With the evolution of blockchain, clients in a wide range of sectors will be impacted, says Patrick McKenna.
It was only back in mid-2015, while speaking at a couple of legal conferences (one on Client Growth Strategies) to audiences of firm leaders and CMOs, that I would ask: 'Show of hands, how many of you have heard of blockchain?' - only to confront an audience that had no idea what I was talking about. Fortunately, I would speculate that most of these same folks have now heard of blockchain and have some notion of what the label refers to . . . but do they really?
Blockchain is but one example of a new area of legal opportunity that can create confusion arising from having us trying to discern whether it is an area of substantive legal discipline, a specific industry, or perhaps, both. In a recent article, I suggested that 'many law firms are recognising the tremendous growth opportunities available to them in targeting and serving what I call tech-driven hybrids.' These are not purely substantive legal practices, nor are they correctly categorised as being industry practices. Rather a hybrid can be both – in that as a partner or law firm you can choose to serve Artificial Intelligence companies (eg Deep Learning) and/or some specific sub-industry niche (eg FinTech) that may be dramatically impacted and disrupted by AI.
With respect to blockchain, I thought it might be interesting to highlight a few of your existing clients (industries) out there that are likely to be impacted, or even disrupted by this technology while concurrently identifying a few of the blockchain “industry” players involved in creating this disruption.
Transfer of ownership
At its most basic level, any legal work which involves the transfer of ownership, say either intellectual property or real estate deeds, will be made enormously more efficient through the application of blockchain and its system of distributed ledgers and “smart contracts.” The concept behind smart contracts is that once agreed-upon conditions are met, the contract will execute automatically when conditions are filled – meaning payments will be forthcoming, deliveries dispatched, or anything else executed as defined by the contract.
Here are but a few of the industries and industry players where blockchain is beginning to have an impact:
Entertainment: Founded by a singer-songwriter, Ujomusic tracks musician royalties as well as allowing them to create evidence of ownership of their work.
Insurance: AIG is piloting a smart contract system to oversee the creation of complex policies requiring international cooperation.
Real Estate: A relatively new company, Ubiquity, is creating a blockchain driven system for tracking the process that creates friction and expenses when legally transferring real estate.
CyberSecurity: GuardTime is a company creating “keyless” signature systems to secure the health records of one million citizens, using blockchain
Health Care: SimplyVital Health has reported two different heath-related blockchain products in development. ConnectingCare tracks the progress of patients after leaving the hospital while Health Nexus provides decentralized patient records.
Recruitment: Blockchain CVs have now been developed which will streamline the selection process by verifying candidates’ qualifications and relevant experience.
Media: Kodak recently announced that it is developing a blockchain system for tracking intellectual property rights and payments to photographers.
Manufacturing: BlockVerify is a special blockchain platform focusing on anti-counterfeit measures for diamond, pharmaceutical and luxury good producers.
Non-Profits: A business-led community project called Transactivgrid based on Brooklyn allows members to locally produce and sell energy with a goal of reducing costs involved in distribution.
Retail: OpenBazaar is an attempt to build a decentralized market where goods and services can be traded – with no intermediary or middle-man.
Travel: An online travel portal, Webject developed a track and trade solution to fill last-minute vacancies of empty hotel rooms.
And finally, according to one report I read, global banking is currently a $134 trillion industry. Banks help intermediate payments, make loans, and provide credit. Blockchain as a trustless, disintermediated technology may disrupt all of that, including:
• Payments: By eliminating the need to rely on intermediaries to approve transactions between consumers, blockchain could facilitate faster payments at lower fees than banks.
• Clearance and Settlement Systems: Blockchain and distributed ledgers can reduce costs and bring us closer to real-time transactions between financial institutions.
• Securities: By tokenizing traditional securities such as stocks, bonds, and alternative assets, the blockchain is upending the structure of capital markets.
• Loans and Credit: By removing the need for gatekeepers in the loan and credit industry, blockchain can make it more secure to borrow money and provide lower interest rates.
These should serve to evidence just a few of the vast potential of opportunities that blockchain technology can offer, how your clients may be affected, and the need to enhance your legal knowledge of this tech-driven hybrid.
Patrick J. McKenna is an internationally recognised author, lecturer, strategist and seasoned advisor to the leaders of premier law firms. He is the author of eight books, most notably his international best seller, First Among Equals currently in its sixth printing and translated into nine languages. His three decades of experience led to his being the subject of a Harvard Law School Case Study entitled: Innovations In Legal Consulting and he is the recipient of an honorary fellowship from Leaders Excellence of Harvard Square.