An international group of law firms and legal technology companies are joining forces as the first cohort to help launch a public, permissioned, blockchain-based, smart-contract management system, the Agreements Network.

The network is intended to serve as a decentralized platform for law firms to productize contracts as scalable “active” (or smart) agreements and for consumers of legal services to realize cost savings and greater security through a blockchain-based contract management system.

Law firms can use the system to create and market what it calls Active Agreements. These are essentially legal document templates combine with smart contract workflows to create packages called Archetypes.

Consumers purchase Archetypes to produce Active Agreements that are individual smart contracts that automate many of the rights and obligations of parties.

Casey Kuhlman

The Agreements Network was developed by London based blockchain company Monax, whose CEO, U.S.-educated lawyer Casey Kuhlman, believes that traditional contracts fail to meet the needs of a modern networked business model.

“The advent of smart contract and blockchain technology opens up – for the very first time – a technical basis on which scalable, technically enabled legal products can be built and delivered to the market,” Kuhlman wrote in a recent blog post. “And with The Agreements Network, an ecosystem is emerging to provide a strong and stable base on which to build those products.”

An Agreements Network white paper describes this combination of blockchain and smart contracts as an opportunity to create scalable, compliant, automated and verifiable legal processes for a networked world.

Blockchain and smart contracts present a unique market making opportunity to turn legal processes into products. The Agreements Network meets a ubiquitous, yet previously unaddressed, market for legal product at scale, whether through support of new commercial use cases, automation of traditional legal services, or designing innovative access to justice tools.

The first cohort of participants in the project are the law firms BakerHostetler, LegalBono and ErdosIP and the technology companies Clause, Crowdcube, LexPredict, Libra, Mattereum, Monax, Rymedi, TransparentNode and Wolfram Blockchain Labs.

These founding participants will collaborate to validate, refine and test the technology.

The network is inviting other companies that would like to participate to visit its website to learn more.

Two blockchain applications being unveiled tomorrow could be the first blockchain applications to gain widespread use in the legal industry, their developer says.

One enables automatic, blockchain-based PGP email encryption using a plug-in for Microsoft Outlook. The other is blockchain-based global version control for Microsoft Word documents, also provided via a plugin.

Both applications were developed by Integra Ledger, the company that has built a blockchain ledger for the legal industry, and will be demonstrated Friday evening in New York City at a meeting of the Global Legal Blockchain Consortium.

David Fisher, Integra Ledger CEO, told me that he expects to offer both applications to the legal market for free.

Fisher said that the encryption plugin will solve a problem that bedevils many lawyers – the difficulty of encrypting email. The plugin will allow users to automatically encrypt emails based on email addresses stored in the Integra blockchain.

Blockchain-based version control will enable document versions to be tracked and confirmed without regard to the platform on which it was created or where it is stored. This is in contrast to other version-control tools, which are application or platform specific.

With the Word plugin, users will be able to instantly hash document versions to the Integra blockchain, along with document metadata, and also confirm the version of a document within Word.

David Berger, CTO of Integra Ledger, said that he sees this plugin as an ideal example of how blockchain can be used in the day-to-day practice of law. “Blockchain-based document versioning and authentication is going to become so obvious and automatic that within a year or two it will become ubiquitous.”

Also at Friday’s event, Fisher and Brian Kuhn, global co-leader of IBM Cognitive Legal, will discuss the framework they unveiled earlier this week at the Lexpo conference in Amsterdam – which they are calling the Amsterdam Framework – for the ethical application of AI and blockchain in law.

As they outlined it at Lexpo, the framework has three components:

  • Sovereignty: Ownership of data and intelligence are self-sovereign to the individual.
  • Transparency: Software that uses sovereign data and intelligence is auditable.
  • Governance: Governance of software that uses self-sovereign data and intelligence is transparent and algorithmic.

The meeting at which the applications will be demonstrated is open to the public, but advance registration is required. It takes place 6-8 p.m. at the law firm of Blank Rome, 405 Lexington Avenue. RSVPs should be sent to Pierson Grider, pgrider@integra ledger.com.

In 2008, a scandal rocked New York’s process-serving industry. An investigation by New York City’s Department of Consumer Affairs of the high default rate in consumer credit cases found that disreputable process-serving companies were never actually serving process, but instead effectively tossing the papers in the sewer and filing false affidavits of service. The “sewer service”scandal led New York to implement strict new rules governing service of process.

The vast majority of process servers are honest, hard-working people. But the sewer service story raises an important question for lawyers: How can you ever really know what’s going on with the papers you entrust to a process server and how can you later validate service should it come into question?

