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Blockchain for Legal Services: Revolution or Evolution!

There has been a lot of talk about how blockchain, underpinned by the Distributed Ledger Technology (DLT) [1], will revolutionize the legal industry, as it allows users to inject digital trust into any software, process or organization, eliminating the need for intermediaries between untrusting parties. [2] In theory, the legal industry is ideal for the adoption of blockchain given the substantial number of players, the high volume of documents, information and transactions involved, and the need for trust between untrusting parties, which is a core tenet of the profession.

However, we believe that the adoption of blockchain in the legal industry will be evolutionary, not revolutionary, as the legal industry will be a follower, not a leader, in the adoption of blockchain, and will move to it only after clients start adopting the technology for use in their businesses. For the business of law [3], despite the hype, blockchain technology is still nascent and a few years away from solving any large-scale business problems. Firms across many industries are experimenting using blockchain to solve some of their business challenges, with no clear winners. In the near term, for the practice of law [4], the legal industry will be a central player in guiding corporates as they navigate the use of the DLT technology for their business and advising regulators as they establish protocols, as there are many legal and data privacy and security issues, that still need to be resolved.

Critical factors for blockchain adoption and industry opportunities

There are six critical factors for the technology to be successfully adopted in any industry [5]:

Number of Players – There need to be many players in the ecosystem to allow for multiple nodes to exist so that any transaction on the blockchain cannot be easily altered (as 51% of the nodes need to agree for any transaction to be changed). So any industry with a few players would not be ideal to adopt blockchain, as they could potentially collude and alter transactions.

Number of Transactions – As the margins on each transaction are low, volumes need to be significant for it to be financially viable to run the ecosystem, both for the miners who validate the transaction, and any entity managing the ecosystem (in the near term, any commercial use will require a private, permissioned blockchain and will need someone maintaining the ecosystem).

Trust in the Market – For successful adoption of the blockchain, there is an assumption that the existing market infrastructure has limited trust which drives the need for another source of trust.

Friction in Market - As with any other driver for change, there needs to be a high degree of friction or “pain” in the market that the technology addresses.

Implementation Cost – Given the competing demands for the limited investments within a firm, the cost of implementing the technology should not be too prohibitive.

Benefit vs. Cost of Implementation – Finally, the most crucial driver for adoption will be the benefit derived from the use of the blockchain versus the existing technology being used. The most likely near-term benefits for blockchain could be for reducing costs and improving efficiencies.

Industry Opportunities for Blockchain

Based on the World Economic Forum study on blockchain, [6] any industry in which the key players are working with physical assets is not conducive to the use of the blockchain, as the technology has not yet effectively learned how to translate between the virtual world capable of immutability, and the tangible world that is material and subject to tampering. Keeping this in mind, the industries that are more likely to drive the adoption of blockchain solutions are public sector, financial services, and healthcare.

The Public sector is ideal for leveraging blockchain for record keeping and identify verification. Government tasks such as identity, title registry, record keeping, document management, etc., can be enabled by blockchain infrastructure to achieve substantial savings. The use of blockchain will also help increase transparency among government agencies and across businesses, citizens, and watchdogs. Governments such as Dubai, Singapore, Georgia, Estonia and many others, are actively running blockchain pilots for identity management, title registry, document management, and fractional ownership, etc. We expect that, in the near term, the public sector, including governments and agencies - potentially many of them in the developing world - will lead the way in adopting blockchain to solve some of the significant challenges they are facing and use it to serve their citizens most effectively.

Financial services firms verify and transfer financial information and assets which are ideally suited for blockchain. Firms are using the blockchain technology to address existing pain points, in high volume businesses, such as trading cryptocurrencies [7], cross-border money transfers [8] and for cross-border payments [9] to im-prove efficiencies and customer service for the end-user, and reduce intermediaries, as well as, costs for the institution.

The Healthcare industry can use blockchain to seamlessly exchange patient information across providers, patients, insurers, and researchers while increasing efficiency, and gives researchers access to the historical, non–patient-identifiable data sets crucial for advancements in medical research. Simultaneously, patients can have more control over their data and even the ability to commercialize data access, if they choose to do so.

In addition to financial services and healthcare, some other industries on the fore-front of experimenting with blockchain are real estate for title registry, music industry for digital rights management, and food and beverage for food safety and origin. In the future, blockchain will likely enable the creation of new business models and revenue streams.

Impact of blockchain on the business of law

The legal industry is ideally suited for adopting blockchain, given the key factors for adoption are in place: large number of players, high volume of documents, information and transactions involved, limited trust. [10] and significant friction related to legal fees.

