This is part two based on a transcript from ‘Legal Technology: Risk and Regulation’ video of my three-part series commenting on different views on and between technologies and lawyers in legal regulations. The first part of the series reviewed the existing state of legal regulations. In this article, I will focus on the risks we have for lawyers, and the last part of the series will be dedicated to discussing inevitable changes in technology.
What are the risks that we have for lawyers? Think about what the legal regulation is set to do. It’s not to stop one particular lawyer from doing something bad. For example, a lawyer has a gambling issue, and he steals from the trust fund. That’s bad. That’s why legal regulation is there to stop this behaviour. It is clear that our legal regulations are geared towards preventing this kind of misconduct.
But no legal tech company is going to steal one particular person’s bank account. Instead, the risk is of some catastrophic failure. So what if we had a hypothetical company that was looking after everyone’s trust accounts, and then there was some catastrophic failure, and all the money got transferred to Zimbabwe? Or maybe it was hacked, or there was a glitch, or something else went wrong – in this kind of situation, we’re having a long-tail risks.
Legal Tech Problems
I think that the existing regulation does not only constraints legal tech but also doesn’t picks up its problems. So how does it constrain? I’ll be using an example that was given by the futurist Mark Pesce at the Australian Judicial Administration Conference. He told the audience the things that legal tech would do using an example of blockchain: in a hypothetical system where there were some goods sold, people pay for them with future currency – say, bitcoins – and these are held under smart contracts on the blockchain. When the goods have been properly transferred or the contract completed, then the money goes across. That’s potentially a very useful system, but we couldn’t do that in South Australia. I don’t know about the other states, but I know in South Australia it would totally breach trust account regulations.
First of all, we had to have special regulation pass this year to enable bank trust accounts to accept money by the banks pay id, which is their latest update. And this is just the existing banks changing the ways they’re doing things in a very singular way. This does not include blockchain, escrow, and cryptocurrency.
If you put cryptocurrency in your trust account, you are holding it in some kind of trust. And if you’re a lawyer, you could be in big trouble, at least, when regulations are present. What that means is that lawyers can’t invent then new ways while being just lawyers. They got to jump ship. They got to become technologists, they are no longer lawyers.
Read the continuation of the series about the inevitable upcoming changes in technology.
Watch the Legal Technology: Risk and Regulation video here:
Adrian Cartland is the Creator of Ailira, the Artificial Intelligence that automates legal information and research, and the Principal of Cartland Law, a firm that specialises in devising novel solutions to complex tax, commercial, and technological, legal issues and transactions.