Lawyers and Smart Contracts

I am of the position that smart contracts will not eliminate lawyers but will change the role of lawyers and will revolutionize the legal system.

Given the tensions that exist between smart contracts and traditional contracts [1], the role of lawyers will change. Smart contracts are automated, performance-based, and self-enforcing, meaning that their performance ‘cannot be stopped’ or ‘amended’ once the contract has been programmed agreed to by the parties and put on the blockchain.[2] Smart contracts differ from traditional contracts as traditional contracts allow for more flexibility, consideration of changing circumstances, consideration of parties intentions, and permit court interference.[3] While smart contracts are decentralized in nature and based on computer codes, legal systems have centralized decision making and are based on natural language.[4] Lawyers will continue to be involved in identifying important aspects to be put in a smart contract and will likely be more involved in dispute resolution. [5] There could be coding errors that lead to that result in performance issues or discrepancies between the code and natural language that will need to be resolved by lawyers. [6] Parties may wish to terminate the smart contract due to grounds such as misrepresentation, mistake, or duress, and given the irrevocable nature of smart contracts may require lawyers to assist in resolving such a dispute.[7] Lawyers will be needed to determine if a contract is legally binding or if the contract is illegal due to changes in the law.[8] Given that smart contracts are executed on distributed nodes, lawyers will be needed to determine the governing law applicable.[9] Arbitration is likely to be the preferred method of resolving smart contract disputes, and contract lawyers will need to have increased their specialized technical knowledge of blockchain technology and arbitration. [11]

In my opinion, increased transparency and accessibility through the use of blockchain will revolutionize the legal system in areas such as contract law, property law and information law amongst other areas of law. The use of smart contracts could make transactions more transparent, and legal services may be more accessible to small businesses and middle-class individuals. [12] As a result of increased transparency of legal services and reduced costs for consumers, access to justice will be more widely prevalent. [13] However, while it may initially appear that smart contracts are more cost-effective and accessible, I do believe that if a dispute or uncertainty were to arise then it could be costly to the parties involved.

[1] L. DiMatteo et al, “The Formation of Smart Contracts and Beyond: Shaking the Fundamentals of Contract Law?” 2019 Cambridge University Press

[2] Ibid

[3] Ibid

[4] Ibid

[5] Ibid

[6] Norton Rose, “Arbitrating Smart Contracts” (2017) https://www.nortonrosefulbright.com/en/knowledge/publications/ea958758/arbitrating-smart-contract-disputesonline accessed 23 October 2019

[7] Ibid

[8] Ibid

[9] Ibid

[10] Ibid

[11] Ibid

[12] John O. McGinnis & Russel G. Pearce “The Great Disruption: How Machine Intelligence Will Transform the Role of Lawyers in the Delivery of Legal Services” (2014) 82 Fordham Law Review

[13] Ibid

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