Return to site

How Blockchain and AI Will Affect LegalTech

In the VC world, people often talk about A.I. assistants (eg, Siri, Amazon Echo, Google Home etc), but very rarely people talk about funding companies with A.I. attorneys, although recently, the first A.I. lawyer ROSS was hired by a law firm specialising in bankruptcy just a few days ago.  In fact the majority of the LegalTech startups out there are focused on helping barristers/solicitors/attorneys to automate their relationship with their clients using a cloud platform, or helping attorneys to automate the paperwork that is necessary to file for their clients or a matchmaking service that lets users find attorneys/ solicitors.

broken image

If we consider that most attorneys are probably not setting precedent nor working on landmark cases, but are spending the majority of their time doing paperwork and filing the right documents, then creating platforms that automate these functions will have a particular high value- especially in nations such as India, where there are 27 million pending court cases that will probably never find resolution.

broken image

India does not have digitalised records of previous court cases nor a central database of their governing laws and the average case to find resolution takes more than 10+ years.

I happened to meet a couple of attorneys who are based in India last December speaking about this very subject, and they told me that sadly, a lot of those cases will never see justice; in India, it takes more than an average of 10-15 years before a case will be settled or find resolution, with many cases taking more than 25 years. Cases that involve senior citizens are often given priority in cases, due to their advanced age, so that there isn't a system of priortisation aside from advanced age of the client. This is primarily due to the cumbersome paperwork involved in filing cases, and the bureaucracy involved between different government agencies, in addition to the fact that no legal documents or previous cases have digital documentation. This lack of a central database or even a blockchain of updated case information is causing the backup of approximately 27 million cases in India. 

In the U.S., companies such as smartlegalforms allow users to find common legal forms that they can fill using an e-form to download for a one-time purchase price. These legal forms include those dealing with divorce, employment, living wills, deeds, landlord-tenant agreements etc. However, I think an exciting aspect of a potential web service are those that will serve as virtual attorneys in regards to many different matters that do not require mediation or those cases not looking to set precedent, but everyday matters that require consultation and the right paperwork filed.

Imagine if you could consult your virtual A.I. lawyer or solicitor and immediately find the right forms to e-file, with the virtual A.I. lawyer giving you an overview of previous successful cases in matters of litigation or else, for corporations to consult before making investment decisions. Neota Logic does this to an extent by catering to businesses and corporations. It is a platform that utilises algos to automate legal documents for businesses to ensure compliance with regulations, politics and procedures and via their interface, businesses can receive analysis and advice, intake and assessment in addition to drafting counsel-approves sales agreements.

broken image

Thus far a lot of financial institutions and even the government in the U.K. are considering adapting to blockchain technology to de-centralise their database in regards to grants funding and keeping track of taxpayer money. For those who are unfamiliar with blockchain, in layman's terms, information is updated in blocks then bound together cryptographically with a time stamp and unique digital signature that are connected to each other in a chain, a bit like a large interconnected network, and if the chain is either broken or does not have the correct signature or security information for any of its blocks, then it is not accepted into the blockchain; thus instead of one centralised database of information, this blockchain has data that is spread out all over the internet between many different users so that it cannot be hacked nor altered. It is similar to a DNA sequence that continually adds new information and checks against itself for authenticity. Although blockchain has been used in bitcoin, and there have been several cases in which bitcoin exchanges had been hacked; however, this was not due to the integrity of the blockchain, but via the servers of the companies holding the bitcoin information, such as the debacle at Mt. Gox in 2014 and the more recent Gatecoin hack which lost $2m in bitcoin and Ethereum.

Other financial institutions such as Visa and Mastercard are adapting to blockchain technology because it is more secure than a centralised database, and other services such as stock options platforms that also use a version of this blockchain; in addition to Nasdaq recently selecting a bitcoin startup chain to run pilots in trading shares of private companies last year and Microsoft allowing developers to build decentralised applications using the Ethereum blockchain to the Windows platform.

broken image

#include credit library 

#include blockchain library 

Var Debtor = ABC Corp. 

Var Creditor = ABC Lender 

New Document = new Credit Agreement.create {debtor:Debtor, creditor:Creditor, type:working capital} 

New Document.interest = Libor(30 day) 

New Document.fincovenants = Debt_Yield(4), LTV(65) 

This is particularly compelling because the potential integration of blockchain with AI in the legal sector, the services provided by an attorney can be automated for the end user as smart contracts would be coded to be self-executing. I think this is an exciting webservice we will see more of in the next 10 years, as blockchain technology expands into many different sectors, as more LegalTech startups develop platforms allowing users to have access to a virtual A.I. attorney for simple transactions instead of the old way of doing things: which was to hire an attorney, solicitor or law firm, pay them a large retainer, and hire them on an hourly basis for them to fill out the correct paperwork for their clients.