The Legal Service Board (LSB) has urged legal services regulators to embrace the opportunities provided by blockchain technology.
The LSB oversees regulators of legal services in England and Wales. This call for action follows the release of an episode of its ‘Talking Tech’ podcast series.
In the episode, Dr Anna Donovan, the inaugural vice dean of innovation at University College London’s Faculty of Laws, charts the evolution of blockchain and other distributed ledger technologies as tools for radically simplifying common legal tasks such as identity verification and contract fulfilment.
Dr Anna Donovan explains:
“Blockchain provides significant opportunities to enhance consumers’ access to legal services, particularly once we reach widespread adoption. This will mean that consumers can have their legal needs met in a more direct, faster and potentially cheaper manner (in comparison to current models). Whilst this technology is currently the focus of the financial services sector there are huge opportunities across the legal services market, including for example in conveyancing and probate.”
“At the moment, a small number of legal services providers are offering services to their consumers that leverage smart contract technology, whilst others are developing complementary dispute resolution mechanisms. That said, at this time (and as this is still a nascent technology), the majority of work within the sector is advisory in nature.”
Research by the LSB shows levels of use of potentially transformative technologies such as Blockchain are low. Only 2% of providers are using Blockchain. The research also shows only 5% of all legal services providers have made, or plan to make, partnerships with or investments in Law Tech firms.
Dr Donovan added:
“At the moment investment is largely coming from financial services, where there is capital to invest and where the nature of financial services transactions lends themselves to this kind of technology.
“To help the adoption of DLT within the sector in a sustainable manner, one that reaches the right balance between innovation and consumer protection, regulators are well placed to use their convening power to support multi-disciplinary research, increase understanding across the sector and, where appropriate, provide best practice guidance, training and information.”
Dr Helen Phillips, Chair of the Legal Services Board, said:
“The potential uses of blockchain technology are both enormous and exciting, and it’s vital that the legal services sector seizes the opportunity to use it to improve access to justice.
“Distributed ledger technology has the potential to drive considerable time and cost savings for both providers and consumers of legal services. It increases transparency, builds trust and speeds up transactions, all of which will benefit consumers.
“The financial and banking sector has made significant strides in exploring the benefits of blockchain and I hope the legal sector follows suit.
“It’s important though that we all understand the risks and potential pitfalls of these innovations, and the LSB is looking carefully at the role regulators must have in protecting users of legal services. We need an approach that balances fostering innovation with consumer protection.
“Legal regulators must not ignore the opportunities and I look forward to working with partners to understand and agree how everyone can benefit from new technology.”
The ‘Talking Tech’ podcast is part of the LSB’s ongoing research series: Developing approaches to regulation for the use of technology in legal services. Each episode accompanies a research paper exploring different aspect of LawTech. The LSB will draw on these to inform its approach and assist the frontline regulators to respond effectively to LawTech. The episode on blockchain is the fourth in the series.
To listen to the podcast, read the research papers and get more information on the LSB’s technology project, visit http://legalservicesboard.org.uk/our-work/current-work/technology-and-regulation.
The podcast is also available on Apple Podcasts, Android players, Spotify and PodBean.
Notes for editors:
1. Anna Donovan is the inaugural Vice Dean (Innovation) at the Faculty of Laws, University College London and is also a member of the UCL Centre for Blockchain Technologies. Anna is a member of the UK LawTech Delivery Panel where she chairs the Education Taskforce. Anna regularly advises global law firms, tech companies and financial organisations on the adoption and regulation of LawTech and distributed ledger technologies, with a particular focus on smart contracts. Anna is currently a member of the BSI Steering Group developing industry standards for the utilisation of smart contracts. Anna is a qualified solicitor in England and Wales (currently non-practising), having spent eight years in corporate practice prior to academia. Anna is also admitted as an attorney-at-law in New York.
2. The Legal Services Act 2007 (the Act) created the LSB as a new regulator with responsibility for overseeing the regulation of legal services in England and Wales. The new regulatory regime became active on 1 January 2010.
3. The LSB oversees ten approved regulators, which in turn regulate individual legal practitioners. The approved regulators, designated under Part 1 of Schedule 4 of the 2007 Act, are the Law Society, the Bar Council, the Master of the Faculties, the Chartered Institute of Legal Executives, the Council for Licensed Conveyancers, the Chartered Institute of Patent Attorneys, the Chartered Institute of Trade Mark Attorneys, the Association of Costs Lawyers, the Institute of Chartered Accountants in England and Wales and the Association of Chartered Certified Accountants. In addition, the Institute of Chartered Accountants of Scotland is an approved regulator for probate activities only but does not currently authorise anyone to offer this service.
4. As of 1 April 2018, the legal profession in England and Wales comprised 146,600 solicitors, 16,600 barristers, 7,600 chartered legal executives and 6,000 other individuals operating in other areas of the legal profession such as conveyancing (figures rounded to the closest hundred). The UK legal sector turnover was £33 billion per annum (2017) which is up 19% in cash terms since 2012.