Legal Education in the Blockchain Revolution de Mark Fenwick,* Wulf A. Kaal & Erik P.M. Vermeulen*

351
Legal Education in the
Blockchain Revolution
Mark Fenwick,* Wulf A. Kaal** & Erik P.M. Vermeulen***
ABSTRACT
The legal profession is one of the most disrupted sectors of the
consulting industry today. The rise of Legal Technology, artificial
intelligence, big data, machine learning, and, most importantly,
blockchain technology is changing the practice of law. The sharing
economy and platform companies challenge many of the traditional
assumptions, doctrines, and concepts of law and
governance—requiring litigators, judges, and regulators to adapt.
Lawyers need to be equipped with the necessary skillsets to operate
effectively in the new world of disruptive innovation in law. A more
creative and innovative approach to educating lawyers for the
twenty-first century is needed.
TABLE OF CONTENTS
I. INTRODUCTION............................................................................ 352

II. LEGAL TECH’S DISRUPTIVE LEGAL INNOVATION ....................... 356

A. Virtual Law Firms................................................................. 360

B. Reevaluation of Applicable Law............................................ 361

C. Changing Legal Practice ....................................................... 362

III. BLOCKCHAIN LEDGER TECHNOLOGY.......................................... 363

A. Blockchain Technology Defined ............................................ 364

B. Decentralization..................................................................... 369

C. Disruptive Innovation............................................................ 372

* Kyushu University (Fukuoka, Japan). The Authors would like to sincerely thank
Robert K. Vischer and Ann L. Bateson for their comments and support.
** University of St. Thomas School of Law (Minneapolis, MN).
*** Tilburg University; Tilburg Law and Economics Center; Philips Lighting
(Netherlands).

352 VAND. J. ENT. & TECH. L. [Vol. 20:2:351
D. Limitations ............................................................................ 374

IV. EDUCATING THE TWENTY-FIRST CENTURY LAWYER ................. 379

V. CONCLUSION ............................................................................... 382

I. INTRODUCTION
Law firms and in-house legal departments generally agree that
Legal Technology (Legal Tech) impacts their future. Legal Tech
startups are revolutionizing the legal industry by increasing the
speed, accuracy, and performance of legal services or by replacing
them altogether with new ideas.1 Conferences, seminars, and
professional magazines are dedicated to debating Legal Tech and its
future implications for the legal industry. Some consensus exists
among legal industry representatives that adopting Legal Tech helps
law firms and legal departments improve client engagement and
satisfaction.2 Legal Tech allows clients to be more involved and
provide feedback for legal services.
Yet, a closer look often reveals that law firms and legal
departments themselves often struggle with innovation and the
required level of innovating. While the leading firms often find
innovative solutions to their clients’ problems, even those firms are
1. Roland Vogl, The Coming of Age of Legal Technology, STAN. L. SCH. BLOGS: LEGAL
AGGREGATE (Sept. 26, 2016), https://law.stanford.edu/2016/09/26/184188/ [https://perma.cc/
SD7N-9HFL] (“In recent years, we have witnessed what can be best described as a legal tech
start-up boom.”).
2. See GEORGETOWN LAW CTR. FOR THE STUDY OF THE LEGAL PROFESSION & THOMSON
REUTERS PEER MONITOR, 2016 REPORT ON THE STATE OF THE LEGAL MARKET 2 (2016),
https://www.law.georgetown.edu/news/upload/2016_PM_GT_Final-Report.pdf [https://perma.cc/
7VHN-ZCW8] (“The reactions of the law firm market to the rapidly changing environment in
which firms operate parallels in some respects the story of Kodak. The current challenge in the
legal market is not that firms are unaware of the threat posed to their current business model by
the dramatic shift in the demands and expectations of their clients. Instead, as in the case of
Kodak, the challenge is that firms are choosing not to act in response to the threat, even though
they are fully aware of its ramifications.”); id. at 13 (“While neither [the 2015 Altman Weil Law
Firm Survey nor the 2015 Thomson Reuters Peer Monitor study] is conclusive, both strongly
suggest that firms that are proactive in pursuing new strategies to meet the concerns and
expectations of their clients are more likely to achieve stronger financial results than those firms
that merely react to specific client demands.”). The 2015 Thomson Reuters Peer Monitor study
reported, among other things, the following major operational changes that upper-tier firms are
implementing: “Use of software that allows firm lawyers to monitor the progress of matters,
resource commitments, and budget status in real time on a matter basis” (71 percent); “[e]fficient
and easily usable knowledge management system that provides lawyers with ready access to the
firm’s prior work product” (71 percent); “[d]ocument review software using predicitive coding
based on a ‘seed sample’ of documents provided by firm lawyers” (71 percent); “[c]lient ‘self-help’
tools that allow clients to perform tasks directly that previously required active participation by
firm lawyers” (29 percent); and “[u]se of e-learning systems” (65 percent). Id. at 13.

2017] LEGAL EDUCATION 353
reluctant to fully embrace Legal Tech innovations. Only those firms
and legal departments that believe Legal Tech could give them a
significant competitive advantage have introduced the position of chief
innovation officer (CIO) or a functional equivalent.3 To receive an
outside perspective, law firms sometimes appoint nonlawyers in those
roles.4 Their role is simple and straightforward: accelerate innovation
and take it to the next level.
Key lawyer characteristics and lawyers’ core skillsets in the
existing legal education and regulatory framework are incompatible
with the demands on lawyers of the twenty-first century.
Traditionally educated lawyers are not usually known for key
characteristics like agility and the capacity to innovate.5 While some
litigators in a common law system can achieve new legal grounds that
could not have been accomplished by legislators in the same time
frame,6 the majority of lawyers in both civil and common law legal
systems tend to be reactive, waiting for congressional or
parliamentary action to provide new legal initiatives and legal
3. See, e.g., Press Release, Bryan Cave LLP, Bryan Cave Announces Chief Innovation
Officer (Apr. 16, 2015), https://www.bryancave.com/en/news-events/bryan-cave-announces-chief-
innovation-officer.html [https://perma.cc/6SLZ-793R] (“The global law firm Bryan Cave LLP has
named Denver-based Partner Katie DeBord Chief Innovation Officer.”); Baker Donelson Appoints
William Painter as First Chief Innovation Officer, LEGAL IT INSIDER (Sept. 27, 2016, 12:29 PM),
https://www.legaltechnology.com/latest-news/baker-Donelson-appoints-first-chief-innovation-
officer/ [https://perma.cc/2R3H-K74L].
4. See, e.g., John Sterling, Non-Lawyers: A Critical Success Factor for the Law Firm of
the Future, STERLING STRATEGIES (Dec. 5, 2013), http://sterlingstrat.com/non-lawyers-a-critical-
success-factor-for-the-law-firm-of-the-future.html [https://perma.cc/R4ST-LTTG] (“More
sophisticated law firms will be (are being) forced by clients and competitors to embrace
technology, knowledge management, project management, lean process, and other management
tools more common outside the legal industry. Successfully adopting any of those management
tools requires attracting great people—well-trained, highly capable, hard-working and client
focused—whose professional training is grounded in engineering, information technology,
organizational psychology, management, and other fields.”); Roy Strom, The Rise of the Law
Firm Management Corps, CHI. LAW. (June 2015), http://www.chicagolawyermagazine.com/
Archives/2015/06/Firm-Management-Corps-C-Suite.aspx [https://perma.cc/5536-CLQ4].
5. See, e.g., RICHARD SUSSKIND, TOMORROW’S LAWYERS: AN INTRODUCTION TO YOUR
FUTURE 53–54 (2013) (“I find that most traditional practices are not changing much. They are
not yet adopting alternative methods of working. This is partly an issue of change management,
in that law firms tend to be so busy serving clients and meeting their own financial targets that
they allow little time for internal reform—it is not easy to change a wheel on a moving car. It is
also, in part, a structural matter, because most law firms still aspire to the old textbook, broad-
based pyramidic structure . . . whereas alternative methods of sourcing call for a revision if not
rejection of that model.”).
6. See, e.g., Roe v. Wade, 410 U.S. 113 (1973); Brown v. Bd. of Educ., 347 U.S. 483
(1954); see also MacPherson v. Buick Motor Co., 111 N.E. 1050 (N.Y. 1916) (abolishing the
doctrine of privity in tort law as a result of technological changes in products manufacturing).

guidance.7 Key skills emphasized in the existing law school education
include precision, in-depth analyses and syntheses, substantive legal
knowledge, and policy considerations. Yet disruptive innovation in
law8 obviates many, if not most, of the traditional legal skills and
characteristics of traditional lawyers. The American Bar Association
(ABA), lawyers, and law schools cannot afford to ignore the new
demands on lawyers of the twenty-first century.9
The legal profession is one of the most disrupted sectors of the
consulting industry today.10 Legal Tech, artificial intelligence (AI),
machine learning, legal automation, big data applications, and
blockchain technology are changing the way lawyers practice law.11
The sharing economy challenges many of the traditional assumptions,
doctrines, and concepts of law and governance.12 Litigators, judges,
7. See, e.g., GUIDO CALABRESI, A COMMON LAW FOR THE AGE OF STATUTES 163 (1982)
(“[C]ourts are not capable of writing speedily enough most of the rules that a modern society
apparently needs.”).
8. See, e.g., Mark Fenwick, Wulf A. Kaal & Erik P.M. Vermeulen, Regulation
Tomorrow: What Happens When Technology Is Faster Than the Law?, 6 AM. U. BUS. L. REV.
(forthcoming 2017).
9. A minority of law schools, including Northwestern University’s Pritzker School of
Law and Chicago-Kent College of Law, have started to integrate law and technology into their
curriculum or have opened centers and other initiatives to prepare students for demands placed
on them by future clients. See Mark C. Palmer, Legal Technology Has a Home in Law School
Education, 2CIVILITY BLOG (July 17, 2017), https://www.2civility.org/legal-technology-home-in-
law-school-education/ [https://perma.cc/VFE9-5WV2] (describing how Northwestern and Chicago-
Kent College of Law have invested in legal technology education). At the time of this Article’s
publication, the majority of law schools in the United States have engaged in marginal attempts
to recognize the demands on twenty-first century lawyers. See Simon Canick, Infusing
Technology Skills into the Law School Curriculum, 42 CAP. U. L. REV. 663, 668 (2014)
(“Technology may be transforming legal practice, but that transformation has hardly changed
the way law professors teach.”).
10. See, e.g., Jane Croft, Artifical Intelligence Disrupting the Business of Law, FIN. TIMES
(Oct. 5, 2016), https://www.ft.com/content/5d96dd72-83eb-11e6-8897-2359a58ac7a5
[https://perma.cc/N7VV-ZRUM]; Bernard Marr, How Big Data Is Disrupting Law Firms and the
Legal Profession, FORBES (Jan. 20, 2016, 2:31 AM), http://www.forbes.com/sites/bernardmarr/
2016/01/20/how-big-data-is-disrupting-law-firms-and-the-legal-profession/#7836ac0a5ed6
[https://perma.cc/TFB6-L5ZK].
11. See, e.g., Jane Croft, More Than 100,000 Legal Roles to Become Automated, FIN.
TIMES (Mar. 15, 2016), https://www.ft.com/content/c8ef3f62-ea9c-11e5-888e-2eadd5fbc4a4
[https://perma.cc/H3GD-JT28]; Joe Dewey & Shawn Amuial, Blockchain Technology Will
Transform the Practice of Law, BLOOMBERG L. (June 25, 2015), https://bol.bna.com/blockchain-
technology-will-transform-the-practice-of-law/ [https://perma.cc/GCP8-MW22]; Marr, supra note
10.
12. See Benjamin G. Edelman & Damien Geradin, Efficiencies and Regulatory Shortcuts:
How Should We Regulate Companies Like Airbnb and Uber?, 19 STAN. TECH. L. REV. 293, 294
(2016) (describing how modern technology is conflicting with some existing regulations); Abbey
Stemler, Regulation 2.0: The Marriage of New Governance and Lex Informatica, 19 VAND. J. ENT.
& TECH. L. 87, 112–13 (2016) (noting that, unlike traditional market structures, the sharing
economy allows entrepreneurs to “outsourc[e] key business functions to intermediaries”).