For legal services, there are three broad categories for use of blockchain: for maintaining records, conducting transactions, and a combination of the two. These categories are further divided into five areas of focus: information registry, identity management, smart contracts, transaction registry and payments. Multiple use cases are being explored in each area of focus. Legal industry input and capabilities will be required across three categories.

Most certainly, the uses of blockchain technology will expand beyond those currently highlighted, as the technology becomes more robust and the commercial use of the technology expands.

However, the legal industry will adopt blockchain technology only after its key customers in the legal ecosystem: corporates, governments and notaries, [11] have already adopted it.

Widespread adoption of blockchain for commercial use is still a few years away, as several issues still need to be resolved:

  • Getting key players in the industry to work together, moving from competition to cooperation, and solving problems for the “greater good” of the industry;

  • Establishing common industry standards to which all players in the ecosystem will adhere;

  • Having assets that can be digitized;

  • Solving interoperability issues between platforms; and

  • A clear value proposition for the use of the Distributed Ledger Technology.

Finally, it is going to be hard for most institutions in any industry to disrupt themselves, given that their primary focus is profitability and efficient business operations. However, they are key to the successful adoption of blockchain in the industry, as they can help define common industry standards; identify potential use cases and test them; bring business expertise to the use cases; run the nodes for the blockchain; and provide funding and resources to build and scale use cases.

Impact of blockchain on the practice of law

The most significant impact of blockchain for the legal industry in the near term, would be to support its customers to better understand the legal and security and privacy issues [12] and guide the regulators to establish the appropriate rules and regulations.

Most corporates experimenting with the blockchain will need legal advice on the following issues.

In addition to the legal issues, some security and privacy issues will also need to be addressed.

Security issues – The benefit of the decentralized nature of blockchain is that it is supposed to be more secure and resistant to hacking. However, to date, there have already been attacks on various cryptocurrency exchanges, with millions of dollars being lost. For any commercial use of blockchain to be successful will require the network to be very secure.

Privacy – On blockchain, all the transactions, even if they are encrypted, are open to the public. Many players may not be comfortable disclosing their information publicly, specifically if it relates to financial, legal or health issues. This issue could potentially be mitigated by using private keys.

Legal professionals will also need to work with regulators to develop regulations that address these legal issues and guide them to establish the appropriate security and privacy protocols, balancing innovation with the protection of the participants and investors on the blockchain.

Legal Consortiums

Since blockchain facilitates transactions across a network, the value of a blockchain network will increase with the number of users. The growing participation by enterprises, technology providers, regulators, and governments would be key to the development of blockchain and help increase adoption of the technology.[13] A few groups have formed in the legal space to encourage collaboration and standardization —helping to establish standards and address the lack of interoperability between networks. The main legal consortiums are:

Global Legal Blockchain Consortium Focused on developing standards to govern the use of blockchain technology in the business of law. The consortium has about 225+ members.

Accord Project

The vision of the project is to develop techno-legal specifications for smart legal contracts and distributed ledger applications in the legal industry and develop open source code for the standardized creation of smart contracts.

There is significant interest from most players in the legal ecosystem to be part of the consortiums. The effectiveness of these consortiums still has not been proven, as they are run by for-profit organizations that may make them less than ideal for driving an industry-wide consortium forward. An industry body or regulator, such as International Legal Technology Association (ILTA), Association of Corporate Counsel (ACC) or Corporate Legal Operations Consortium (CLOC), may potentially have more success in running such a consortium.

Action Steps for the Players in the Legal ecosystem

Given the energy around blockchain, it is vital for all players in the legal services ecosystem to have a better understanding of blockchain technology and its potential impact on them. Below are suggested next steps:


The users of legal services.

Corporate Legal Departments – Understand the legal, security, and privacy issues around the adoption of blockchain and advise the business as they test use cases to improve efficiency and effectiveness to serve customers better and maintain/increase profitability. Use blockchain for the select legal operations [14][15]:

  • Efficient execution of legal services For dispute resolution and arbitration, development and execution of smart contracts; filing corporate returns, registration of intellectual property rights;

  • Verification and authentication of legal business operations for customers. For document management, billing and expense management, etc.;

  • Improving efficiency of legal tasks performed For maintaining chain of documents during, custody cases, M&A transactions, recording and maintaining historical case-related information, and notarizing documents.

Government Agencies and Notaries

Conduct use cases to leverage the potential of blockchain to improve efficiency in the legal system, i.e providing transparency around historical cases, maintaining chain of documents during cases, digitizing volumes of material currently in paper-format, and for notarizing documents.

