The introduction of the blockchain has begun to change how we see and use money with cryptocurrencies. As blockchains mature they attempt to solve different problems, and thus disrupt different industries. One such example is the smart contract and how it now allows people to enter into arrangements without a middle party. Currently, such contracts are overseen and scrutinized by lawyers. So let’s discuss, will smart contracts replace the position of lawyers?
What is a Smart Contract?
A smart contract is a program that lives and gets executed on the blockchain. A smart contract can take any form, but will always faithfully execute under the original conditions in which it was written. The code of a smart contract is publicly readable, so it’s easy to know what the contract is before entering into the contract. Smart contracts are also deterministic, meaning that the output to all functions are known before the contract is run. For these reasons, smart contracts can model many different functions, including legal ones. These legal contracts are publicly available and can be read by anyone, and accessed by anyone.
Threatening the Status Quo
Smart contracts are a direct threat to the current business model for a modern lawyer. A lawyer’s job is to understand the complex underpinnings of legal situations and to draw up contracts or arbitrate disagreements in the understanding of these legal contracts. Smart contracts will take away this ability because unlike complicated legal jargon, the contract is plain to see; you cannot hide in the fine print, or obfuscate meaning by manipulating interpretations of language. Contracts such as escrows and corporate agreements can be highly complicated and lawyers are utilized to draw up the contracts and to contest them if there is a dispute. In a smart contract, there can be no hidden language and the contract will always execute 100% faithfully, so there is no room for argument. If 2 parties enter the contract, they are bound by that contract. Arbitration is done by the system so there is no court and no opinion.
Lawyer/Programmer – a glimpse into the future?
For a non-programmer, who has never seen or written code, a smart contract looks no less complicated than a legal document. For these individuals, how will they accurately read and decipher a smart contract’s code? The general public will need help to navigate this unknown. This is where lawyers can help. They’ll need to develop smart contract literacy, to read and decipher the contract’s construction and inclusions.
In the future, lawyers who have programming experience will have a more hands-on role in creating smart contracts as smart contracts become more popular and more complex. They can offer services to decipher smart contracts and make sure that their client isn’t being given the short end of the stick by entering into this public arrangement. According to the americanbar.org, “litigation attorneys may no longer be litigating the “four-corners” of the contract, but rather expanding into the intent of the code.”
Lawyers will need additional skills and training, like knowing how the code in smart contracts translates to the actions or benefits that their client will receive from said contract. The main difference is that a client isn’t going to be able to go to a lawyer for recourse. If a client enters a smart contract blindly and is taken advantage of by it, there is no entity to sue, only an absolute mechanism of enforcement that will faithfully execute, no matter the consequences. This marks the need for individuals that can parse this information with great accuracy and are bound to professionally deliver this translation to their client accurately and with good regard for their client.
So, are lawyers obsolete in the world of smart contracts? No, but their role and function will change. So while lawyers in the blockchain space won’t be needed for arbitration of a smart contract, they most certainly will be needed to help ensure that clients have the best understanding possible of the contracts they may enter.
For example, a well-trained lawyer might find problems in an escrow contract that too heavily benefits the contract holder and not the buyer or seller in the contract, and advise their client to use a different escrow contract that will help them more, or even write an escrow contract for them that eliminates this problem.
Professionals to help navigate complicated legal and technical contracts will be needed for a long time to come, so until that changes, there will be a place for lawyers in this new landscape.