Part of the answer, one company believes, lies with blockchain technology.

Unless you’ve been living in a cave for the last year, you’ve no doubt heard about blockchain. It is the technology that underlies cryptocurrencies such as Bitcoin and Ethereum. Using peer-to-peer networks to chain together blocks of records, blockchain creates an immutable ledger of transactions that is extremely difficult if not impossible to modify.

In the legal industry, blockchain is the latest buzzword. Law firms and industry groups are rallying around its potential applications in law. But even with all the buzz, it is sometimes difficult to visualize how blockchain might be used in our day-to-day practices.

Which brings us back to service of process.

Two companies — ServeManager, which markets a software platform for process servers, and Integra Ledger, which is developing a blockchain for law — recently worked together to develop a proof of concept (POC) for the use of blockchain as a means of verification of service of process. Yesterday, I was given a demonstration of the POC by Trent Carlyle, cofounder and chief technology officer of ServeManager’s parent company Lawgical, and Chad Jolly, senior software developer at Lawgical.

The idea behind the POC is to use blockchain technology in order to provide courts, lawyers and others connected to a case with access to verifiable, untampered data on service of process, Carlyle told me.

This POC does this by storing service-of-process data from ServeManager’s mobile application on Integra’s blockchain ledger. When a process server makes or attempts service, the app sends the metadata to Integra. On Integra, a record is created that includes the GPS coordinates, the GPS timestamp, the mobile device used, and other information. That record is given a unique blockchain ID that can subsequently be viewed by anyone to verify the service attempt.

That ID could be included on the affidavit of service so that anyone looking at it subsequently could simply plug in the ID on Integra, bring up the record, and confirm that it matches with the information on the affidavit.

You can see this in action here: Service of Process Blockchain Verification. (Just click Search; an ID is already entered in the search bar.) Read more about it in this article.

The ID could also be used as part of an accountability report within ServeManager that would use GPS activity data to confirm not only the server’s whereabouts at the time of service, but also in the hours surrounding it.

ServeManager was already collecting this data on its own servers. But by posting it to the blockchain, a record is created that cannot be changed or tampered with, providing a higher level of verification, Carlyle and Jolly said.

This POC stores a record of only the successful service, but it could be easily expanded to store a full record of all service attempts and to include more information about each of those attempts.

Ultimately, blockchain technology could preclude the need for hard-copy proofs of service, they believe.

“Do we still need to produce the piece of paper?” Carlyle said. “The blockchain is essentially the affidavit. It can tell you everything digitally and provide more valid proof than what is on an affidavit.”

Although ServeManager developed this as a proof of concept, the POC is ready to implement once the Integra Ledger formally launches. In the meantime, ServeManager will be exploring whether its customers — process servers and law firms — have interest in using this technology.

“The idea is more powerful and interesting than anything else right now,” said Jolly. “There is nothing all that interesting about the technology — this is just a single API call. But one of the big questions going forward is how you explain this to a judge.”

[Disclosure: ServeManager’s parent company Lawgical also owns the Legal Talk Network, which produces two podcasts I cohost, Lawyer 2 Lawyer and Law Technology Now. I earn no money from these podcasts and have no direct financial relationship with the company.]

A convergence of recent events underscore the growing importance of blockchain technology in the legal industry. In fact, during an event at the recent annual conference of the International Legal Technology Association, Bob Craig, CIO at Baker Hostetler, predicted that blockchain, more than any other technology, will drive the next wave of legal innovation and transform the business of law.

During the ILTA conference, two major initiatives were announced to promote and guide the use of blockchain in the legal industry. One, the Global Legal Blockchain Consortium, includes among its founding members the law firms Baker Hostetler and Orrick and IBM Watson’s legal division. The other, the Legal Industry Working Group of the Enterprise Ethereum Alliance, counts a number of law firms and financial services companies among its members.

And, just a few weeks before the announcements of those two legal blockchain initiatives, the smart-contracts company Clause announced that it was joining with the Linux Foundation’s Hyperledger, the International Association for Commercial and Contract Management (IACCM), and practice-management company Clio to launch the Accord Project to develop open source technology and standards for computational contracting, including via blockchain.

For my column this week at Above the Law, I discuss these developments in more depth and look at why there’s so much buzz about blockchain: In Legal, Blockchain Is The New Black.

[Image by DavidstankiewiczOwn work, CC BY-SA 4.0, Link]

Bob Craig, chief information officer at Baker Hostetler, has a vision of a technology that will transform the business of law. That technology is blockchain.

