Eleven law firms and blockchain startups have joined open-source software company Monax to help develop a new legal services platform called the Agreements Network. Originally revealed in April, the network is being designed to allow lawyers to perform tasks like managing contracts, leases, and governance documents via smart contracts that are compatible with the public ethereum blockchain.
Monax CEO and co-founder Casey Kuhlman, himself a lawyer, told Forbes that the goal of the Agreements Network is to bring legal transactions “into the digital age” by moving the documents they draft and file to a shared, distributed ledger.
If successful, the platform stands to save time and money not only for clients seeking support from law firms but the lawyers who rely on countless middlemen to execute their services.
“Lawyers are the perfect audience for this,” said Kuhlman.
The company’s partners in the project include law firms BakerHostetler, LegalBono and ErdosIP and tech companies including contract manager Clause, investment crowdfunding platform Crowdcube, consulting firm LexPredict, and software startup Libra.
Instead of the old-fashioned means of exchanging emails, word documents, and PDFs, the Agreements Network is creating a shared infrastructure that Kuhlman says eliminates “transactional execution risk,” or the inherent liability that two parties must take on when they enter into an agreement. Contracts, documents, information, and assets will be stored collaboratively, across multiple computers, instead of in one location by a single firm or lawyer.
In a smart legal contract, every step of a process can be permanently recorded. Assets can change ownership and payments can be made automatically over the blockchain once certain conditions are satisfied. Tasks that previously took days could be reduced down to minutes.
Kuhlman says the Agreements Network is the natural progression of an idea from Monax’s early days: marrying the requirements of legal processes with the assurances and efficiencies of smart contract technology. “That was what companies were interested in exploring,” he said.
Founded in 2014, Monax is best known in the blockchain space for Hyperledger Burrow, its open-source contribution to the Linux Foundation-led consortium focused on enterprise blockchain solutions. The Agreements Network is built on top of Hyperledger Burrow, which itself is compatible with an ethereum virtual machine. Monax also provides corporate governance and fleet leasing services for businesses.
Robert Craig, BakerHostetler’s CIO, sees the platform’s potential. “If launched safely and properly, the Agreements Network could provide a foundational piece of technology for a range of innovative solutions in the legal marketplace,” he said in a statement.
While lawyers have a (perhaps undeserved) reputation for being slow to adopt new technologies, Aaron Wright, a professor at Cardozo School of Law, chair of the legal advisory group of the Enterprise Ethereum Alliance, and co-author of the book Blockchain and the Law, says new client needs may drive the adoption of blockchain in the legal industry, especially as more and more companies explore blockchain-based investments and solutions.
“Lots of law firms are interested because their clients are asking them to become interested,” he said. Wright is also a developer of OpenLaw, a blockchain infrastructure for legal smart contracts that has also seen interest from major firms including Corrs Chambers Westgarth in Australia.
Another driver of adoption for this type of product is profits. “Corporate legal clients are becoming much more demanding of law firms,” said Dean Sonderegger, the general manager of the legal markets group at information services company Wolters Kluwer. As a result, they may disallow billing for activities they don’t see as profitable, and this creates a lot of pressure on firms’ bottom lines.
“There’s a very real financial incentive for the law firm to become more efficient and provide more value,” Sonderegger said. “Whereas it has traditionally been difficult to get attorneys to use different tools and apps, you’re seeing the market pull them in a way where they have to do that.”
Kuhlman’s ultimate goal is that the Agreements Network be a “low or no code solution,” meaning that it will have a user interface that is easy to navigate for those without a tech background. “What we think will be the result of this,” he says, “is the ability for more and more lawyers to bring their knowledge to the table.” And when that happens, “we are going to have a powerful force for innovation within the legal market.”
Currently, the network is in the testnet stage. Kuhlman says it will be ready to launch in October.