Providers The providers of legal services who support customers by delivering legal advice, resolving legal challenges, and helping them to run their legal departments more efficiently and effectively.

Law Firms

This group will play a critical role in the future of the adoption of blockchain within the industry. All players in the ecosystem will look towards them for:

  • Training on the use and the implications of the blockchain technology;

  • Guiding corporate clients as they run blockchain use-cases, then implement the technology to run their business;

  • Establishing legal and regulatory standards, working with regulators to drive the adoption of blockchain;

  • Develop common industry standards for the use of blockchain within the legal industry, as a critical member of the legal consortiums;

  • Collaborate with other legal service providers to leverage blockchain to serve existing clients more effectively and efficiently and potentially service those currently who do not have access to justice.

All Other Providers (Legal Services Providers, Big Four, Legal Techs and Other Services Providers) – Assess the potential use cases and discussions around the uses of blockchain by corporates and government agencies, to determine if there is a likelihood of their services being dis-intermediated in the future, and the estimated timing of the same, e.g. the use of blockchain for billing and expense man-agement could negatively impact some service providers.

Other Other players in the legal ecosystem who are critical for it to function effectively: Regulators and Enforcers – Work with industry leaders and law firms to establish rules and regulations for the successful adoption of blockchain technology, balancing the need to encourage innovation, re-duce delivery costs and improve transparency, while protecting end-users. Investors – The adoption of blockchain across the legal industry will provide significant opportunities for investments.

The Future In conclusion, we believe that blockchain technology, has the potential to transform businesses globally. However, the adoption of blockchain in the legal industry will be evolutionary, not revolutionary, with the use of the technology becoming core to the legal industry in the next few years, However, the legal industry will only adopt it after their clients start using to run part of their business.

But it is important to keep in mind that the legal industry will play a key role in this evolution, educating all players in the legal ecosystem, helping corporates understand the legal and regulatory implications as they adopt blockchain for their business and working with the regulators to establish standards. They will also be critical in establishing common industry standards for the legal profession and collaborating with other legal service providers to serve clients more efficiently and effectively.

Notes [1], Dec, 2018. Blockchain is underpinned by Distributed Ledger Technology (DLT), which enables a network of digital data that is consistent, replicated, shared, transparent and synchronized across multiple sites, countries, or institutions.

[2] “Bitcoin: A Peer-to-Peer Electronic Cash System”, Satoshi Nakamoto, 2008 [3] Business of Law Definition: The providing of a combination of legal, business and tech capabilities, to augment customer (both corporate and law firm) expertise and improve their efficiency and effectiveness, including services such as legal project management, and business analysis.

[4] Practice of Law Definition: The giving of legal advice or of representation of another as an agent in a court of law or through rules of court, or in the preparation of legal documents or in dispute or contractual negotiation. The exercise of the profession of barrister, solicitor, attorney or lawyer. [5] blockchain-beyond-the-hype-what-is-the-strategic-business-value

[6] Blockchain Beyond the Hype A Practical Framework for Business Leaders, World Economic Forum, April 2018

[7] As of June 20, 2019, the daily trading volume of cryptocurrencies is $52.5 billion.

[8] Money transfer operators (MTOs) are financial companies (but usually not banks) engaged in cross border transfer of funds using either their internal system or access to another cross border banking network. According to the World Bank, total remittances sent in 2016 were above the $530 billion.

[9] Global payments 2018: A dynamic industry continues to break new ground, McKinsey, October 2018. The global payments industry is $1.9 trillion and is expected to cross $3 trillion within the next 5 years.

[10] Gaining trust as well as respect in communicating to motivated audiences about science topics”, Princeton University study, Su-san Fiske and Cydney Dupree, 2014

[11], An Industry in Transition: Legal Services Market of the Future, May 2018


About the Author

Nita Sanger is the Chief Executive Officer of Idea Innovate Consulting, a boutique consulting firm focused on business transformation and growth helping businesses be successful in a volatile, uncertain, complex and ambiguous(VUCA), business environment.

She has 20 years of experience working with global large and mid-sized corporates and start-ups and scale-ups in financial, professional and legal services. Nita focuses on setting the vision and strategy for the business and then operationalizing the strategy to achieve desired results and ensure exponential growth. Nita has also established and advised multiple start-ups focused on disrupting the services sector. She brings domain expertise in the application of various technologies to transform the business, i.e. Artificial Intelligence / Cognitive, Internet of Things, Blockchain, Crowdsourcing, Crowdfunding, Analytics, etc. Nita is a blockchain enthusiast and has written and presented on the impact of blockchain on various businesses.

She can be reached at

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