the introduction of smart contracts presents new opportunities for lawyers - although capitalising on those opportunities may require lawyers to expand their skill sets to include ICT skills that are necessary to draft, interpret and enforce smart contracts.
Ultimately, smart contracts haven’t outsmarted the legal industry just yet. In fact, they prove that despite the advances in automated technology, a level of human involvement will always be necessary in the legal sphere. But smart contracts do help propagate a more profound message – the intersection between law and technology is continuing to increase and the legal industry needs to ensure that it is prepared to deal with this overlap.