Blockchain Mania Causes Frenzy in the Legal Profession
The March edition of this newsletter discussed electronic signatures, which logically segues into this edition about the future of blockchain technology and the impact it will have on future legal agreements. The computer code written for Bitcoin, i.e. blockchain, is essentially a list kept simultaneously on multiple, if not thousands or more, computers throughout the world. Blockchain technology is the basic Bitcoin-type code that creates the distributed ledger. This article will discuss some of the ways lawyers are working toward the use of blockchain technology in the legal profession.
As businesses rapidly become digital, blockchain technology will increasingly be used to draft agreements, record commercial transactions and verify legal documents. An entire industry is rapidly evolving to service the business and legal community with Smart Contracts. Smart Contracts are legally-binding, digitized contracts that are recorded on the “blockchain”. Once recorded with blockchain technology, these Smart Contracts are anticipated to be nearly impossible to alter. Smart Contracts are attractive because they can be programmed to automatically make payments and fulfill other obligations required by the agreement. In addition, Smart Contracts can track compliance and inform the parties to the agreement of various triggering events. In theory, the efficiency of the process and the immutability of the final agreement should reduce attorney time and fees; and, should prevent protracted litigation based on breaches of the agreement.
In addition to Smart Contracts, there are many other potential applications and uses of blockchain technology. To keep up with the rapid developments, state governments are enacting legislation to permit the use of blockchain technology. It is expected that legislation will include acceptance of the technology for the recordation of deeds, titles of various sorts and security instruments such as deeds of trust, tax liens and Uniform Commercial Code liens (UCC1). State and local governments are exploring use of blockchain for licensing and registration purposes as well.
Real estate lawyers will particularly benefit from blockchain because of the electronic execution process, the ability to clear title and record instruments, and the decisive proof of real property ownership. The blockchain’s ability to verify ownership of real property and other types of assets will be especially important in foreign countries that have poor land records, personal property titling, infrastructure and governance.
Many companies are developing Smart Contracts in standard forms that cannot be altered by the parties before execution, and more advanced Smart Contracts that can be programmed to be self-executing. These advanced Smart Contract will be programmed to fulfill the terms of the agreement, which means that the parties to the agreement do not have to rely upon the other parties to fulfill their obligations. For example, if payments are required by a Smart Contract promissory note, the payer’s bank account will have embedded into the contract instructions to automatically make payments into the payee’s bank at a time certain or upon the occurrence of a triggering event. Another example is an agreement that requires the transfer of stock upon the happening of a specific event such as the price of the stock reaching a certain price. In theory, the embedded code in the Smart Contract will cause improved performance of an agreement because no human intervention will be able to hinder performance and no human confirmation is necessary for validation of performance.
Blockchain is likely to change how businesses and attorneys approach transactions in the future. Smart Contracts are likely to make contracts more uniform because of the requirement for templates. Advanced Smart Contracts will force the parties to be precise about the terms because performance will be programmed into the Smart Contract. Smart Contracts will make it more difficult to purposely avoid performance. Blockchain is expected to be an improvement to the contracting process and, in theory, should result in reduced litigation.
We Can Help
The attorneys of Gross & Romanick, P.C. possess substantial experience with respect to drafting, revising, and negotiating a broad range of business agreements and transactions. In order to simplify and streamline the contract execution process, we regularly utilize electronic signatures. Our firm represents clients in business transactions and civil litigation in the state and federal courts of Virginia, Maryland and the District of Columbia. Please consider our law firm for all of your business legal needs, including registered agent services, litigation, contract review, buying and selling businesses, business start-up and formation, commercial leases, evictions, employment matters, and debt collection. Go to www.gross.com to learn more about us. Call us at 703-273-1400 or send an e-mail to email@example.com.
About Our Law Firm
Gross & Romanick, P.C. is a law firm located in Fairfax, Virginia. Since 1980, our attorneys have dedicated themselves to providing cost efficient legal services to individuals and businesses in Northern Virginia and the Washington, D.C. Metro Area. We meet our clients’ needs by applying hard work with integrity to find creative and practical legal solutions. Our extensive business litigation experience, and our understanding of the transactional mistakes that often lead to expensive courtroom battles, helps us to advise our clients on business deals and the resolution of commercial disputes. To learn more about our firm, visit: www.gross.com or call us at 703-273-1400