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Smart Contracts for Lawyers

Smart Contracts for Lawyers, technologies and new methods of working

There are a range of technologies that top-50 law firms are actively using to enhance the delivery of legal services to their clients. These implementations are often used for corporate transactions as opposed to private-client work.

The choice technology on the market is the Accord Project for mature smart contracts. This is a non-blockchain technology so it does not depend on a single ‘ledger’ of transactions. An explanation of blockchain is further below.

The Accord Project is actually markup-based, which in practice this means it uses linguistic instructions to set out what to observe and the appropriate actions after certain constraints are passed.

The real power behind platforms which use markup languages is that they are in fact not technical. A simpe set of instructions with connections to sensors, or which ‘listen-in’ to email notifications can be turned in a consistent experience for your customers across complex supply chains.

Smart contracts add value by providing consistency in complex legal contexts where multiple parties are needed to complete the delivery of a contract.

A ‘smart contract’ is really a contract with dynamic inputs enabling you to move contractual obligations from being an event removed from production to one in situ.
Take for example the delivery of manufactured goods. A smart contract allows you to identify points in an agreement where:
  • raw materials are supplied
  • raw materials are accepted
  • materials are used to produce semi-manufactured goods
  • semi-manufactured goods are transported for final assembly
  • goods are assembled
  • finished goods are delivered to the buyer


Each of the above steps could require multiple individual proofs-of delivery and assessments which are held across the supply chain.

Or they could be simple steps in a smart contract which covers the entire agreement, connecting to systems across your supply chain (e.g. SAP) and automating legal drudgery.

Smart Contracts for Lawyers using Blockchain

Blockchain technology is a distributed digital ledger designed to be decentralised, immutable, and transparent. The distributed nature of blockchain ensures there is no central authority controlling the system, and all participants in the network have access to the same information and can thereby verify any and all information within the transaction.

The immutability of the system ensures that once a transaction is recorded, it cannot be altered or deleted, providing a tamper-proof record of all transactions in an agreement. The transparency of the system allows all participants to see all the transactions, providing trust and accountability across all parties involved.

Don’t be fooled by the lack of a central authority, that can instead be taken as multiple copies being available across your firm on internal systems: you can remain the sole-proprietor of the information and only share to external parties what you deem necessary.

Smart contracts are just one piece of the due diligence puzzle – Photo: Shutterstock

What is a smart contract using blockchain

Smart contracts are self-executing digital contracts built on-top of a blockchain network. Computer programs automatically execute the terms of a contract when certain conditions are met, as confirmation of the delivery of goods.

This form of smart contract use blockchain technology to enable parties to execute, verify, and enforce the performance of a contract. This is without the need for intermediaries such as lawyers, banks, or other third parties because you have pre-configured the conditions for the contract to be seen as fulfilled and those which mean it it is breached.

Remaining compliant as a law firm using blockchain

When implementing smart contracts, law firms must comply with various regulations and laws, including data protection laws, confidentiality, and ethical standards as sset out by the Law Society and SRA.

The Law Commission has analysed the legal implications of smart legal contracts — computer programs that can observe the performance of a contract and act on the obligations of a legally binding contract without human further intervention.

The Commission’s analysis identified considerations for different types of smart contracts and found the current legal framework in England and Wales can support their use without requiring statutory law reform. It did however suggest that further work is needed to support the use of smart contract technology in areas such as deeds and private international law.

The Commission’s advice to the Government was published in November 2021 and was informed by detailed responses received following a call for evidence. One of the primary concerns for law firms is retaining confidentiality of the information contained in smart contracts. Law firms must ensure the contracts comply with data protection laws and maintain the confidentiality of the information contained in them. This is achieved through you maintaining sovereignty of the information: own the implementation of the technology and where the data is stored.

Another concern was ensuring the legal enforceability of smart contracts. Law firms must ensure the contracts comply with the relevant legal frameworks and are legally binding in England and Wales, or other relevant jurisdictions. This requires an understanding how to formulate the contract and setting conditions for penalties for failure of delivering on the contract – not a big deal for a solicitor.

How Law Firms can use Smart Contracts

Smart contracts are a promising innovation that can offer significant benefits to law firms looking to optimize their contract management processes. At Hayachi services, we believe smart contracts are a game changer for the legal industry, providing a range of advantages that can help law firms to improve their efficiency, reduce costs, and enhance transparency.

Smart contracts can automate the process of contract execution for a range of industries. By using a simple set of instructions to set the parameters of a contract, in executing the terms of the agreement smart contracts save time and reduce errors associated with manual checking for if the contract has breached. This can be particularly useful for law firms that need to manage a large number of contracts or those involved in complex transactions that require multiple parties to execute contracts simultaneously.

They also enhance transparency by making the terms of the agreement and its execution clear and agreed by all parties. As part of a smart contract these conditions for delivering the contract are pre-agreed and much harder for parties to renege on. This helps to reduce disputes and enforces trust between parties such installing sensors to feed-back the condition goods are in during storage.

Another major benefit is their potential to reduce legal costs associated with agreements. By automating certain aspects of the contract review process, smart contracts reduce the need for manual input and oversight. You can create a template contract and issue it in large volumes, leaving the enforcement element to detailed review by a machine. Streamlining due diligence ensures your contracts are executed in a timely and cost-effective manner, at scale.

Smart contracts have immense potential to transform the profession. Their adoption by law firms can bring significant benefits in terms of efficiency, cost reduction, and transparency as well as wellbeing of staff by not having to ‘deal’ with the problems of rogue contracts or suppliers agreed across the business.

Aat Hayachi we believe that working smarter and not harder, is the ideal lawyers need to work toward. Doing high-value, valuable work is both more fulfilling and more enriching for lawyers.

Smart contracts are a game changer for the legal industry and its adoption is still variable at the moment, remaining the preserve of top-50 law firms in the UK. Early adoption and implementation will put your firm ahead of many others that require multiple parties to agree on ‘their copy’ of the contract with all of the complications which arise from this.
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