and regulators are forced to reconsider traditional approaches because
of disruption via platform technologies.13
The challenges presented by Legal Tech, the new economy, and
platform technologies justify a more creative and innovative approach
for legal education in the twenty-first century. The curriculum of US
law schools has only marginally changed over the last thirty or more
years.14 Yet as law firms increasingly embrace Legal Tech, the new
economy, and platform technologies,15 law schools of the twenty-first
century will recognize the new reality and adapt to new demands.
Such adaptation will likely entail incorporating AI into the classroom,
adopting teaching by hypotheticals via AI, and introducing active
machine learning in class, among many other possible innovations.16
Curricular innovations may include coding for lawyers17 and law and
technology courses or course modules,18 among many others. With
13. Id.
14. See A. Benjamin Spencer, The Law School Critique in Historical Perspective, 69
WASH. & LEE L. REV. 1949, 2020, 2054 (2012).
15. See, e.g., THOMAS S. CLAY & ERIC A. SEEGER, 2015 LAW FIRMS IN TRANSITION: AN
ALTMAN WEIL FLASH SURVEY 55–56, 82–83 (2015), http://www.altmanweil.com/dir_docs/
resource/1c789ef2-5cff-463a-863a-2248d23882a7_document.pdf [https://perma.cc/8NP7-XBAR];
INT’L LEGAL TECH. ASS’N & INSIDE LEGAL, 2016 ILTA/INSIDELEGAL TECHNOLOGY PURCHASING
SURVEY 10 (2016), http://insidelegal.typepad.com/files/2016_ILTA_InsideLegal_Technology_
Purchasing_Survey.pdf [https://perma.cc/MW9G-9AEK]; ROBERT HALF LEGAL, FUTURE LAW
OFFICE: TECHNOLOGY’S TRANSFORMATION OF THE LEGAL FIELD (2013),
https://www.roberthalf.com/sites/default/files/Media_Root/Images/RHL-PDFs/RHL_FLO_
evolvingLegalProf.pdf [https://perma.cc/ZTR4-6Q9H]; Erin Coe, Lawyers at Risk for Layoffs as
Firms Embrace Technology, LAW360 (June 25, 2013, 10:51 PM),
https://www.law360.com/articles/452967/lawyers-at-risk-for-layoffs-as-firms-embrace-technology
[https://perma.cc/CJ64-RSTT]. For background on the Legal Tech market, see Tom Wilson, Legal
Tech—Mapping Disruption, MEDIUM (July 12, 2016), https://medium.com/@taw/legal-tech-
mapping-disruption-3e6685fc4a5c#.eiufshoue [https://perma.cc/T3X6-6EVB].
16. See Kevin D. Ashley, Teaching Law and Digital Age Legal Practice with an AI and
Law Seminar, 88 CHI.-KENT L. REV. 783, 816 (2013). It is conceivable that first-mover law
schools that make the financial investment in AI, machine learning, and blockchain will have a
comparative advantage vis-à-vis their peers, regardless of the ranking of such school, because the
demand for lawyers adequately trained in these technologies is likely to increase sharply at a
threshold point of law firm adoption.
17. Jason Krause, Does Learning to Code Make You a Better Lawyer?, A.B.A. J. (Sept.
2016), http://www.abajournal.com/magazine/article/lawyer_learning_code_zvenyach_ohm/?utm_
content=buffer8442b&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
[https://perma.cc/V7J6-DXBS]; Chelsea Strauss, How I Learned Coding in Law School, SUFFOLK
U. L. SCH.: STUDENT VOICES (May 6, 2016), http://theroadto1l.blogs.law.suffolk.edu/
general/student-voices-how-i-learned-coding-in-law-school/ [https://perma.cc/7WK9-C7SS].
18. On September 29, 2016, the Florida Supreme Court announced that it would require
a minimum of three technology-related continuing legal education (CLE) credits in each
three-year CLE reporting cycle, thus increasing the number of mandatory CLE credits from
thirty to thirty-three. See In re Amendments to Rules Regulating the Fla. Bar 4-1.1 and 6-10.3,
No. SC16-574 (Fla. Sept. 29, 2016) (per curiam); Victor Li, Florida Supreme Court Approves
Mandatory Tech CLE Classes for Lawyers, A.B.A. J. (Sept. 30, 2016, 8:45 AM),

curriculum changes, adaptation to changes in technology, and new
teaching methodologies that lend themselves more to technological
adaptation, the law schools of the twenty-first century should be able
to equip twenty-first century lawyers with the necessary skillsets to
operate effectively in the new world of disruptive innovation that is
emerging so rapidly.19
This Article has five parts. After this introduction to the basic
tenets of the Article, Part II introduces emerging changes in Legal
Tech and their implications for lawyers. These changes include the
emergence of virtual law firms, the changes mandated by the sharing
economy, Legal Tech innovations in several areas of the law, and
changes in the practice of law. After defining blockchain ledger
technology and smart contracts, Part III evaluates the effects of
blockchain technology’s unprecedented decentralization and its
disruptive effects on the practice of law and society at large. Part III
also discusses the existing, but slowly resolving, limitations of
blockchain ledger technology. Part IV then analyzes the implications
of Legal Tech and blockchain ledger technology both for legal
education more generally and for law schools’ efforts in educating
lawyers who are practice ready for the twenty-first century. Part V
concludes.
II. LEGAL TECH’S DISRUPTIVE LEGAL INNOVATION
Legal Tech has evolved from support systems to fully
integrated and automated services for lawyers that increasingly
disrupt the practice of law. Legal Tech can generally be defined as
information technology services and software, as well as platforms and
their applications.20 Since the 1970s, with the invention of the first
legal databases,21 Legal Tech has supported existing ways of operating
http://www.abajournal.com/news/article/florida_supreme_court_approves_mandatory_tech_cles_
for_lawyers?utm_source=Newsletter+email+list&utm_campaign=0ae9e44e21-EMAIL_
CAMPAIGN_2017_02_21&utm_medium=email&utm_term=0_28957849de-0ae9e44e21-
[https://perma.cc/7QZM-EVJV].
19. As law schools adapt to Legal Tech, a learning process is likely to set in that allows a
gradual, and in some cases more radical, appreciation of impending exponential changes and
their meaning for the law school communities.
20. Wilson, supra note 15 (“Broadly speaking, the Legal Tech market covers companies
(mostly startups) utilising technology to build products solving problems faced both by industry
(i.e. law firms, corporates[,] etc.) and consumers related to legal services.”).
21. William G. Harrington, A Brief History of Computer-Assisted Legal Research, 77 LAW
LIBR. J. 543, 553 (1985) (noting that Lexis was introduced in 1973 and Westlaw was introduced
in 1975). For a good overview of the online services and databases available to lawyers by the
mid-1980s, see S. Blair Kauffman, Electronic Databases in Legal Research: Beyond LEXIS and
WESTLAW, 13 RUTGERS COMPUTER & TECH. L.J. 73 (1987),

and practicing law. In fact, Legal Tech created the need for additional
lawyers to evaluate the new legal materials that are made more
quickly available and more easily accessible by technology. At first,
Legal Tech made law firms and lawyers more efficient in performing
their activities. Examples include automated billing, document
storage, practice management, and accounting software.22 In the
early 2010s, Legal Tech became more advanced and started to include
technology that assisted legal professionals in due diligence and
e-discovery processes.23 Since 2015, Legal Tech has continued to
evolve in unprecedented ways. Multiple startup companies and their
investors have started to capitalize on technologies, and their
http://digitalcommons.law.yale.edu/fss_papers/1293/ [https://perma.cc/GZJ4-DALQ]. In 2004,
Bloomberg began offering “B-Law.” Lynn Foster & Bruce Kennedy, Technological Developments
in Legal Research, 2 J. APP. PRAC. & PROCESS 275, 281–82 (2000) (“During the 1990s . . . [t]he
Internet became another electronic medium for legal publishing. . . . [C]ourts themelves began to
host their own free websites.”); Michael Robak, The Bloomberg Citator: A First Look at BLAW’s
Citation Function, 13 AM. ASS’N L. LIBR. SPECTRUM 24, 24 (2009). In the mid-1990s, firms such as
VersusLaw and Loislaw began to offer solo- and small-firm lawyers lower-cost (but less
comprehensive) online alternatives to Westlaw and Lexis. Robert Ambrogi, Shake-Up in Legal
Research: Fastcase Acquires Loislaw from Wolters-Kluwer, LAW SITES (Sept. 21, 2015),
http://www.lawsitesblog.com/2015/09/shake-up-in-legal-research-fastcase-acquires-loislaw-from-
wolters-kluwer.html [https://perma.cc/KUP2-5Y4X]. Those services were followed in 1999 by
Fastcase and Casemaker, which are notable for offering their services free to members of
subscribing state bar associations. Mary Whisner, Getting to Know Fastcase, 106 LAW LIBR. J.
473, 473–74, 473 n.2 (2014). HeinOnline launched in 2000. About, WILLIAM S. HEIN & CO.,
http://home.wshein.com/about/history/ [https://perma.cc/7X35-XRKZ] (last visited Oct. 9, 2017).
In 2010, Lexis, Westlaw, and Bloomberg introduced new versions of their research products
(products which became known as WestlawNext, Lexis Advance, and Bloomberg Law), and
Google Scholar entered the legal research business. Jill Schachner Chanen, Exclusive: Inside the
New Westlaw, Lexis & Bloomberg Platforms, A.B.A. J. (Jan. 25, 2010, 3:00 AM),
http://www.abajournal.com/news/article/exclusive_inside_the_new_westlaw_lexis_bloomberg_pla
tforms/ [https://perma.cc/3EPC-XT5C]. More recently, companies such as Ravel Law are
introducing new ways to search, analyze, and visualize content. See, e.g., Who We Are, RAVEL,
http://ravellaw.com/who-we-are/ [https://perma.cc/JM3Z-F56K] (last visited Oct. 9, 2017).
22. See, e.g., SHARON D. NELSON ET AL., THE 2010 SOLO AND SMALL FIRM LEGAL
TECHNOLOGY GUIDE 95–117 (2010); Vogl, supra note 1. For more recent developments, see, for
example, Abdi Shayesteh & Elnaz Zarrini, Man Vs. Machine: Or, Lawyers Vs. Legal Technology,
LAW360 (Nov. 14, 2016, 12:14 PM), https://www.law360.com/articles/862058
[https://perma.cc/2BSN-CLMN].
23. See, e.g., BRUCE A. OLSON & TOM O’CONNOR, ELECTRONIC DISCOVERY FOR SMALL
CASES 8 (2012) (noting increases in e-discovery technology and its impacts on the Federal Rules
of Civil Procedure); John M. Facciola, A History of Electronic Discovery, in MANAGING E-
DISCOVERY AND ESI 13, 14 (Michael D. Berman et al. eds., 2011); Julie Sobowale, How Artifical
Intelligence Is Transforming the Legal Profession, A.B.A. J. (Apr. 2016),
http://www.abajournal.com/magazine/article/how_artificial_intelligence_is_transforming_the_leg
al_profession [https://perma.cc/7U35-WN4V] (noting the launch of e-Brevia’s Diligence
Accelerator among other developments); Wilson, supra note 15.

applications are already replacing some junior lawyers and disrupting
the existing parameters for the practice of law.24
Four categories of startups in Legal Tech can be distinguished.
The first category includes startup companies that offer a range of
online legal services, removing the in-person legal consultation
process and guidance process for clients.25 The second legal startup
category involves online “matching” platforms that connect lawyers
with clients.26 Such platform startups help consumers find a fitting
lawyer without the costly involvement of a law firm. The third
24. See, e.g., DELOITTE, THE ROBOTS ARE COMING 6–8 (2015),
https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/finance/deloitte-uk-finance-
robots-are-coming.pdf [https://perma.cc/9KF9-JQCV]; Thomas H. Davenport, Let’s Automate All
the Lawyers?, WALL ST. J.: BLOG (Mar. 25, 2015, 12:18 PM),
http://blogs.wsj.com/cio/2015/03/25/lets-automate-all-the-lawyers/ [https://perma.cc/M2ZC-
WZJT]; Peter Nussey, How Much of What Lawyers Do Can Be Automated? A Look at New
Research, LEGAL IT INSIDER (Jan. 22, 2016, 1:44 PM), https://www.legaltechnology.com/latest-
news/guest-post-how-much-of-what-lawyers-do-can-be-automated-a-look-at-new-research/
[https://perma.cc/E6WX-7DT3] (charting the percentage of work lawyers perform that can be
automated).
25. Some of these services—including JUSTIA, https://www.justia.com/
[https://perma.cc/L7CN-XURR] (last visited Oct. 9, 2017); LAWYERS.COM,
http://www.lawyers.com/ [https://perma.cc/3RGM-K997] (last visited Oct. 9, 2017); and AVVO,
https://www.avvo.com/ [https://perma.cc/G6KZ-JXZ7] (last visited Oct. 9, 2017)—are free or have
free components. Avvo, for example, allows a user to ask a question for free anonymously. It
notifies the questioner when a lawyer responds to the question, which it says is usually within
twelve hours. Ask a Lawyer, AVVO, https://www.avvo.com/ask-a-lawyer# [https://perma.cc/6LKB-
XABQ] (last visited Oct. 9, 2017). Some of these services are fee based or have a fee-based
component. For example, in addition to its free service, Avvo also offers fixed-fee legal services in
multiple practice areas, and it offers a flat-fee option for talking directly by phone for fifteen
minutes with one of its top-reviewed lawyers. AVVO, supra. While providing some free legal
advice and documents, LegalZoom offers personal and business prepaid legal service plans that
offer thirty-minute consultations for each unique legal matter and a one-hour annual legal
checkup. Attorney Advice, LEGALZOOM, https://www.legalzoom.com/attorneys/
[https://perma.cc/44SG-E9AD] (last visited Oct. 9, 2017). Rocket Lawyer focuses on helping
subscribers create personal and business legal documents, providing step-by-step instructions for
customizing the documents, and offering review of the documents by an attorney for a set
subscription cost. It also provides access to affordable representation by licensed attorneys.
ROCKET LAWYER, https://www.rocketlawyer.com [https://perma.cc/KCS4-SM2K] (last visited Oct.
9, 2017).
26. Such startups’ platforms help consumers find the right lawyer without the costly
involvement of a law firm. See, e.g., LAWGIVES, https://www.lawgives.com/
about [https://perma.cc/RGX5-D5BD] (last visited Oct. 9, 2017); LEGAL HERO,
http://legalhero.com (last visited Oct. 9, 2017); UPCOUNSEL, https://www.upcounsel.com/
[https://perma.cc/5SBX-37AU] (last visited Oct. 9, 2017). See generally Shannon Achimalbe, Will
Client-Matching Services Turn Participating Lawyers into Uber Drivers?, ABOVE THE LAW (Dec.
3, 2014, 3:19 PM), http://abovethelaw.com/2014/12/will-client-matching-services-turn-
participating-lawyers-into-uber-drivers/ [https://perma.cc/VY7H-QM59]; Jennifer Smith, Online
Matchmakers Offer New Way to Find Legal Help, WALL ST. J. (Dec. 2, 2013),
http://www.wsj.com/news/articles/SB10001424052702303464504579107231443311754
[https://perma.cc/2TB9-H4FU].

