Can blockchain smart contracts level the legal playing field for SMEs?
Imagine picking a suitable, binding legal contract off a shelf and adding it to your cart. Just like that.
"One of the biggest issues facing the SME world is that legal instruments and service providers are largely unable to provide relevant transactional legal services to their customers at a price point those customers find acceptable," says Monax CEO Casey Kuhlman.
Kuhlman has a colourful background. He was recently invited to join the Forbes Technology Council as a senior legal tech executive, after being a Marine in a previous life, and the owner of his own law firm in Somalia. Tempestuous circumstances there led him to bitcoin as a means of receiving payments from international clients, which then led him to blockchain technology itself. He quickly realised it could directly solve a lot of the problems currently facing his clients.
So began Monax – a system designed to let SMEs primarily, but anyone else too, shop for effective legal products as easily as picking a bottle of milk off the shelf.
Problem, meet solution
"One of the biggest issues facing the SME world is that legal instruments and service providers are largely unable to provide relevant transactional legal services to their customers at a price point those customers find acceptable," Kuhlman explained. "Almost every interaction between companies (i.e most commercial activity) is underpinned by a legal contract; yet, as commerce evolves there is a growing chasm between the traditional lawyer and the real, networked world. This chasm has came about largely because legal has lacked the technical backbone on which to build relevant digital products for these networked businesses – and that is where blockchain-based systems come into play."
The blockchain-based systems he's referring to, or legal products if you will, are what's now commonly called a smart contract.
Picture a shopping centre where an SME can pick a workable, applicable and binding legal contract off the shelf, add it to their cart and take it to the checkout, easy as that.
"Yes it really is as straightforward as that!" Kuhlman says. "Using the Monax Platform, our users can access the blueprints for Active Agreements housed within the Agreements Network and leverage them to meet their business needs. The process is a simple one – select the correct "Archetype" (or blueprint), fill out a form, press create, and you have made both a legally binding agreement managed by smart contract technology. The user experience feels a lot like forms libraries built on previous generations of technology, but the result of that initial user experience is an active digital record that can be used to plug into your other business systems."
A large part of the job of many lawyers is to do this kind of relatively routine paperwork, adapting existing templates into useable forms for their clients. But this can be costly, especially for SMEs which aren't as blessed with cashflow and in-house lawyers as larger enterprises are.
Blockchain technology and smart contracts are a suitable technical foundation for a new breed of legal products that might fit the kind of price point the SME market is looking for.
As Kuhlman explains, "the combination of smart contract and blockchain technology opens up, for the first time, a technical basis to build scalable legal products to serve the SME market... the Monax Platform on top of the Agreements Network offers SMEs not only an ability to purchase and operate legal instruments as digital products, but it also offers the same SMEs the ability to create their own legal products for internal use. The result is an offering that moves contracts beyond the age of paper and – for the first time – into the digital age."
What's so smart about contracts?
"Smart contracts are neither especially smart nor are they, by default, contracts," Kuhlman notes. Rather, they're just software, in contrast to the "living, breathing documents we think of as contracts... they are not inherently enforceable."
But that doesn't mean they can't be. This is part of how the Agreements Network complements Monax, and vice versa.
"The Agreements Network is architected in such a manner to "dual integrate" smart contract code housed within the blockchain network alongside prose templates which can be rationally understood and enforced by any dispute resolution system," Kuhlman said, while "blockchain-housed scripts can be configured – with proper architecture – in such a manner as they can fulfill the typical minimum requirements set by contract law to represent an enforceable contract.
"For the broad majority of transactions there is actually nothing preventing properly configured smart contract suites to be determined as legally binding.
"Indeed, there are a range of systems – beyond the Monax Platform – which are already building these systems. They exist in a range of enterprise systems as well as in Ethereum and other blockchains. In general, as with any emergent technology, they will start simple and grow more complex over time as they find their place within the landscape of business systems."
The Agreements Network itself is an Ethereum-based platform with its own ERC20 token for platform access.
How long until I can use it?
Agreements Network is still under construction, but Monax is already up and running, and you can go request a demo if you want to take a practical, working blockchain application for a spin.
Elsewhere, there are signs that the world probably won't have to wait too long for major developments in legal tech. For example a partnership, in triplicate, between CSIRO's Data61, IBM and the Herbert Smith Freehills law firm is working on building out the "Australian National Blockchain", for the creation and operation of legal smart contracts.
The legal industry is one of those areas where blockchain technology might be quite readily applicable, and moving in fast.
Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VET, XLM, BTC, ADA