Craig and his firm are part of a group of law firms and technology companies that this week announced the formation of the Global Legal Blockchain Consortium. The consortium will work to drive the adoption and standardization of blockchain in the legal industry, with the larger goal of improving the security and interoperability of the global legal technology ecosystem.

Members of the consortium include the law firms Baker Hostetler and Orrick, IBM Watson Legal, and the newly formed company Integra Ledger, which is hoping to become the ledger used throughout the legal industry for blockchain digital identities.

At an event Tuesday to announce the consortium’s formation, Craig said that establishment of consortia has become common in many industries as a way to get the right people around the table to explore how blockchain technology can solve real-world business problems or, in this case, real-world legal problems.

“We are just at the dawn of the blockchain era,” Craig said. “The more you invest yourself in what blockchain is and the possibilities it enables, you see that the world will be different because of it, and we believe the legal world will be different because of it.”

Craig spelled out the consortium’s three goals for the future of blockchain in legal:

  • An interoperable and secure global legal industry using blockchain technology.
  • Agnostic as to software, agnostic as to document management systems, and agnostic as to blockchain.
  • Universal, blockchain-based identities for law – client identity, matter identity, document identity.

During the event, held during the annual convention of the International Legal Technology Association in Las Vegas, a series of speakers discussed various aspects of the consortium’s vision and plans.

One of those speakers, Drummond Reed, chief trust officer at Evernym, a company that has developed the world’s first publicly available distributed ledger dedicated to managing digital identities, Sovrin, and has donated its code to Hyperledger (project Indy) in order to make it available for anyone.

Reed said that the key benefit of blockchain in legal is to provide a solution for the “global root of trust problem.” Blockchain does that by enabling the establishment of immutable digital identities that do not require reliance on any particular registrar, vendor or governmental entity.

“What is the perennial problem in digital ID for which blockchain is the breakthrough?” Reed said. “How do we have a root of trust? How can we can be really sure we are dealing with the person or the group or the document or the smart contract that you’re referencing?”

“With a blockchain, every transaction is digitally signed, every transaction is chained together, and it’s replicated on hundreds of computers around the world with digital signatures,” he said, noting that Bitcoin has never been hacked in its nine years of existence.

Another speaker, David Fisher, the founder and CEO of Integra ledger, said that the key application of blockchain in law will be universal legal identities. Virtually anything or anyone will have a unique digital identity — legal matters, documents, individuals, entities, billing entities, and more. The identities will provide proof of existence and uniqueness, without identifying details, that can be used by all Integra-compliant software.

The consortium’s vision, Fisher said, is for every major law firm and corporate legal department to be a node in the blockchain with a synchronized copy of all the sequential ledger entries of identities. This will lead, in turn, to an open market for innovation in which these Integra identities will be referenced by:

  • Other blockchains.
  • Legacy software companies, in order to add functionality.
  • Smart contracts.
  • Custom apps developed by corporate legal departments and law firms.
  • Applications developed by other consortia and working groups.

Reed said that the key benefit of blockchain in legal is to address the global root of trust problem by establishing immutable digital identities that do not require reliance on any particular registrar, vendor or governmental entity.

“With a blockchain, every transaction is digitally signed, every transaction is chained together, and its replicated on hundreds of computers around the world with digital signatures,” he said, noting that Bitcoin has never been hacked in its nine years of existence.

“What is the perennial problem in digital ID for which blockchain is the breakthrough?” Reed said. “How do we have a root of trust? How can we can be really sure we are dealing with the person or the group or the document or the smart contract that you’re referencing?”

The consortium is not alone in pushing adoption of blockchain within the legal industry. Earlier this week, the Enterprise Ethereum Alliance (EEA), a cross-industry collaborative blockchain consortium aiming to leverage open-source Ethereum technology for enterprise solutions, announced the launch of its ‘Legal Industry Working Group’.

Members of that group include CooleyDebevoise & Plimpton, GoodwinHogan LovellsHolland & KnightJones DayLatham & WatkinsMorrison & FoersterPerkins CoieShearman & SterlingCardozo Law School, Duke Center on Law & Technology, and the Department of Legal Studies and Business Ethics at the University of Pennsylvania’s Wharton School. Other EEA members that also joined the legal group include BNY MellonConsenSysING, and JPMorgan Chase & Co.

A kick-off event for the consortium, the MIT Legal Forum on AI + Blockchain, will be held at MIT in Cambridge, Mass. on Oct. 30 and 31. Registration information is available here.