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What Technology Will Do to Law Practice (And It’s Not What You Think)

The conventional wisdom is that technology will make law practice more efficient. It will commoditize some lawyers and give super powers to others. In either case, it will improve “access to justice.” This view is based on one universal bias in the legal and near-legal community: that law and justice have inherent value and are necessary for all aspects of the society to function properly.

This belief has spread to the near-legal community such as law practice technology vendors. All of their products are designed to increase the efficiency of lawyers or of the legal process or to serve lawyers or other participants of the legal system in some way.

That’s why when a new technology paradigm comes along, every legal industry player: law firms, lawyers, clients, vendors, courts, government and so on, tries to understand this paradigm through ways in which it will improve the legal process or access to justice.

The law and justice bias makes them think how this new tech will get more clients, make more in fees, get cases heard faster, lower overhead, make enforcement more effective and so on.

But what if a new tech paradigm comes along that by design ignores law and justice, lawyers and judges but is still so powerful that a great deal of commerce and other affairs is irresistibly tempted to exit the conventional space and move into this Matrix based on entirely new principles?

Sounds preposterous and without precedent? Remember that before the Internet, we used to have travel agents, send letters through postal service, get news from journalists, and borrow videotapes or DVDs from Blockbuster.

The Internet proved all these things unnecessary because the Internet liberated information. It was a new paradigm, not merely technology.

It is now time for another technological liberation that will send many traditional intermediaries and facilitators to oblivion: the liberation of money. I am talking about decentralized cryptographic money and automated enforcement of contracts aka things like Bitcoin and “smart contracts” (or “blockchains” but I don’t like this term for two reasons: 1) it became a marketing buzzword; 2) the blockchain data structure is not the only way to implement a fully functional cryptographic p2p money network).

Let me return to the inherent value of law and justice (and lawyers).

Black’s defines “justice” as “the fair and proper administration of laws.” Merriam-Webster’s is generally in agreement: “the maintenance or administration of what is just especially by the impartial adjustment of conflicting claims or the assignment of merited rewards or punishments” or “the administration of law.”

There is only one situation in which one needs to administer laws: when two or more parties with adverse interests are in dispute. This is because laws allocate rights and obligations; everyone’s right is someone else’s obligation (and the other way around); and someone must default on their obligation for the need to administer the law governing this obligation to arise. (I assume that compliance with the law is not the same as administering the law because administering necessarily involves an impartial third party that will apply the law to adjudicate a claim by a right-holder against an alleged defaulter. Therefore, when you send a payment due to a creditor, no law is administered but when the creditor sues you for default, justice kicks in.)

MOST PEOPLE OR COMPANIES DO NOT NEED OR WANT TO BE IN A SITUATION WHEN THEY NEED JUSTICE TO KICK IN. For obvious reasons. (I assume a discussion of the joys (this is sarcasm) of dispute-resolution for parties is not needed here but if it were it would take a separate long, long essay.

So despite the legal world’s romantic obsession with justice, it is a costly, dramatic, blunt, but necessary evil.

What if there was a way to avoid the need to resort to justice?

This is not a new idea. Common law itself has tried for centuries to provide this service. Take liquidated damages for example. It is an amount that parties to a contract agree will be due on breach. The point is avoiding quantification of damages, which requires administration of laws or justice to a much greater extent that merely awarding a number from the contract itself. Another point is that the law considers it just if parties voluntarily assume the risk of a substantial difference between liquidated and actual damages to avoid the joys of litigation. Of course, being obsessed with justice, common law has left many loopholes that allow contracting parties to require a deeper inquiry into the facts and the law of the dispute by claiming unconscionability, mistake, rescission, and other legal ways of rewriting the original contract to satisfy buyer’s remorse or a similar regret about the way risks were originally allocated between contracting parties.

Decentralized p2p cryptographic money networks offer ways for contracting parties to allocate risks and enforce their outcomes irrevocably.

Irrevocably here also means outside of the reach of the conventional justice system so parties cannot attempt to reverse affairs structured on these networks through conventional courts.

This is a radical review of the notice of justice.

On these networks, voluntary assumption of risks is sufficient for justice. Nothing else matters and no further justice will be provided.

This voluntary assumption of risks need not even be informed. If you dived in and drowned, too bad. People will and have already lost millions without any recourse to the traditional courts through bad decisions in these cryptographic p2p worlds. But people also moved and continue to move tens of billions into commerce on these networks.

And the reason people enter these networks is their irreversibility. This is a great appeal to a new machine-driven world of commerce.

The rise of intelligent machines means that most commerce will be automated within a couple of decades. Machines will not only execute programs to trade goods and services for money but will also enter into contracts after automated assessment of risks and rewards.

Conventional money and justice do not meet the needs of machine-driven commerce.

The machine world will have zero tolerance for running to the courthouse to file a pound of bound paper, waiting for years to get a court order, and then trying to enforce the judgment only to find that the debtor has moved its assets to a non-cooperating jurisdiction.

Machine commerce will rise to eliminate these issues by moving money from conventional currencies too prone to reversal and too slow for automation to crypto-money designed from the ground up for machine transactions. On the Internet, there is only one jurisdiction.

Machine commerce will work through unequivocal code and draw on big data to properly assess risks and rewards of deals. There will be no going back and no buyer’s remorse. All damages will be liquidated damages and all damages will be automatically recovered, either by instant seizure or by garnishing future participation of the debtor in the commercial community.

Do not presume that this world will be available only to the rich or to large corporations. It will be open to anyone with the Internet connection and a smart device (or, really, a bot, a descendant of Alexa or Siri). There will be a marketplace of pluggable expertise that will assess risks and rewards of irreversible p2p transactions (think digital actuaries—the insurance industry has been doing this for a while—just in a crude way, like a steam engine versus a nuclear reactor). There will be no going back once you metaphorically sign on the dotted line but there will also be no disputes. Calculable (or calculable with probability) will beat arguable.

What of lawyers and courts then? They will focus on huge criminal and constitutional cases as governments fight to protect their declining tax base and assert control over natural resources while the link between many transactions, identity of citizens, and the physical world in which tax collectors operate is severed.

(This is Part 3 in a series. Please read Part 1 and Part 2.)

Comments

  1. I love this idea as it applies to say an auto insurance contract. Imagine having a machine using logic to adjudicate accident benefits clams . I can’t imagine insurance companies would like that. Also how could the government regulate the industry like it does today ? Amazing to think about .

  2. I’m in a pensive mood after reading this. Well done, Pulat. Thank you.

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