category entails startups that use AI tools to take over their lawyers’
time-consuming and expensive legal research activities such as
reviewing, understanding, evaluating, and reapplying contracts.27
Finally, startups with expertise in blockchain technology attempt to
replace lawyers as intermediaries in certain types of transactions.28
The decentralization of law that is a central part of the startup
companies’ purpose and that disrupts existing legal practices has
27. See, e.g., BEAGLE, http://beagle.ai/ [https://perma.cc/2MEL-B2GL] (last visited Oct. 9,
2017); BRIGHTLEAF, http://www.brightleaf.com/ [https://perma.cc/93RL-C5F8] (last visited Oct. 9,
2017); EBREVIA, https://ebrevia.com/ [https://perma.cc/C7AP-65YR] (last visited Oct. 9, 2017);
EXIGENT GRP., http://www.exigent-group.com/ [https://perma.cc/FT3E-RG8Y] (last visited Oct. 9,
2017); LEGALROBOT, https://www.legalrobot.com/ [https://perma.cc/9MWL-4LNZ] (last visited
Oct. 9, 2017); LEGALSIFTER, https://www.legalsifter.com/ [https://perma.cc/6TB2-HUU3] (last
visited Oct. 9, 2017); SEALSOFTWARE, https://www.seal-software.com/ [https://perma.cc/AE65-
T7AZ] (last visited Oct. 9, 2017). See generally Julie Bort, This Startup Invented a New Category
of Search Software So Good Google Uses It, BUS. INSIDER (Feb. 1, 2017, 8:00 PM),
http://www.businessinsider.com/seal-software-invents-search-software-so-good-google-uses-it-
2017-2 [https://perma.cc/Q9WJ-26CG]; Exigent Launches Hybrid Service for Low Cost
Customisable Contract Discovery, EXIGENT (Jan. 18, 2017), http://www.exigent-
group.com/exigent-launches-hybrid-service-for-low-cost-customizable-contract-discovery/
[https://perma.cc/8BM6-STE2]; Frederic Lardinois, LegalSifter Helps Designers and Developers
Read Their Contracts, TECH CRUNCH (Aug. 7, 2014), https://techcrunch.com/2014/08/07/
legalsifter-helps-designers-and-developers-read-their-contracts/ [https://perma.cc/H56Z-DD2K];
LPO Exigent Teams Up with LexPredict to Provide NLP Contract Discovery Service, ARTIFICIAL
LAW. (Jan. 18, 2017), https://artificiallawyer.com/2017/01/18/lpo-exigent-teams-up-with-
lexpredict-to-provide-contract-discovery-service/ [https://perma.cc/G4PS-KP6E]; Seal Software:
Breaking the Seal to Identify Contract Value, SOURCING INNOVATION (Feb. 13, 2017),
http://sourcinginnovation.com/wordpress/2017/02/13/seal-software-breaking-the-seal-to-identify-
contract-value/ [https://perma.cc/Q8T7-5TGD].
28. Ethereum is one example of a custom-built blockchain platform that runs smart
contracts. See ETHEREUM, https://www.ethereum.org/ [https://perma.cc/K7Q7-ETUF] (last visited
Oct. 9, 2017). Legal startups that use blockchain technology for smart contracts include
SmartContract, Hedgy, Mifiel, rainvow, godzillion, and Katalysis. Blockchains Startups,
ANGELLIST, https://angel.co/blockchains [https://perma.cc/D4KK-6WZY] (last visited Oct. 9,
2017). A few of the others include ADJOINT, http://www.adjoint.io/ [https://perma.cc/Y4AL-3L7Q]
(last visited Oct. 9, 2017); CLAUSE, http://www.clause.io/ [https://perma.cc/C323-ZBGZ] (last
visited Oct. 9, 2017); COMMONACCORD, http://www.commonaccord.org/ [https://perma.cc/L77W-
WAW6] (last visited Oct. 9, 2017); and STASH, http://stashcrypto.com/products.html
[https://perma.cc/X278-TCTS] (last visited Oct. 9, 2017). See generally James Eyers, Opinion,
Blockchain ‘Smart Contracts’ to Disrupt Lawyers, AUSTL. FIN. REV. (May 30, 2016, 9:28 AM),
http://www.afr.com/technology/blockchain-smart-contracts-to-disrupt-lawyers-20160529-gp6f5e
[https://perma.cc/J3EA-ESG5]; Rob Marvin, Blockchain in 2017: The Year of Smart Contracts,
PC MAG. (Dec. 12, 2016, 2:48 PM), http://www.pcmag.com/article/350088/blockchain-in-2017-the-
year-of-smart-contracts [https://perma.cc/47BM-4R5B]; Bailey Reutzel, BNP Paribas Works with
Blockchain Startup to Open Source Law, COINDESK (May 5, 2016, 4:28 PM),
https://www.coindesk.com/commonaccord-legal-smart-contracts-prove-beneficial-one-bank-
veritcal/ [https://perma.cc/J4J9-PQN2]; Startup Corner: Cryptofinance Software Company Stash,
Inc. to Create Smart Contracts for Digital Currency Law Firm Selachii, LEGAL IT INSIDER (Oct.
28, 2015, 10:02 AM), https://www.legaltechnology.com/latest-news/startup-corner-cryptofinance-
software-company-stash-inc-to-create-smart-contracts-for-digital-currency-law-firm-selachii/
[https://perma.cc/SWL7-83F9].

broad repercussions for the legal profession. First, existing legal
services are either rendered increasingly irrelevant or replaced by
Legal Tech.29 Junior legal professionals and legal support staff are
likely the first victims of the Legal Tech evolution.30 Legal Tech
applications will be able to perform most of a junior lawyer’s work in
the near future without the human elements that create imprecision,
flaws, inaccuracies, possible lawsuits, and delay.31 Second, and most
importantly, the legal profession will be forced by such startup
companies to innovate in perpetuity, a task that is not easily
accomplished by overextended, and often cumbersome, legal
organizations that have lost the capacity for agile reinvention.
A. Virtual Law Firms
Legal Tech has the potential to rapidly transform law firms
and legal departments into virtual law firms. Virtual law firms may
dominate in the future. A virtual law firm is basically a platform with
emphases on connecting legal and other professionals and
collaboration. When implemented successfully, the effect of the
platform model will be the creation of a flexible and accessible
community of professionals with different skills and experience. The
bigger the community, the easier it is to offer solutions tailored to the
needs of the clients.
The virtual law firm model attracts a wide spectrum of law
firms. One extreme is represented by the traditional law firm,
characterized by a hierarchy with partners at the top and varying
29. See, e.g., DELOITTE, DEVELOPING LEGAL TALENT: STEPPING INTO THE FUTURE LAW
FIRM 4 (2016), http://www.legalfutures.co.uk/wp-content/uploads/developing-legal-talent-
2016.pdf [https://perma.cc/7GQB-RPA2].
30. See, e.g., CHRISTIAN VEITH ET AL., HOW LEGAL TECHNOLOGY WILL CHANGE THE
BUSINESS OF LAW 10–11 (2016), http://media.wix.com/ugd/b30d31_
7b407b2c8c6b44d697957b7fa5db48c8.pdf [https://perma.cc/CUL7-B5GF]; David Kravets, Law
Firm Bosses Envision Watson-Type Computers Replacing Young Lawyers, ARS TECHNICA (Oct.
26, 2015, 12:06 PM), https://arstechnica.com/tech-policy/2015/10/law-firm-bosses-envision-
watson-type-computers-replacing-young-lawyers/ [https://perma.cc/2WNE-FYTU]; Dan Mangan,
Lawyers Could Be the Next Profession to Be Replaced by Computers, CNBC (Feb. 17, 2017, 4:10
PM), http://www.cnbc.com/2017/02/17/lawyers-could-be-replaced-by-artificial-intelligence.html
[https://perma.cc/9FGV-UYZJ]; Karen Turner, Meet ‘Ross,’ the Newly Hired Legal Robot, WASH.
POST (May 16, 2016), https://www.washingtonpost.com/news/innovations/wp/2016/05/16/meet-
ross-the-newly-hired-legal-robot/?utm_term=.950014c34c52 [https://perma.cc/7PX7-ZXN6];
Jacqui Walker, The Future of Law: Is Technology Stealing Young Lawyer Jobs?, LEGALER BLOG
(Mar. 1, 2015), http://blog.legaler.com/2015/03/01/the-future-of-law-is-technology-stealing-young-
lawyer-jobs/ [https://perma.cc/6RZG-GLQC].
31. See, e.g., Mangan, supra note 30; Turner, supra note 30.

levels of associates, paralegals, and nonlawyers below them.32 On the
other end of the spectrum are those firms that adopt an Airbnb-type
platform organization—mainly providing a match-making or
coordination service.33 Enormous variations exist between the two
extremes depending on the level of implementation of Legal Tech.
Legal platforms adopt a variety of approaches. For instance,
UpCounsel offers entrepreneurs on-demand access to experienced
lawyers.34 LawyerlinQ in the Netherlands35 offers law firms the
possibility to insource special knowledge and skills for more complex
projects.36 LexSemble is a crowdsourcing platform that allows
multiple users to edit legal knowledge entries.37 The information
gathered from the Cloud helps the platform to develop a machine
learning analytics engine. This engine can be used to assist in legal
decision-making and prediction activities.
B. Reevaluation of Applicable Law
Legal Tech’s disruptive innovation, in combination with the
principles established by the sharing economy, requires lawyers and
lawmakers to reevaluate their understanding of many areas of the
law. Because of the disruptive effects of the sharing economy,38 legal
doctrines, principles, and concepts need to be redesigned around
sharing and decentralized peer-to-peer platforms. Such an
undertaking requires out-of-the-box thinking for lawyers who were
trained during law school and during their entire careers to think
inside the box.
The areas of law that are most clearly affected by disruptive
innovation in law, the sharing economy, machine learning, AI, and
blockchain technology include property law, privacy law, and
employment law, to name only a few.
32. See, e.g., About S&C, SULLIVAN & CROMWELL, https://www.sullcrom.com/overview
[https://perma.cc/6MZ8-6LRU] (last visited Oct. 9, 2017); Culture, DAVISPOLK,
https://www.davispolk.com/firm/culture/ [https://perma.cc/HP5H-JAF5] (last visited Oct. 9, 2017);
Overview, DEBEVOISE & PLIMPTON, http://www.debevoise.com/aboutus/overview (last visited Oct.
9, 2017); Philosophy, CRAVATH, SWAINE & MOORE, https://www.cravath.com/philosophy/ (last
visited Oct. 9, 2017).
33. Achimalbe, supra note 26; Smith, supra note 26.
34. UPCOUNSEL, supra note 26.
35. About, LAWYERLINQ, http://about.lawyerlinq.com [https://perma.cc/7ZR4-L8NE] (last
visited Oct. 9, 2017).
36. For an overview of how to set up a simple virtual law practice, see Chad E. Burton,
Launching a Virtual Law Firm, 31 GP SOLO, Jan.–Feb. 2014, at 24, 26.
37. LEXSEMBLE, https://lexsemble.com/ [https://perma.cc/96H5-V7KF] (last visited Oct.
9, 2017).
38. See discussion infra Part III.C.

