I can now predict confidently that smart contracts are going to be a reality sooner than almost everyone has predicted. I say this because the push to adopt smart contracts will come from major corporate clients of law firms, whether the lawyers in those firms are ready or not. And firms that are not ready will find themselves faced with clients going somewhere else for a solution.
My friend and technology guru Dennis Kennedy has provided the playbook in his piece for Law Practice Magazine, Thinking Smartly About Smart Contracts. I have linked to his blog post about the article (which links to it) because some readers may want to get some background information about blockchain from another resource he has written that is also referenced there.
Why will smart contracts become so important so soon? Because this concept will be so easy for clients to understand and it will sound very good to many of them.
As lawyers understand, when you hold a contract in your hand that paper isn’t really the contract, the contract is an agreement evidenced by the writing on the paper. See the Wikipedia definition of contract. A smart contract will be code rather than paper, although there may be printouts. The code is the contract. That’s huge. A smart contract may then be connected to all of the parts of the contract’s elements by blockchain. This may include everything from a human inspector who inspects goods to certify they are conforming and files a report via blockchain to the transfer of funds executed via blockchain. So when the code is executed properly, the contract has been executed properly and there will not be post-contract litigation.
For those of us in legal that is a breath-taking concept. For corporate clients, the idea of a smart contract eliminating post-contract litigation will be both breath-taking and a smart business decision. I can’t say precisely how soon we will get there but I am convinced we will get there — as is Dennis Kennedy. So read his feature.
Will the first smart contracts for routine consumer matters like used cars sales or real estate closings happen soon after or not for a long time? We will have to wait and see.