By now, you’ve likely heard about blockchain – the technology underlying the famous cryptocurrency Bitcoin. But do you know all the ways blockchain may be able to help you increase efficiencies at your law firm?
Put simply, blockchain stores cryptocurrency transaction details together with data like payment information, identity, and ownership, into a hash (a string of characters). This ledger system is used to validate transactions and process them with the highest level of security possible. Computers connected across the world, called nodes, verify to see if certain conditions are met during the process of a transaction—like ensuring that Person A’s digital wallet has enough money to support the terms of the deal—and ultimately approve the transaction, accepting the exchange on behalf of Person B.
Blockchain in Law Firms
Blockchain is transparent, as any party to a transaction can access its details, and information cannot be altered without the knowledge of all parties. Using blockchain, firms no longer need to manage multiple copies of agreements across offices. This automated, transparent process can improve access to justice as well as law firm efficiencies.
While blockchain, to date, has mostly been concerned with cryptocurrencies, the distributed ledger technology is poised to make a splash in other industries. Blockchain tech can be integrated into most modern software applications, meaning law firms can implement the tech for a higher level of security and stability. In an era of increasingly sophisticated cyberattacks, this security could be invaluable for clients.
Blockchain is decentralized, which means the need for banks, brokerages, and other intermediary agencies in transactions is eliminated. The steep fees associated with traditional finance and investment structures are no longer added to the cost of completing financial transactions.
The Future of Blockchain in the Modern Law Firm
Law firms that embrace the assistive nature of blockchain technology will find many uses for it in their everyday practices. Firms have already begun implementing it for transactional legal services, business support, and smart contracts. For example, firms have turned toward using digital wallets instead of escrow accounts—thereby guaranteeing heightened security to their clients. Blockchain can also provide some relief to lawyers who spend valuable time mired in administrative tasks, as smart contracting allows savvy lawyers to automate certain aspects of the arduous contract writing process.
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