Property law is a prime example. With the accelerating rise of
the sharing economy, people are likely to care less over time about
ownership. Given these incremental changes in society, property law
may adjust over time. In the sharing economy, products and legal
rights pertaining to products and land may become less relevant and
may iteratively become services.39 As such, ownership, title, and legal
rights pertaining to real property and chattel are becoming less
relevant. Moreover, as the distinction between commercial property
and personal consumption property becomes blurred, other areas of
law need to be revised. Such areas may include tax law, bankruptcy
law, and liability and insurance law, among many others.
Privacy law provides another prominent example. With the
development and exponential evolution of the Internet of Things (IoT),
AI, machine learning, big data analytics, blockchain technology, and
smart contracts, more and more personal information will be
registered, recorded, and analyzed.
C. Changing Legal Practice
Legal Tech is replacing the traditional role of legal
professionals. Legal professionals play a crucial role in establishing
trust and truth in legal transactions.40 They negotiate, draft, and
interpret contracts and help enforce them; create laws and regulations
that protect the weaker parties; and design structures that enable the
registration and transfer of tangible property and intellectual
property. Well-drafted legal contracts help the contracting parties
establish trust and confidence in the validity and economic benefits of
the transaction. Important matters, such as the truth about
ownership and control, the transfer of ownership, and the allocation of
risk and control, are normally covered in a contract. However, the
counseling, deal-making, matchmaking, gatekeeping, and enforcing
roles are increasingly performed by technology.41 This trend is likely
39. See, e.g., Adrian Kuenzler, Promoting Access over Ownership: Realigning Antitrust
and Intellectual Property Law to Usher in an Era of Collaborate Consumption, 19 VAND. J. ENT.
& TECH. L. 473, 529 (2016) (“[B]usinesses that share information about product design and
distribution and offer independent maintenance and repair services ostensibly have seen an
upsurge in demand.”).
40. See, e.g., George Dent, Lawyers and Trust in Business Alliances, 58 BUS. LAW. 45, 57
(2002); John O. McGinnis & Russell G. Pearce, The Great Disruption: How Machine Intelligence
Will Transform the Role of Lawyers in the Delivery of Legal Services, 82 FORDHAM L. REV. 3041,
3055 (2014); Estate Planning FAQs: The Lawyer’s Role, A.B.A., http://www.americanbar.org/
groups/real_property_trust_estate/resources/estate_planning/the_lawyer_s_role.html
[https://perma.cc/4UJP-7TBA] (last visited Oct. 9, 2017).
41. Benjamin H. Barton, The Lawyer’s Monopoly—What Goes and What Stays, 82
FORDHAM L. REV. 3067, 3075–76 (2014); McGinnis & Pearce, supra note 40, at 3056.

to accelerate in the near future, enabled by blockchain technology and
smart contracting.42
III. BLOCKCHAIN LEDGER TECHNOLOGY
Leading technologists around the world have hailed blockchain
technology as one of the most important technological innovations
since the Internet.43 Blockchain technology provides near-unlimited
opportunities and applications through peer-to-peer interactions and
transactions in a decentralized network where all participants are
equal. Blockchain technology provides verification and validation of
each transaction in the decentralized network.44 For instance, in the
financial world, a global consensus record of information and
transactions creates much-needed transparency while at the same
time opening global access to finance—including in areas of the world
where the banking system is not readily available—in contrast to a
42. See infra Part III (discussing the revolutionary role of blockchain technology in the
legal field).
43. See, e.g., COGNIZANT, MARKETFORCE & PEGASYSTEMS, THE FUTURE OF RETAIL
FINANCIAL SERVICES 6, 28 (2016), https://www.pega.com/sites/pega.com/files/docs/2016/Jan/the-
future-of-retail-financial-services-study.pdf [https://perma.cc/7HKR-RE8K]; MICHAEL CROSBY ET
AL., SUTARDJA CTR. FOR ENTREPRENEURSHIP & TECH., BLOCKCHAIN TECHNOLOGY: BEYOND
BITCOIN 3 (2015), http://scet.berkeley.edu/wp-content/uploads/BlockchainPaper.pdf
[https://perma.cc/5ZNL-4DEF]; Rich Daly, Blockchain: Wall Street’s Most Game-Changing
Technology Advance Since the Internet, FORBES (July 11, 2016, 6:00 AM),
https://www.forbes.com/sites/richdaly/2016/07/11/blockchain-wall-streets-most-game-changing-
technology-advance-since-the-internet/#33987a154d87 [https://perma.cc/VPM4-87V3]; Dinis
Guarda, Over 50 Bitcoin and Blockchain Thoughts and Quotes You Need to Read, TRADERSDNA
(Apr. 7, 2016, 2:05 AM), http://www.tradersdna.com/bitcoin-and-blockchain/over-50-bitcoin-and-
blockchain-thoughts-and-quotes-you-need-to-read/ [https://perma.cc/TQ8A-279V]; William
Mougayar, The Blockchain Is the New Google, TECH CRUNCH (May 11, 2016),
https://techcrunch.com/2016/05/11/the-blockchain-is-the-new-google/ [https://perma.cc/ND5B-
4DGC]; John Naughton, Opinion, Is Blockchain the Most Important IT Invention of Our Age?,
GUARDIAN (Jan. 24, 2016, 4:00 PM), https://www.theguardian.com/commentisfree/2016/
jan/24/blockchain-bitcoin-technology-most-important-tech-invention-of-our-age-sir-mark-walport
[https://perma.cc/PK74-6QTZ]; Kyle Torpey, Why the Bitcoin Blockchain Is the Biggest Thing
Since the Internet, NASDAQ (Apr. 19, 2016, 9:32 AM), http://www.nasdaq.com/article/why-the-
bitcoin-blockchain-is-the-biggest-thing-since-the-internet-cm608228; see also Carrie Kirby,
Andreessen at CoinSummit: Bitcoin Today Is the Internet in 1994, COINDESK (Mar. 25, 2014, 8:21
PM), http://www.coindesk.com/marc-andreessen-balaji-srinivasan-discuss-bitcoin/
[https://perma.cc/K9BX-NC2T] (echoing Netscape founder Marc Andreessen’s assertion that
“[l]ike the Internet in 1994, bitcoin today is seen by the mainstream as ‘weird and scary[.]’”).
44. For example, blockchain has been described as “a ledger of transactions with
‘universally verifiable and trackable data.’” Daniel DeConinck, Overstock Completes First Public
Stock Issuance Using Blockchain, 36 REV. BANKING & FIN. L. 416, 418 (2017) (quoting Joshua
Ashley Klayman & F. Dario de Martino, The (Heart)Beat Has Sounded: The World Economic
Forum Places Blochchain Front and Center, MORRISON & FOERSTER (Aug. 18, 2016), at 2,
https://media2.mofo.com/documents/160817-world-economic-forum-blockchain.pdf).

mobile telephone network.45 Blockchain technology eliminates the
need for intermediation by incentivizing direct
transactions—including compensation—between the creator and
consumer.46
Blockchain technology creates a platform for trust through
truth and transparency between parties. Because the blockchain (at
least the public blockchain) is in fact public and immutable,47 the
technology increases transparency while at the same time
significantly reducing transaction costs. Intermediaries, including
lawyers, are replaced by code, connectivity, crowd, and collaboration.48
A. Blockchain Technology Defined
Blockchain technology has been defined in many different
ways, and no truly uniform definition seems to exist. Some refer to it
as a giant, worldwide, distributed, immutable “Google spreadsheet”
45. See, e.g., Yessi Bello Perez, Can Bitcoin Make a Difference in the Global Aid Sector?,
COINDESK (Sept. 9, 2015, 10:30 AM), http://www.coindesk.com/can-bitcoin-make-a-difference-in-
the-global-aid-sector/ [https://perma.cc/UP2M-G64L] (suggesting that donations and aid to third
world countries can finally be provided without the interference of suboptimal bureaucratic
organizations that don’t allocate the aid as intended by the donor); Michele Chandler, Mobile
Banking Takes Off in Nigeria, STAN. GRADUATE SCH. BUS. (Jan. 24, 2012),
https://www.gsb.stanford.edu/insights/mobile-banking-takes-nigeria [https://perma.cc/V3RB-
AZ8U] (noting that in Nigeria banking transactions are readily executed over mobile phones
because no infrastructure exists for consumer banking); Cade Metz, Why Bitcoin Will Thrive
First in the Developing World, WIRED (Feb. 2, 2016, 8:00 AM),
https://www.wired.com/2016/02/why-bitcoin-will-thrive-first-in-the-developing-world/
[https://perma.cc/4492-D44P].
46. See, e.g., Brett Scott, How Can Cryptocurrency and Blockchain Technology Play a
Role in Building Social and Solidarity Finance? 5 (U.N. Research Inst. for Soc. Dev., Working
Paper No. 2016-1, 2016), http://www.unrisd.org/brett-scott [https://perma.cc/A7PB-TKN2]; Perez,
supra note 45; infra Part III.B.
47. See, e.g., DeConinck, supra note 44, at 422 (“The platform publishes all ledger
entries to a publicly accessible blockchain, however, in order to promote transparency.”).
48. See, e.g., Eric Piscini et al., Blockchain: Trust Economy, in DELOITTE, TECH TRENDS
2017: THE KINETIC ENTERPRISE 92, 93 (2017), https://dupress.deloitte.com/dup-us-en/focus/tech-
trends/2017/blockchain-trust-economy.html [https://perma.cc/J4XE-HQ5Z]; Mohit Kaushal &
Sheel Tyle, The Blockchain: What It Is and Why It Matters, BROOKINGS: TECHTANK (Jan. 13,
2105), https://www.brookings.edu/blog/techtank/2015/01/13/the-blockchain-what-it-is-and-why-it-
matters/ [https://perma.cc/TG7G-XV44]; Jason Leibowitz, Blockchain’s Big Innovation Is Trust,
Not Money, COINDESK (May 21, 2016, 4:57 PM), http://www.coindesk.com/blockchain-innovation-
trust-money/ [https://perma.cc/AW6E-AMUD]; Don Tapscott & Alex Tapscott, How Blockchain
Will Change Organzations, MIT SLOAN MGMT. REV. (Dec. 7, 2016),
http://sloanreview.mit.edu/article/how-blockchain-will-change-organizations/?social_token=
5393525f2c938c2283f4f53795e343a4&utm_source=twitter&utm_medium=social&utm_campaign
=sm-direct [https://perma.cc/42NG-5SPR]; The Trust Machine: The Technology Behind Bitcoin
Could Transform How the Economy Works, ECONOMIST (Oct. 31, 2015),
http://www.economist.com/news/leaders/21677198-technology-behind-bitcoin-could-transform-
how-economy-works-trust-machine [https://perma.cc/A7V2-88T2].

for transactions.49 Others define blockchain by focusing on its central
elements—an electronic, decentralized, immutable transaction ledger
that provides cryptographic verification.50 Vitalik Buterin, the
founder of Ethereum, perhaps most prominently defined blockchain as
follows:
[A] public blockchain is a blockchain that anyone in the world can read, anyone in
the world can send transactions to and expect to see them included if they are
valid, and anyone in the world can participate in the consensus process—the
process for determining what blocks get added to the chain and what the current
state is. As a substitute for centralized or quasi-centralized trust, public
blockchains are secured by cryptoeconomics—the combination of economic
incentives and cryptographic verification using mechanisms such as proof of work
or proof of stake, following a general principle that the degree to which someone
can have an influence in the consensus process is proportional to the quantity of
economic resources that they can bring to bear. These blockchains are generally
considered to be “fully decentralized[.]”51
49. Craig Leppan, Who Is Blockchain Going to Affect Most, OVATIONS (July 29, 2015),
http://www.ovationsgroup.com/blockchain/ [https://perma.cc/J4AB-FS9N]; Jonathan Shieber,
Colu Aims to Bring Blockchain Technology Everywhere, TECH CRUNCH (Jan. 27, 2015),
https://techcrunch.com/2015/01/27/colu-aims-to-bring-blockchain-technology-everywhere/
[https://perma.cc/MMY3-Q5HB].
50. See, e.g., DELOITTE, BLOCKCHAIN: ENIGMA. PARADOX. OPPORTUNITY 4–5 (2016),
https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/Innovation/deloitte-uk-
blockchain-full-report.pdf [https://perma.cc/U32H-JLX6]; ALAN MORRISON, PWC, BLOCKCHAIN
AND SMART CONTRACT AUTOMATION: BLOCKCHAINS DEFINED 2 (2016),
http://www.pwc.com/us/en/technology-forecast/2016/blockchain/pwc-smart-contract-automation-
definition.pdf [https://perma.cc/EH2K-MPP2]; Alistair Dabbs, What Is a Blockchain, and Why Is
It Growing in Popularity?, ARS TECHNICA (Nov. 6, 2016, 8:00 AM),
https://arstechnica.com/information-technology/2016/11/what-is-blockchain/ [https://perma.cc/
Y7N2-XN3C]; Lee Grant, Blockchain—Definition, Origin, and History, TECHBULLION (Sept. 6,
2016), http://www.techbullion.com/blockchain-definition-origin-history [https://perma.cc/HSJ9-
J6P5].
51. Vitalik Buterin, On Public and Private Blockchains, ETHEREUM BLOG (Aug. 7, 2015),
https://blog.ethereum.org/2015/08/07/on-public-and-private-blockchains/ [https://perma.cc/6Y7W-
FXVH]. Buterin contrasted public blockchains (the original idea) with consortium blockchains
and fully private blockchains:
[A] consortium blockchain is a blockchain where the consensus process is controlled
by a pre-selected set of nodes; for example, one might imagine a consortium of 15
financial institutions, each of which operates a node and of which 10 must sign every
block in order for the block to be valid. The right to read the blockchain may be public,
or restricted to the participants, and there are also hybrid routes such as the root
hashes of the blocks being public together with an API that allows members of the
public to make a limited number of queries and get back cryptographic proofs of some
parts of the blockchain state. These blockchains may be considered “partially
decentralized[.]”
See id. (“[A] fully private blockchain is a blockchain where write permissions are kept centralized
to one organization. Read permissions may be public or restricted to an arbitrary extent. Likely
applications include database management, auditing, etc [sic] internal to a single company, and
so public readability may not be necessary in many cases at all, though in other cases public
auditability is desired.”).

