By Austin Miller, Content Marketing Manager
Not too long ago Karl Schroeder (author of Lockstep) claimed on Wired’s A Geek’s Guide to the Galaxy podcast, that the future of contract law (and other legal fields) would be in the hands of the internet and even potentially in the hands of A.I.—our interest was undoubtedly peaked. The future of small business contracts potentially in the hands of A.I.? What a claim!
First off, what are Smart Contracts?
For those of you who are not accustomed with current legal and technological trends—smart contracts are the future format for legally binding documents. These documents would presumably be available to anyone and provide a basic open-source medium for the average Joe to create legally binding contracts quicker and more efficiently. In theory these contracts would eliminate the need for a middle man AKA contract lawyers and provide a a medium for non Juris Doctorates to write up their own legally binding contracts.
For a more finite definition, Wikipedia offers us the following:
...computer protocols that facilitate, verify, or enforce the negotiation or performance of a contract, or that obviate the need for a contractual clause. Smart contracts usually also have a user interface and often emulate the logic of contractual clauses. Proponents of smart contracts claim that many kinds of contractual clauses may thus be made partially or fully self-executing, self-enforcing, or both. Smart contracts aim to provide security superior to traditional contract law and to reduce other transaction costs associated with contracting.
What do smart contracts mean for law?
Although we all hate to see anyone get replaced by technology, smart contracts could level the playing field for various parties in commerce. In theory, the common man would have open access to the same “contract writers” and resources as anyone else including big business. Therefore in theory, corporations could be held to the same standards as the common man (remember, in “theory”). Bitcoin may have failed to survive in a Darwinian sense, but nonetheless it did lay a future groundwork for other technologies. In fact, one of the forefathers of Bitcoin Nick Szabo is thought to be the first to create the idea of Smart Contracts, and even started evangelizing them as early as the 80's. In spite of Bitcoin’s market failure, it's unlikely that smart contracts will face the same result. Smart contracts provide obvious benefits to society whereas Bitcoin seemed to present little to no advantage (except for users who tend to swim in darker corners of the internet) over current modes of currency. Is swiping a card really any more difficult than using Bitcoin?
Lawyers are often compared to parasites (Liar Liar) or superheroes (Suits). Whatever the preferred metaphor--both exude resilience, a beneficial trait for those who are in the field or have a loved one who works in contract litigation. In other words, don’t worry lawyers or loved ones of lawyers—your kind have always thrived and it's unlikely things will radically change in the near future. For one thing, there is too much money to be had by powerful arms of society (i.e. Law School, D.C. Lobbying etc.) for us to readily get rid of the field. Secondly, even though Schroeder might have hinted towards other arms of law being replaced by A.I. such as judges—contract law is only one branch of many within the field. Moreover, the American public (for many reasons) has a legitimate fear of technology—and more specifically, a fear of its ability to be manipulated (be it by foreign entities, domestic governments, or black hat keyboard warriors). These fears could strengthen the contract lawyers’ argument if they market it as such.
How do smart contracts affect mY Business?
Even if within the year, legislation goes through that legally validates smart contracts—it will most likely be some time before the effects become a daily reality. Just as with any new technology, there is a period of transition. Such is the case with e-commerce, no matter the advantages—a lot of people still prefer to go into the store and shop. We predict that the transition from traditional contract writing to smart contracts will be much the same. These types of contracts will most likely be pioneered and championed by small business owners over larger corporations that require extremely intimate and detailed knowledge of the business proposals at hand.
Moreover, if the legal field pulls together and produces a strong ad campaign, they very well may thrive in spite of advancing technology. It's likely that the change will be gradual and your company will not face dramatic changes in the near future. Smart contracts will probably remain in a hybrid state much like the publishing industry and their relationship with printing vs. eBooks.
Whether smart contracts will take us a step closer to utopia or dystopia remains to be seen. On one hand it will give quicker, easier, and more accessible contract writing tools to business owners and the general public. On the other hand, it opens the doors for future possibilities of automatizing the legal field which conjures up fearful Orwellian-like images in the head of robotic juries and judges—faceless authority with no one person being held responsible for their actions. And although everyone has these images burned in their heads (thanks to popular Sci-fi), we are optimistic about the future of smart contracts and their potential to give small business owners greater access and control.
We don't pretend to be legal experts by any means, but as a startup in the technology space—we see first hand the power of disruptive tech, and we are optimistic about the future.