Rather than attempting to agree on a mutually acceptable
phraseology for a definition, a description of the core elements of
ledger technology can help define the blockchain. As such, a
blockchain is a shared digital ledger or database that maintains a
continuously growing list of transactions among participating parties
regarding digital assets—together described as “blocks.”52 The linear
and chronological order of transactions in a chain will be extended
with another transaction link that is added to the block once an
additional transaction is validated, verified, and completed.53 The
chain of transactions is distributed to a limitless number of
participants—so-called “nodes”54—around the world in a public or
private peer-to-peer network.
Blockchain technology removes fraudulent transactions.
Blockchain’s security measures make blockchain validation
technologies more transparent and less prone to error and
corruption.55 While blockchain’s use of digital signatures helps
establish the identity and authenticity of the parties involved in the
transaction, it is the Internet’s completely decentralized network
connectivity that allows the most protection against fraud.56 Network
connectivity allows multiple copies of the blockchain to be available to
all participants across the distributed network.57 The decentralized
and fully distributed nature of the blockchain makes information in
52. See Michele D’Aliessi, How Does the Blockchain Work?, MEDIUM (June 1, 2016),
https://medium.com/@micheledaliessi/how-does-the-blockchain-work-98c8cd01d2ae#.w76hifcu2
[https://perma.cc/9CSS-HKR4]; Monica Pearson, Blockchain Is the New Buzzword, EXPERIAN
(Jan. 31, 2016), https://www.experian.com/blogs/insights/2016/01/blockchain-is-the-new-
buzzword/ [https://perma.cc/F6B2-QVWB].
53. See D’Aliessi, supra note 52; Pearson, supra note 52.
54. See D’Aliessi, supra note 52. Participants can be individuals, organizations, and even
things. See Sloane Brakeville & Bhargav Perepa, Blockchain Basics: Introduction to Distributed
Ledgers, IBM: DEVELOPERWORKS (Aug. 21, 2017), https://www.ibm.com/developerworks/
cloud/library/cl-blockchain-basics-intro-bluemix-trs/ [https://perma.cc/T3UB-V6X8]; Hemant
Saxena, Blockchain Technology Explained; Microsoft’s Plan to Develop Blockchain as a Service,
WINDOWS CLUB (Feb. 16, 2017), http://www.thewindowsclub.com/blockchain-microsoft-plans-
develop-service?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+
TheWindowsClub+%28The+Windows+Club%29 [https://perma.cc/3ZAK-MKQW]. The only
condition for participants is the necessity of an Internet connection. See D’Aliessi, supra note 52.
55. See REED SMITH, BEYOND BITCOIN: BLOCKCHAIN 19 (2016), [https://perma.cc/HE94-
AVB2] (“Because the blockchain is not controlled by a central party, but instead involves
decentralized control, the blockchain is less vulnerable to (if not immune from) cyberattack. The
blockchain cannot be lost or corrupted by participants, and thus counterparty risk in
transactions is significantly reduced.”).
56. See Brakeville & Perepa, supra note 54. For an in-depth, nuanced discussion of this
point, see PETER VAN VALKENBURGH, OPEN MATTERS: WHY PERMISSIONLESS BLOCKCHAINS ARE
ESSENTIAL TO THE FUTURE OF THE INTERNET 23–32 (2016), https://coincenter.org/files/2016-
12/openmattersv1-1.pdf [https://perma.cc/J4EF-MDQ8].
57. See D’Aliessi, supra note 52.

the blockchain practically impossible to reverse, alter, or erase.58
Blockchain’s distributed consensus model—that is, the network nodes’
verification and validation of chain transactions before execution of
the transactions—makes it extremely rare for a fraudulent
transaction to be recorded in the blockchain.59 That model also allows
node verification of transactions without compromising the privacy of
the parties and is therefore arguably safer than a traditional model
that requires third-party intermediary validation of transactions.60
Cryptographic “hashes” further increase blockchain security.
Cryptographic hashes are complex algorithms that use details of all
previous transactions in the existing blockchain before adding the
next block to generate a unique hash value.61 That hash value
ensures the authenticity of each transaction before it is added to the
block. The smallest change to the blockchain, even a single digit or
value, results in a different hash value. A different hash value makes
any form of manipulation immediately detectable.62
Blockchain-enabled computer protocols that verify, facilitate,
monitor, and enforce the negotiation and performance of a contract are
known as “smart contracts” and “smart property.”63 The term “smart
contract” was first introduced by Nick Szabo, a computer scientist and
58. See, e.g., Brakeville & Perepa, supra note 54; Antony Lewis, A Gentle Introduction to
Immutability of Blockchains, BITS ON BLOCKS (Feb. 29, 2016),
https://bitsonblocks.net/2016/02/29/a-gentle-introduction-to-immutability-of-blockchains/
[https://perma.cc/2PNJ-7L65].
59. See, e.g., François Zaninotto, The Blockchain Explained to Web Developers, Part 1:
The Theory, MARMELAB BLOG (Apr. 28, 2016), https://marmelab.com/blog/2016/04/28/blockchain-
for-web-developers-the-theory.html [https://perma.cc/RE62-CRAY]. But see Razvan Peteanu,
Fraud Detection in the World of Bitcoin, BITCOINMAG. (Mar. 26, 2014, 5:50 AM),
https://bitcoinmagazine.com/articles/fraud-detection-world-bitcoin-1395827419/
[https://perma.cc/JP8S-B82Z] (“Fundamentally, detecting fraud is hard precisely because it is
rare, dynamic, and not necessarily obviously fraudulent.”).
60. For a discussion of privacy on the blockchain, see VAN VALKENBURGH, supra note 56,
at 33–40. For an overview of various consensus mechanisms, see SIGRID SEIBOLD & GEORGE
SAMMAN, KPMG, CONSENSUS: IMMUTABLE AGREEMENT FOR THE INTERNET OF VALUE (2016),
https://assets.kpmg.com/content/dam/kpmg/pdf/2016/07/kpmg-blockchain-consensus-mechanism-
channel-islands.pdf [https://perma.cc/7MMU-KWW2]; VAN VALKENBURGH, supra note 56, at
10–12, 15–40.
61. See Lewis, supra note 58.
62. Id.
63. See John Danaher, Blockchains, Smart Contracts and Smart Property, ALGOCRACY &
THE TRANSHUMANIST PROJECT (Mar. 5, 2016), https://algocracy.wordpress.com/2016/03/05/
blockchains-smart-contracts-and-smart-property/ [https://perma.cc/874T-GMLA]; Nicolette Kost
De Sevres & Bradley Cohen, The Blockchain Revolution, Smart Contracts and Financial
Transactions, DLA PIPER (Apr. 26, 2016), https://www.dlapiper.com/en/czech/insights/
publications/2016/04/the-blockchain-revolution/ [https://perma.cc/CF9T-NWMM]; see also
MORRISON, supra note 50 (“In the bitcoin blockchain, each smart transaction is itself a smart
contract in miniature.”).

legal theorist, in 1994.64 An often-cited example for smart contracts is
the purchase of music through Apple’s iTunes platform.65 A computer
code ensures that the “purchaser” can only listen to the music file on a
limited number of Apple devices.66
More complex smart contract arrangements, in which several
parties are involved, require a verifiable and unhackable system
provided by blockchain technology.67 Through blockchain technology,
smart contracting often makes conventional legal contracting
unnecessary, as smart contracts often emulate the logic of legal
contract clauses.68 Ethereum, the leading platform for smart
contracting, describes smart contracting in this context as follows:
Ethereum is a decentralized platform that runs smart contracts: applications that
run exactly as programmed without any possibility of downtime, censorship, fraud
or third party interference. These apps run on a custom built blockchain, an
enormously powerful shared global infrastructure that can move value around and
represent the ownership of property. This enables developers to create markets,
store registries of debts or promises, move funds in accordance with instructions
64. Not-So-Clever Contracts, ECONOMIST (July 28, 2016),
http://www.economist.com/news/business/21702758-time-being-least-human-judgment-still-
better-bet-cold-hearted [https://perma.cc/325V-LPLU]; see also Smart Contracts: The Blockchain
Technology That Will Replace Lawyers, BLOCKGEEKS, http://blockgeeks.com/guides/smart-
contracts/ [https://perma.cc/BW2V-7RSQ] (last visited Oct. 10, 2017) [hereinafter Smart
Contracts].
65. See, e.g., THORSTEN KOEPPL & JEREMY KRONIK, C.D. HOWE INST., BLOCKCHAIN
TECHNOLOGY—WHAT’S IN STORE FOR CANADA’S ECONOMY AND FINANCIAL MARKETS? 15 (2017),
https://www.cdhowe.org/sites/default/files/attachments/research_papers/mixed/Commentary_468
_0.pdf [https://perma.cc/XXC9-JUMN]; Douglas Vaughn & Anna Outzer, Understanding How
Blockchain Could Impact Legal Industry, LAW360 (Jan. 11, 2017, 12:17 PM),
https://www.law360.com/articles/879810/understanding-how-blockchain-could-impact-legal-
industry [https://perma.cc/RN7G-R4XV].
66. Jeffrey Glazer, Smart Contracts Are a Future, LAW & ENTREPRENEURSHIP CLINIC
(Sept. 14, 2015), https://www.uwle.org/blog/smart-contracts-are-a-future [https://perma.cc/K8CU-
N4KE]; see also Vaughn & Outzer, supra note 65.
67. See, e.g., ETHEREUM, supra note 28; Luke Parker, Industry Research Papers
Highlight Blockchain Technology’s Disruptive Potential, BRAVE NEWCOIN (July 3, 2016),
https://bravenewcoin.com/news/industry-research-papers-highlight-blockchain-technologys-
disruptive-potential/ [https://perma.cc/QN2E-RVPL]; Smart Contracts, supra note 64.
68. See, e.g., Josh Stark, How Close Are Smart Contracts to Impacting Real-World Law?,
COINDESK (Apr. 11, 2016, 2:00 PM), http://www.coindesk.com/blockchain-smarts-contracts-real-
world-law/ [https://perma.cc/85LC-AKZ5]; Josh Stark, Making Sense of Blockchain Smart
Contracts, COINDESK (June 4, 2016, 3:39 PM GMT), http://www.coindesk.com/making-sense-
smart-contracts/ [https://perma.cc/Q5J7-JCN9]; see also, e.g., Ted Mlynar & Ira Schaefer, Why
Smart Contracts Will Need ‘Smart Term Sheets’ to Match, COINDESK (Dec. 9, 2016, 2:36 PM),
http://www.coindesk.com/smart-contracts-will-need-smart-term-sheets-match/ [https://perma.cc/
Q899-759H]. For an example of what startups hope to accomplish with smart contracting, see
LEGALESE, https://legalese.com/ [https://perma.cc/6FDL-ECG9] (last visited Oct. 10, 2017).

given long in the past (like a will or a futures contract) and many other things that
have not been invented yet, all without a middle man or counterparty risk.69
B. Decentralization
Rapid technological change allows society to become
increasingly decentralized by overcoming vertical hierarchies and
enabling a world of horizontal, open, and autonomous networks.70 The
Internet enabled a free, fast, and global exchange of information and
ideas. Social media further reformed and accelerated the way society
exchanges and shares information. Both inventions continue to have
a broad and astonishing social impact. Within one generation, many
aspects of social interaction have been transformed.
Blockchain technology is transforming society for an even more
decentralized future. Figure 1 illustrates the currently shifting and
intersecting paradigms of user connectivity and the move towards
corporate decentralization. Corporate decentralization started with
firms such as Netflix, Amazon, Tesla, and Under Armour, among
several others, that favored flatter corporate hierarchies, open
communication, a best-idea-wins culture, and a focus on Millennials’
preferences.71 This trend toward decentralization has been
accompanied by an ever-increasing interconnectivity of users.72
Figure 2 suggests that around 2015–17 a paradigm shift began that
allowed the interconnectivity of users to substantially increase,
enabled and supported by smart contracts and blockchain technology,
while at the same time blockchain-enabled distributed networks
allowed for a radical increase in decentralization.
69. ETHEREUM, supra note 28 (emphasis in original).
70. See, e.g., Don Tapscott, Why Blockchain Will Smash Hierarchies, DUKE CORP. EDUC.
(Sept. 2016), http://www.dukece.com/article-library/blockchain-will-smash-hierarchies/
[https://perma.cc/K63E-8A76].
71. See generally Eric Biber et al., Regulating Business Innovation as Policy Disruption:
From the Model T to Airbnb, 70 VAND. L. REV. 1561, 1570–71, 1583–84, 1601–02 (2017)
(examining the disruptive impact and commercial appeal of Netflix, Amazon, and Tesla on their
respective markets and certain regulatory responses).
72. See, e.g., Pauline Meyer, Tesla Motors, Inc.’s Organizational Structure,
Characteristics (an Analysis), PANMORE INST. (Feb. 21, 2017), http://panmore.com/tesla-motors-
inc-organizational-structure-characteristics-analysis [https://perma.cc/N3RN-8EYQ].

Figure 1: Time series 1980–2020 societal connectivity and
platform decentralization.73
These findings have significant implications. Increased
connectivity enabled by blockchain technology in combination with
increased decentralization allows for the removal of intermediaries,
including lawyers, financial intermediaries, and platform companies.
Changes in social media platform companies provide a prominent
example. Until recently, consumers of information were dependent on
centralized media organizations and corporations to disseminate
information.74 However, society relies increasingly on information
that is created, produced, and consumed by the crowd. This crowd
functionality slowly removes the role of journalists, media, and other
expert intermediaries because crowd-based social media platforms
facilitate the real-time exchange of information.75 But social media
73. Figure 1 illustrates the relationship between decentralization and user connectivity.
Erik P.M. Vermeulen, There Is No Escape from Blockchains and Artificial Intelligence… Lawyers
Better Be Prepared!, MEDIUM (Jan. 23, 2017), https://medium.com/@erikpmvermeulen/there-is-
no-escape-from-blockchains-and-artificial-intelligence-lawyers-better-be-prepared-2d7a8221c627
[https://perma.cc/6C2L-ZYM5].
74. See, e.g., Ricardo Gandour, Study: Decline of Traditional Media Feeds Polarization,
COLUM. JOURNALISM REV. (Sept. 19, 2016),
https://www.cjr.org/analysis/media_polarization_journalism.php [https://perma.cc/WPP2-C6UX];
Bailey Roy, Social vs. Traditional Media: Has the Battle Already Ended?, PRSA PUBLICATIONS
(Apr. 1, 2016), [https://perma.cc/68NU-BAGV]
75. See, e.g., Michael Barthel, Newspapers: Fact Sheet, in STATE OF THE NEWS MEDIA
2016, at 9, 19 (2016), http://assets.pewresearch.org/wp-content/uploads/sites/13/2016/06/
30143308/state-of-the-news-media-report-2016-final.pdf [https://perma.cc/5UK6-M6SL] (noting
that the number of daily newspapers decreased by more than 100 from 2004 to 2014); Jeffrey

companies such as Twitter and LinkedIn are still just intermediary
platform companies that can be removed with the proliferation of
blockchain technology. Take, for instance, Akasha,76 a
next-generation social media network powered by the Ethereum world
computer and embedded into the interplanetary file system.77 Akasha
requires no platform company for social media purposes but allows the
direct peer-to-peer exchange of content, with the difference that user
content is published over a decentralized network rather than
individual servers.78 Akasha shows great potential to remove
remaining issues with the shifting content generation by the crowd.79
Gottfried & Elisa Shearer, News Use Across Social Media Platforms 2016, PEW RES. CTR. (May
26, 2016), http://www.journalism.org/2016/05/26/news-use-across-social-media-platforms-2016/
[https://perma.cc/ZA4K-CVDG] (noting that 62 percent of the adults in the United States now get
news on social media); Kalev Leetaru, Will Facebook Replace the News Media?, FORBES (Sept. 12,
2016, 2:13 PM), http://www.forbes.com/sites/kalevleetaru/2016/09/12/will-facebook-replace-the-
news-media/#17f135d4bd56 (noting that 44 percent of the public gets its news from Facebook
alone).
76. AKASHA, https://akasha.world (last visited Oct. 10, 2017).
77. The interplanetary file system “aims to be a global, peer-to-peer database of content
files.” Lance Koonce, The Wild, Distributed World: Get Ready for Radical Infrastructure Changes,
from Blockchains to the Interplanetary File System to the Internet of Things, 28 No. 10 INTELL.
PROP. & TECH. L.J. 3, 4 (2016).
78. Id.
79. For instance, “fake news,” biased information, and the explosion of “native
advertisements” (where ads cannot easily be distinguished from the real content) are a rapidly
increasing problem on social media. James Carson, What Is Fake News? Its Origins and How It
Grew in 2016, TELEGRAPH (Mar. 16, 2017, 1:57 PM), http://www.telegraph.co.uk/technology/
0/fake-news-origins-grew-2016/. That is not to say that the “pre-social media” era was devoid of
fake news. See id. Yet many argue that traditional newspapers and other official media outlets
(if independent) provide at least some verification for published information. See, e.g., Molly A.
Dugan, Journalism Ethics and the Independent Journalist, 39 MCGEORGE L. REV. 801, 801–04
(2008); Kenneth Jost, Digital Journalism: Is News Quality Better or Worse Online?, 24 CQ
RESEARCHER 457, 463 (2014), http://library.cqpress.com/cqresearcher/getpdf.php?
id=cqresrre2014053000 [https://perma.cc/J97Y-NPPF]; Craig Silverman, New Research Details
How Journalists Verify Information, POYNTER (Feb. 27, 2013), https://www.poynter.org/
2013/new-research-details-how-journalists-verify-information/203728/ [https://perma.cc/QJK6-
G7ZS]. However, other ways exist to solve these “fake news” issues. The social media platforms
themselves can engage in fact-checking, or they can introduce a third-party verification system.
See also Hannah L. Cook, Flagging the Middle Ground of the Right to be Forgotten: Combatting
Old News with Search Engine Flags, 20 VAND. J. ENT. & TECH. L. 1, 18–24 (2017) (proposing a
flagging system to address misleading information on the Internet). This will, however, add a
bureaucratic layer between the “creator” and “consumer.” It will run counter to the
decentralization trend society is currently experiencing. See, e.g., Clyde Hughes, Facebook
‘Disputed’ Tag: Fact-Checkers Eye Posts Flagged As Fake News, NEWSMAX (Mar. 6, 2017, 3:19
PM), http://www.newsmax.com/TheWire/facebook-disputed-tag-fake/2017/03/06/id/777192/
[https://perma.cc/YV3C-J3CP]; Amber Jamieson & Olivia Solon, Facebook to Begin Flagging
Fake News in Response to Mounting Criticism, GUARDIAN (Dec. 15, 2016, 3:05 PM),
https://www.theguardian.com/technology/2016/dec/15/facebook-flag-fake-news-fact-check
[https://perma.cc/Z78D-8Y4B]. A combination of technology and the crowd will likely offer a
solution soon. See, e.g., Jessica Davies, 5 New Automated Fact-Checking Projects Under Way,

C. Disruptive Innovation
Blockchain technology has vast disruptive, innovative
properties. Despite the very early-stage development of blockchain
technology, the possible applications are nearly limitless. Consider
the blockchain-based currency Bitcoin. Until recently, most
commentators viewed Bitcoin as a hype—susceptible to fraud, price
manipulation, and corruption.80 But today, “[t]he issue is no longer
whether cryptocurrency will survive, but rather how it will evolve.”81
The high levels of investor activity in the blockchain area appear to
provide a reliable indicator of the commercial maturity of blockchain
technology. Figure 2 shows that venture capital (VC) investment in
startup companies that utilize blockchain technology has increased
exponentially since 2012. Investor interest in the technology will
undoubtedly further increase. Particularly, the applicability of
blockchain-based smart contracts to digital marketplaces, the sharing
economy, the IoT, and AI will further accelerate its development.
DIGIDAY (Dec. 22, 2016), http://digiday.com/uk/5-new-automated-fact-checking-projects-
underway/ [https://perma.cc/6N3C-J2BS]; Dhruv Ghulati, Introducing Factmata—Artificial
Intelligence for Political Fact-Checking, MEDIUM (Dec. 6, 2016),
https://medium.com/factmata/introducing-factmata-artificial-intelligence-for-political-fact-
checking-db8acdbf4cf1#.3alzobkgh [https://perma.cc/6N9G-KQPX]; Kate Starbird & Emma Spiro,
Slowing the Spread of Viral Misinformation: Can Crowdsourcing Help?, HUFFINGTON POST (Dec.
20, 2016, 10:23 AM), http://www.huffingtonpost.com/entry/slowing-the-spread-of-viral-
misinformation-can-crowdsourcing_us_58594084e4b0630a254235a7 [https://perma.cc/D6D8-
3VQW]. These solutions correspond to the peer-to-peer “exchange” of assets and services
facilitated by the blockchain technology. See, e.g., Brakeville & Perepa, supra note 54.
80. See, e.g., OFFICE OF INV’R EDUC. & ADVOCACY, SEC, PUB. NO. 153, PONZI SCHEMES
USING VIRTUAL CURRENCIES 1 (2013), http://www.sec.gov/investor/alerts/ia_virtualcurrencies.pdf
[https://perma.cc/AT52-PXXJ]; Izabella Kaminska et al., Bitcoin and Blockchain: The Future of
Money or Just Hype?, FIN. TIMES (Sept. 21, 2016), https://www.ft.com/content/3bea303c-7a7e-
11e6-b837-eb4b4333ee43 [https://perma.cc/F528-Z7M4].
81. PWC, MONEY IS NO OBJECT: UNDERSTANDING THE EVOLVING CRYPTOCURRENCY
MARKET 1 (2015), https://www.pwc.com/us/en/financial-services/publications/assets/pwc-
cryptocurrency-evolution.pdf [https://perma.cc/P6KC-QS3Q].

Figure 2: VC investments in blockchain startups from
2007 to 2016.82
Blockchain technology startups attempt to replace lawyers as
intermediaries in many types of transactions, including and most
notably contracts analyses, real estate, and intellectual property.83
Moreover, such startups have the potential to create lasting societal
changes. Some commentators predict a future in which blockchain
startups can remove lawyers from commerce altogether, as smart
contracts in the blockchain—such as those in the Ethereum
82. Vermeulen, supra note 73.
83. Clause is an example. It describes itself this way:
Clause is a revolutionary new platform that enables commercial contracts to “come
alive” and autonomously manage themselves. Our proprietary, patent-pending
infrastructure seamlessly integrates legally enforceable contracts with real-time data
from the “internet of things”, web services, and business and accounting systems.
Clause leaves behind the world of static, paper-based contracts and unleashes the
massive potential of dynamic contracts. Prices, warranties, delivery requirements,
and other terms update in response to data after the parties form their initial
agreement. Clause brings an unprecedented level of speed, integration, and
automation to the business world. We currently have several partnerships with
industry and technology leaders in progress. We invented the infrastructure for
“intelligent” or “self-managing” legal contracts. Our proprietary technology leverages
cryptography, NLP, RESTful API integrations, and distributed ledgers.
Clause.io, LINKEDIN, https://www.linkedin.com/company/clause [https://perma.cc/8F3S-X8YL]
(last visited Oct. 10, 2017); see CLAUSE, https://clause.workable.com [https://perma.cc/2NVN-
SM73].

platform84—regulate commerce entirely, enabled by the trust created
between parties through immutable blockchain technology.85
Business, administrative, and legal processes that rely on legal
intermediaries may become redundant because of advances in
acceptance and implementation of blockchain technology. Forms of
keeping legal ledgers—such as notary and registry services, motion
practice in court, and legal title searches, among several others—may
be among the first services to disappear in the not-too-distant future.
Similarly, corporate processes that have ledger functionality but rely
on legal intermediaries could be streamlined very quickly by
implementing blockchain technology. When blockchain technology
becomes more widely accepted and applications spread into consumer
territory, existing legal processes and structures will likely be among
the first processes to become redundant.
The combination of blockchain technology startups with
platforms, AI, and machine learning offers opportunities for
developing new technologies. Leveraging the big data that is collected
by using Legal Tech solutions and blockchain applications in
combination with machine learning creates more creative and faster
tools. This, in turn, creates a surge of new and innovative platforms
with disruptive effects for the legal industry, among others.
D. Limitations
Blockchain technology and smart contracts executed on
blockchain technology platforms, such as Ethereum, are faced with
multiple possible technological and legal limitations. First, the world
of blockchain and smart contracting has clearly not yet reached
maturity.86 While blockchain-enabled smart contracts generally do
84. See supra note 51 and accompanying text; see also Frances Coppola, Ethereum:
Towards a New BitSociety, FORBES (Apr. 3, 2016, 1:02 PM),
https://www.forbes.com/sites/francescoppola/2016/04/03/ethereum-towards-a-new-bitsociety/
#7e8d17fb3adc [https://perma.cc/7RRV-2PQQ] (“Buterin announces the death of lawyers. Who
needs lawyers when the terms of your contract, or the evidence of your ownership of an asset, or
even your own identity, are securely encoded within the blockchain and verified by the entire
network?”).
85. See, e.g., Michael Kokal, The Coming Blockchain Disruption: Trust Without the
“Middle-Man”, NAT’L L. REV. (Feb. 23, 2017), http://www.natlawreview.com/article/coming-
blockchain-disruption-trust-without-middle-man [https://perma.cc/A57L-WK3D]; Lewis, supra
note 58.
86. See, e.g., ALAN MORRISON, PWC, BLOCKCHAIN AND SMART CONTRACT AUTOMATION:
HOW SMART CONTRACTS AUTOMATE DIGITAL BUSINESS 5–8 (2016),
https://www.pwc.com/us/en/technology-forecast/2016/blockchain/pwc-smart-contract-automation-
digital-business.pdf [https://perma.cc/Z85E-5DLG]; PRASAD SATYAVOLU & ABHIJEET
SANGAMNERKAR, COGNIZANT, BLOCKCHAIN’S SMART CONTRACTS: DRIVING THE NEXT WAVE OF
INNOVATION ACROSS MANUFACTURING VALUE CHAINS 6–9 (2016),

not require legal involvement across the spectrum of transactions,
legal professionals often still believe that “code” in smart contracts can
only deal with very simple transactions—such as buying music or
perhaps a car—and argue that more complicated legal arrangements
will necessitate the draftsmanship and negotiations of traditional
lawyers.87 Even if more complex transactions could be coded and
included in smart contracts, a widespread belief in the legal
community suggests that lawyers will remain responsible for drafting
the terms and arrangements that would later have to be coded by
specialists.88
Legal limitations pertaining to smart contracts and blockchain
technology originate mostly from concerns over the legal origin of
smart contracting. While smart contracts may reflect the underlying
contract between parties, lawyers may argue that smart contracts are
https://www.cognizant.com/whitepapers/blockchains-smart-contracts-driving-the-next-wave-of-
innovation-across-manufacturing-value-chains-codex2113.pdf [https://perma.cc/FUE2-TE7U];
2016: A Pivotal Year for Blockchain, SWIFT (May 12, 2016), https://www.swift.com/insights/
news/2016_a-pivotal-year-for-blockchain [https://perma.cc/KPY2-4EFH]; Garrick Hileman, State
of Blockchain Q1 2016: Blockchain Funding Overtakes Bitcoin, COINDESK (May 11, 2016, 3:15
PM), http://www.coindesk.com/state-of-blockchain-q1-2016/ [https://perma.cc/B5AF-ZAX5]; Chris
Kanaracus, Don’t Believe the Blockchain Hype: Examining the Weaknesses and Risks, ZDNET
(Apr. 13, 2016, 9:22 PM), http://www.zdnet.com/article/dont-believe-the-blockchain-hype-
examining-its-weaknesses-and-risks/ [https://perma.cc/G5UM-S7S6]; Rob Marvin, Blockchain in
2017: The Year of Smart Contracts, PC MAG. (Dec. 12, 2016, 2:48 PM),
http://www.pcmag.com/article/350088/blockchain-in-2017-the-year-of-smart-contracts
[https://perma.cc/SX5Z-EZXX]; Laura Shin, Looking to Integrate Blockchain into Your Business?
Here’s How, FORBES (May 10, 2016, 8:00 AM), https://www.forbes.com/sites/laurashin/2016/05/10/
looking-to-integrate-blockchain-into-your-business-heres-how/#715aa8911a15
[https://perma.cc/PZ2D-KMKB].
87. See, e.g., NORTON ROSE FULBRIGHT, SMART CONTRACTS: CODING THE FINE PRINT 24
(2016), https://www.accmeetings.com/AM16/faculty/files/Article_471_734F_NRF24493_Smart_
Contracts_V6_LR.PDF [https://perma.cc/6CT7-7H4B]; Richad Howlett, A Lawyer’s Perspective:
Can Smart Contracts Exist Outside the Legal Structure?, BITCOIN MAG. (July 11, 2016, 2:52 PM),
https://bitcoinmagazine.com/articles/a-lawyer-s-perspective-can-smart-contracts-exist-outside-
the-legal-structure-1468263134/ [https://perma.cc/92RN-XZV7]; Ted Mlynar & Ira Schaefer,
Blockchain Smart Contracts Need a New Kind of Due Diligence, COINDESK (Sept. 21, 2016, 3:33
PM), https://www.coindesk.com/blockchain-smart-contracts-need-new-kind-due-diligence/
[https://perma.cc/FCV8-J6M7]; Andy Robinson & Tom Hingley, Opinion, Smart Contracts: The
Next Frontier?, U. OXFORD: BUS. L. BLOG (May 23, 2016), https://www.law.ox.ac.uk/business-law-
blog/blog/2016/05/smart-contracts-next-frontier [https://perma.cc/A8US-VB6D]; Kevin Shook,
Self-Enforcing Smart Contracts Will Change Your Life, CORP. COUNS. (Feb. 6, 2017),
http://www.corpcounsel.com/id=1202778557927/SelfEnforcing-Smart-Contracts-Will-Change-
Your-Life?slreturn=20170213090556 [https://perma.cc/CEG3-8U9G].
88. See, e.g., Mlynar & Schaefer, supra note 87; Caitlin Moon, Blockchain for Lawyers
101; Part 2, LAW TECH. TODAY (Jan. 31, 2017), http://www.lawtechnologytoday.org/2017/01/
blockchain-lawyers-101-part-2/ [https://perma.cc/K3MM-M5X5]; Robinson & Hingley, supra note
87; Shook, supra note 87; Evan Weinberger, ‘Smart Contracts’ Won’t Eliminate Need for Lawyers,
LAW360 (Apr. 6, 2015, 6:46 PM), https://www.law360.com/articles/637833/smart-contracts-won-t-
eliminate-need-for-lawyers [https://perma.cc/74XF-9XCN].

void and unenforceable under the law.89 Contractual legal rules
regarding formation, interpretation, conditions, and remedies require
substantive adjustments of smart contracts in contract law.90
Blockchain evolution in combination with smart contracting
also raises legal concerns regarding privacy, data protection, security,
and integrity. While blockchain technology itself offers unprecedented
genuine data and privacy protection, the storage of blockchain data
across a global network of nodes often will not comply with specific
consumer protection rules, directives, and guidelines around the
world.91 The existing legal issues arising in the context of sharing
platforms92 demonstrate that future blockchain-enabled sharing
services may not be accepted quickly by, or without resistance from,
incumbents challenged by new ways of delivering a service or product.
A prominent example, the Decentralized Autonomous
Organization (DAO), provides ample evidence pertaining to the
outstanding technological and legal issues that surround blockchain
technology. DAO was launched in May 201693 in the founders’
89. See Alan Cohn, Travis West & Chelsea Parker, Smart After All: Blockchain, Smart
Contracts, Parametric Insurance, and Smart Energy Grids, 1 GEO. L. TECH. REV. 273, 284–85
(2017) (discussing the question of enforceability of smart contracts).
90. Mark Hines & Niklas Holmberg, Lex Disturbia: The Impact of Smart Contracts on
the Law, LEXOLOGY (Mar. 16, 2016), http://www.lexology.com/library/detail.aspx?g=0b7cf43a-
7032-4750-9220-caca5c529281 [https://perma.cc/ZR4C-QWS6]; Matthew McMillan, Smart
Contracts: Legal and Regulatory Challenges of Smart Contracts, HENRY DAVIS YORK (Dec. 8,
2016), https://www.hdy.com.au/our-insights/insights/legal-regulatory-challenges-of-smart-
contracts [https://perma.cc/6EJC-FY5T]; Martin von Haller Gronbaek, Blockchain 2.0, Smart
Contracts and Challenges, BIRD & BIRD (June 16, 2016), https://www.twobirds.com/en/news/
articles/2016/uk/blockchain-2-0—smart-contracts-and-challenges [https://perma.cc/L3UE-NE3G];
Kate H. Withers, Smart Contracts: Opportunties and Legal Risks in FinTech, NAT’L L. REV. (Nov.
8, 2016), http://www.natlawreview.com/article/smart-contracts-opportunities-and-legal-risks-
fintech [https://perma.cc/379R-J2BT].
91. See, e.g., Andres Guadamuz & Chris Marsden, Blockchains and Bitcoin: Regulatory
Responses to Cryptocurrencies, FIRST MONDAY (Dec. 7, 2015), http://firstmonday.org/article/view/
6198/5163 [https://perma.cc/XNG4-P585]. For a good overview of the complexities of the global
regulation of blockchain technology, see Javier Sebastian Cermeño, Blockchain in Financial
Services: Regulatory Landscape and Future Challenges for Its Commercial Application 6–18
(BBVA Research, Working Paper No. 16/20, 2016), https://www.bbvaresearch.com/wp-
content/uploads/2016/12/WP_16-20.pdf [https://perma.cc/LN9C-4VHC]. For a summary of
international law actions relating to digital currencies, see Digital Currencies: International
Actions and Regulations, PERKINS COIE, https://www.perkinscoie.com/en/news-insights/digital-
currencies-international-actions-and-regulations.html [https://perma.cc/634Z-AR7P] (last
updated May 2017).
92. Examples include Uber (cars), Airbnb (lodging), ETSY (marketplace), Kickstarter
(crowdfunding), Lending Club (lending), Open Table (dining), SoundCloud (music), DogVacay
(pet vacation), and Liquid (bike sharing).
93. Christoph Jentzsch, the co-founder of the IoT company Slock.it, was one of the “key
founders” of DAO, a new style venture capital fund. Carla L. Reyes et al., Distributed
Governance, 59 WM. & MARY L. REV. ONLINE 1, 4–5 (2016), http://wmlawreview.org/sites/default/

attempt to set up a corporate-type organization without using a
conventional corporate structure. The founders’ central idea was that
the wisdom of the crowd would lead to smarter and more
game-changing investment decisions.94 DAO operated as a kind of
venture capital fund managed directly by its token holders.95
The DAO governance structure was built on software code and
smart contracts that ran on the public decentralized blockchain
platform Ethereum.96 DAO did not have a physical address, as it was
merely computer code. And it was not an organization with a
traditional hierarchy known from traditional corporate structures,
where authority and empowerment flow downwards from investors
and shareholders through a board of directors to management and
eventually staff.97 Indeed, DAO had no directors, managers, or
employees. Because a series of smart contracts granted DAO token
holders voting rights,98 the blockchain-based smart contracts imitated
the role of articles of association or bylaws. Because the DAO code
was open-source, the token holders would vote not only on investment
proposals but also on any change made to the code.99 Accepted
files/Reyes%2C%20Packin%2C%20Edwards%20-%20Distributed%20Governance_0.pdf
[https://perma.cc/BK6G-ASV3]; Shah Gilani, This Fintech Experiment Could Be Huge… Here’s
What You Need to Know Before You Invest, WALL ST. INSIGHTS & INDICTMENTS (May 27, 2016),
http://wallstreetinsightsandindictments.com/2016/05/this-fintech-experiment-could-be-huge-
heres-what-you-need-to-know-before-you-invest/ [https://perma.cc/9K8F-9NTC]; Cade Metz, The
Biggest Crowdfunding Project Ever—The DAO—Is Kind of a Mess, WIRED (June 6, 2016, 7:00
AM), https://www.wired.com/2016/06/biggest-crowdfunding-project-ever-dao-mess/
[https://perma.cc/2AKX-RE8B].
94. See, e.g., Reyes et al., supra note 93, at 5; Kyle Torpey, The Wisdom (or Lack Thereof)
of the DAO, AM. BANKER (June 1, 2016, 4:10 PM), https://www.americanbanker.com/opinion/the-
wisdom-or-lack-thereof-of-the-dao [https://perma.cc/J44Z-97AM].
95. See, e.g., Reyes et al., supra note 93, at 5; Seth Bannon, The Tao of “The DAO” or:
How the Autonomous Corporation Is Already Here, TECH CRUNCH (May 16, 2016),
https://techcrunch.com/2016/05/16/the-tao-of-the-dao-or-how-the-autonomous-corporation-is-
already-here/ [https://perma.cc/TWJ8-LLBT].
96. Klint Finley, A $50 Million Hack Just Showed That the DAO Was All Too Human,
WIRED (June 18, 2016, 4:30 AM), https://www.wired.com/2016/06/50-million-hack-just-showed-
dao-human/ [https://perma.cc/C8F2-46DG]; Brent Miller, Smart Contracts and the Role of
Lawyers (Part 2)—About “Code Is Law”, BIG L. KM (Oct. 22, 2016),
https://biglawkm.com/2016/10/22/smart-contracts-and-the-role-of-lawyers-part-2-about-code-is-
law/ [https://perma.cc/L5S2-MNW7].
97. Carla L. Reyes et al., Companies Face Risk and Opportunity with Distributed
Governance Structures, COLUM. L. SCH.: CLS BLUE SKY BLOG (Jan. 19, 2017),
http://clsbluesky.law.columbia.edu/2017/01/19/companies-face-risk-and-opportunity-with-
distributed-governance-structures/ [https://perma.cc/2N5J-S723].
98. Id.
99. Michael del Castillo, The DAO Crisis: Or How Vigilantism and Blockchain
Democrary Became the Best Hope for Burned Investors, COINDESK (July 13, 2016, 4:05 PM),
http://www.coindesk.com/author-daos-original-code-minimize-regulatory-backlash/
[https://perma.cc/57L6-MJXD]; Metz, supra note 93.

proposals would also be backed by a software code defining the
relationship (in terms of rights, obligations, and performance metrics)
between DAO and the funded proposals.
During a crowdfunding campaign in May 2016, all investors
could become DAO participants by purchasing DAO tokens.100 DAO
raised more than $168 million from approximately ten thousand
“investors.”101
Alas, things went terribly wrong with DAO. Fundamental
flaws in the DAO code enabled hackers to transfer one-third of the
total funds to a subsidiary account.102 This hack, in combination with
additional technological limitations, brought down the DAO
initiative.103
Open legal issues pertaining to DAO need to be addressed
before future DAO setups can operate seamlessly.104 Such legal issues
include the following:
(1) What legal regime governs the issuance of DAO tokens?
(2) Are minority DAO token holders protected and, if so, how?
(3) Are DAOs subject to taxation?
(4) Do DAO smart contracts create legally binding obligations?
(5) Who owns the intellectual property rights generated by the
crowd-funded proposals?
100. See, e.g., Gilani, supra note 93; Giulio Prisco, The DAO Raises More Than $117
Million in World’s Largest Crowdfunding to Date, BITCOIN MAG. (May 16, 2016, 2:09 PM),
https://bitcoinmagazine.com/articles/the-dao-raises-more-than-million-in-world-s-largest-
crowdfunding-to-date-1463422191/ [https://perma.cc/KU6R-JRB5].
101. Metz, supra note 93.
102. Nathaniel Popper, A Hacking of More Than $50 Million Dashes Hopes in the World
of Virtual Currency, N.Y. TIMES (June 17, 2016), https://www.nytimes.com/2016/06/18/business/
dealbook/hacker-may-have-removed-more-than-50-million-from-experimental-cybercurrency-
project.html [https://perma.cc/HN7J-7U8K].
103. See, e.g., Not-So-Clever Contracts, supra note 64; Paul Vigna, Fund Based on Digital
Currency Ethereum to Wind Down After Alleged Attack, WALL ST. J. (June 17, 2016, 7:27 PM),
https://www.wsj.com/articles/investment-fund-based-on-digital-currency-to-wind-down-after-
alleged-hack-1466175033?mod=rss_Technology [https://perma.cc/NE8E-TJCX].
104. See, e.g., Reuben Bramanathan, Blockchains, Smart Contracts and the Law,
COINBASE BLOG (June 24, 2016), https://blog.coinbase.com/blockchains-smart-contracts-and-the-
law-709c5b4a9895#.qnnsleuz5 [https://perma.cc/G3K9-8RYC]; Drew Hinkes, A Legal Analysis of
the DAO Exploit and Possible Investor Rights, BITCOIN MAG. (June 21, 2016, 11:57 AM),
https://bitcoinmagazine.com/articles/a-legal-analysis-of-the-dao-exploit-and-possible-investor-
rights-1466524659/ [https://perma.cc/2AMC-GMFM]; Tanaya Macheel, The DAO Might Be
Groundbreaking, But Is It Legal?, AM. BANKER (May 19, 2016, 3:12 PM),
https://www.americanbanker.com/news/the-dao-might-be-groundbreaking-but-is-it-legal
[https://perma.cc/BDC9-X6YE]; see also CLYDE & CO., BLOCKCHAIN AND THE LAW: AN
UNCHARTED LANDSCAPE 3 (2016), http://www.clydeco.com/uploads/Files/
CC010565_Blockchain_brochure_10-06-16_LOWRES.PDF [https://perma.cc/2M6Z-T8S4] (“While
uncertainty remains, the courts will seek to give effect to some kind of oversight and legally
recognised status to DAOs and distributed ledgers.”).

(6) How are conflicts resolved between DAO token holders, the
DAO itself, and the proposals?
IV. EDUCATING THE TWENTY-FIRST CENTURY LAWYER
Law schools need to develop approaches to enable their
students to get ready for the increasingly disrupted legal world of the
twenty-first century. The exponentially increasing disruptive
innovation worldwide will cause clients to frequently ask legal
professionals to deal with issues that lawyers cannot fully understand,
within a legal framework that does not always offer clear or helpful
answers. Because of these challenges facing the practice of law, law
schools have an obligation to help their students evaluate possible
niches in the future legal market.
Increasing law students’ capacity to better understand the
challenges of today’s society can enable them to provide more effective
service to clients in the economy of the future. For example, a law
school course on “Disruptive Innovation,” such as the one taught by
the Authors,105 not only helps law students appreciate emerging
technology and the importance of software code, but, more
importantly, provides students with the resources and capacities to
help them become the much-needed legal professionals in the
decentralized world.
Law schools need to find ways to educate lawyers who can add
value in helping clients and society adjust to an increasingly
technological environment, rather than lawyers who will create
unnecessary or unwise restrictions on it.106 Such restrictions will not
stop innovations and developments in technology. Take, for example,
Spotify, the online music streaming service that—instead of
emphasizing the illegality of its main competitor’s (Napster’s) business
model of peer-to-peer music sharing107—found ways to charge
105. Disruptive Innovation, WULF KAAL, https://wulfkaal.com/courses/disruptive-
innovation-why-lawyers-matter/ [https://perma.cc/3ZRP-SF4Z] (last visited Oct. 10, 2017); see
Wulf Kaal, Future of Innovation and Law, MEDIUM (Jan. 12, 2017),
https://medium.com/@wulfkaal/future-of-innovation-and-law-535d7ef739a#.uzqta5n8l
[https://perma.cc/3TGU-JJJU] (describing the purpose of the Disruptive Innovation course).
106. While the Authors believe that leading technologists and law professors are
becoming increasingly equipped to help law students get ready for the future practice of law, the
emphasis in law school hiring on constitutional law, among other less disrupted legal fields and
disciplines, impedes the necessary innovation in legal education. See Kaal, supra note 105.
107. Napster was a peer-to-peer file sharing company that allowed users to share digital
music files in the MP3 format over the Internet for free. A&M Records v. Napster, Inc., 239 F.3d
1004, 1011 (9th Cir. 2001). In 2000, the Recording Industry of America sued Napster under the
Digital Millennium Copyright Act for violating copyright. Id. Napster lost the case at both the
district and appellate court levels, and when it was unable to comply with the district court order

consumers without sacrificing the convenience and accessibility of the
streaming service. Similarly, instead of using legal arguments and
concerns as barriers to innovation, law schools need to find ways to
educate the lawyers of the twenty-first century to find ways to
encourage friction-free interactions and conversations and the creative
exchange of assets and services.
Legal Tech, and especially blockchain ledger technology,
presents tremendous opportunities for law students. Despite the
blockchain’s disruptive properties,108 legal professionals can in fact
benefit from the technology if they focus on the opportunities to enter
into contracts in a cheaper and more secure way. Traditional lawyers
too often bring a traditional legal “tool kit” to solving the legal
problems of the twenty-first century, which often leads to disastrous
outcomes. This approach might have worked adequately when
innovation cycles were longer, but in a world where innovations occur
exponentially, the traditional legal tool kit is regularly out of touch
with the radically different needs of a decentralized world. Most
lawyers and law industry representatives underestimate the
implications of the emerging Legal Tech.109 Particularly in the case of
blockchain technology, law schools should raise awareness of the
opportunities associated with the technology for their graduates. In
order to advise on blockchain contracts, law students and lawyers
have to become familiar with the technology and learn at least basic
coding as it pertains to Ethereum smart contracts.110
Law students’ capacity to work in multidisciplinary teams will
take on a much greater significance in the future. Lawyers are
to block infringing uses, it was forced to shut down. See generally Corey Rayburn, Note, After
Napster, 6 VA. J.L. & TECH. 16 (2001); Matt Richtel, The Napster Decision: The Overview;
Appellate Judges Back Limitations on Copying Music, N.Y. TIMES (Feb. 13, 2001),
http://www.nytimes.com/2001/02/13/business/napster-decision-overview-appellate-judges-back-
limitations-copying-music.html [https://perma.cc/9XV4-CCAS]; Erica D. Rowell, Court Rules
Against Napster, ABC NEWS (Feb. 12, 2001), http://abcnews.go.com/Technology/
story?id=98767&page=1 [https://perma.cc/T7VQ-LALY].
108. See supra Part III.
109. Anecdotal evidence based on discussions with law firm and corporate
lawyers—including lawyers in Asia, Europe, and the United States, among other anecdotal
evidence—indicates that very few legal professionals are aware of developments in Legal Tech.
Typical reactions to information about the opportunities these new technologies present involve
giving several reasons why blockchain-based smart contracts and other developments are
unlikely to fundamentally change the need for lawyers or the way that lawyers work.
110. David Colarusso, Hello, World! Should Attorneys Learn to Code?, LAWYERIST (Aug.
25, 2016), https://lawyerist.com/hello-world-attorneys-learn-code/ [https://perma.cc/M4NY-H6XJ];
Krause, supra note 17; Wolfram Alpha Founder: Lawyers Should Code and Contracts Be
Computable, ARTIFICIAL LAW. (Oct. 14, 2016), https://www.artificiallawyer.com/
2016/10/14/wolfram-alpha-founder-lawyers-should-code-and-contracts-be-computable/
[https://perma.cc/4CYA-AKEY].

becoming increasingly involved in complex, nonstandard legal tasks.111
The automation and standardization of high-volume legal tasks will
further transform the role of lawyers and other legal professionals.
Big data and AI will make Legal Tech solutions more effective,
networked, and intelligent. Legal work such as contract drafting,
legal risk management, and dispute resolution will increasingly be
outsourced to technology and robots.112 Lawyers and legal advisors
will increasingly assume the role of project managers and business
advisors.
For law students, the growth of multidisciplinary teams in the
technology-based society and economy means that they will be
required to work closely not only with accountants or fiscal advisors
but also and ever increasingly with engineers, designers, and
architects. Crucially, lawyers and legal advisors will find themselves
operating as a bridge between the diverse range of actors who must
now work together in dealing with increasingly complex challenges. A
business-oriented perspective means that legal professionals are
better placed to help their clients maximize efficiency, enhance client
services, and reduce costs.
Specifically, law schools need to enable their students to work
in interdisciplinary teams with software engineers. It is essential for
law students to gain a greater appreciation of the means by which
code can be utilized and integrated in legal contexts. Legal Tech
startups and software engineers are increasingly using predictive
coding and algorithms for legal applications.113 Lawyers benefit from
111. For examples of law firms that have established multidisciplinary practices, see
Laura Shin, As Bitcoin Technology Makes Inroads, One Law Firm Launches Multidisciplinary
Blockchain Practice, FORBES (Aug. 9, 2016, 8:00 AM), https://www.forbes.com/sites/laurashin/
2016/08/09/as-bitcoin-technology-makes-inroads-one-law-firm-launches-multidisciplinary-
blockchain-practice/#41044fc42dab [https://perma.cc/76DX-UP32]; Steptoe’s Blockchain Team
Expands into Multidisciplinary Practice, STEPTOE & JOHNSON (Aug. 9, 2016),
http://www.steptoe.com/news-2342.html [https://perma.cc/3YDR-9HZT].
112. Dana Remus & Frank S. Levy, Can Computers Be Lawyers? Computers, Lawyers,
and the Practice of Law 22, 30–31, 34 (Spencer Found., Working Paper, 2016),
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2701092 [https://perma.cc/37C4-UCDN];
Jeff Bennion, Are Robots Going to Take Our Legal Jobs?, ABOVE THE LAW (June 21, 2016, 2:02
PM), http://abovethelaw.com/2016/06/are-robots-going-to-take-our-legal-jobs/ [https://perma.cc/
RLQ8-RQB4]; Michael Cross, Role of Artificial Intelligence in Law, RACONTEUR (Feb. 19, 2015),
https://www.raconteur.net/business/time-for-technology-to-take-over [https://perma.cc/LJW6-
VTXV]; Chris Holder & Vikram Khurana, Robotics Process Automation and Outsourcing,
LAWYERISSUE (May 16, 2016), http://www.lawyerissue.com/robotics-process-automation-and-
outsourcing/ [https://perma.cc/M9K5-PBH7].
113. See, e.g., Crowded Ocean, New Startup Marketing Terms for July, CROWDED OCEAN
(July 19, 2012), http://www.crowdedocean.com/blog/tag/predictive-coding/ [https://perma.cc/JY65-
MJBE]; Start Up or Predictive Coding Giant? Merger and Acquisition Attorneys in San Antonio
Familiar with Equivio Technology Know the Real Story, SHUMWAY VAN (Oct. 24, 2017),

such algorithmic technology applications in the context of e-discovery,
contract drafting, and legal research, among many others.114
Curricular changes, including the introduction of a course on “coding
for lawyers,” can help facilitate a greater understanding of
interdisciplinary skill requirements for students. The purpose of a
course on coding for lawyers would be for students to gain a general
conceptual understanding of the possible applications of innovative
and disruptive technologies and their algorithmic implementations in
the context of law.
Law school initiatives should help students evaluate the most
important legal applications of algorithmic technology solutions and
explain how software engineers are applying code to provide efficient
legal solutions. Students should learn basic mathematical principles
for coded technology solutions in law—including legal applications of
big data, AI, machine learning, and blockchain technology. Based on
mathematical foundations, students should develop basic conceptual
coding skills that enable them to engage with representatives of the
hard sciences on a daily basis and develop client solutions in
interdisciplinary teams.
V. CONCLUSION
Lawyers and law schools cannot afford to ignore the changes
discussed in this Article. The legal profession is one of the most
disrupted sectors of the consulting industry today. Legal Tech, AI,
blockchain technology, the sharing economy, and platform companies
are changing legal practice. Traditional legal assumptions, doctrines,
and concepts of law and governance have to be reevaluated in light of
the impending disruptive changes. Law schools’ attempts to innovate
in order to get their students practice ready for the twenty-first
century, and equipped with the necessary skill set to operate
effectively in the new world of disruptive innovation, require
experimentation with new ways and a more creative and innovative
approach to the law school curriculum. Legal Tech, and especially
blockchain ledger technology, presents tremendous opportunities for
law students wishing to get practice ready for the twenty-first century.
While blockchain-centered legal jobs of the future will be the
centerpiece of any law school reform agenda, the future of
https://www.attorneysanantonio.com/single-post/Start-up-or-predictive-coding-giant-Merger-and-
acquisition-attorneys-in-San-Antonio-familiar-with-Equivio-technology-know-the-real-story
[https://perma.cc/99GN-GU5V]; Troutman Sanders LLP, Startups Seek to Revolutionize Due
Diligence, INFO. INTERSECTION (Jan. 25, 2013), http://www.informationintersection.com/
2013/01/startups-seek-to-revolutionize-due-diligence/ [https://perma.cc/CW7F-4SWB].
114. See supra notes 23 and 112 and accompanying text.

non-blockchain-centered legal employment is equally important. For
instance, future lawyers will have to be able to distinguish
blockchain-based contracting from traditional legal contracting and
advise clients on optimal blockchain and non-blockchain contracting
allocations. Certain parts of larger legal arrangements, contracts, and
dealmaking will certainly be “blockchainable” in the future, providing
trust, efficiency, cost savings, and legal clarity. Other parts of
dealmaking and other legal tasks, however, will continue to require
the ambiguity and flexibility of the law. For the parts of dealmaking
and the other legal tasks that are non-blockchainable, the role for
other, non-blockchainable agents of trust may expand. It seems
possible that the blockchain-driven disintermediation of law itself
creates additional legal tasks that require human lawyer input.

Legal Education in the Blockchain Revolution de Mark Fenwick,* Wulf A. Kaal & Erik P.M. Vermeulen*

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