Smart Contracts and the Role of Lawyers (Part 3) – About Lawyering Transactions on Blockchains

In Part 1 I attempted to unpack some of the  semantic baggage related to the term, “smart contract,” and in Part 2 I attempted to unpack some of the semantic baggage related to the term, “code is law.” With a more nuanced understanding of these legal-sounding terms, now we can better consider the possible role of lawyering in the emerging blockchain era, hopefully with neither too much fantasizing and hype nor too much hostility and dismissiveness. In this post I review how seven transaction-related lawyering activities either become irrelevant, increase in importance or remain unchanged when applied to blockchain-based transactions. Note that the categories I’ve focused on below are not inclusive of all lawyering activities for all kinds of contracts, and their relevance varies by transaction type and size, jurisdiction, etc., but collectively they give a pretty good overview of contract-centered lawyering. Continue reading “Smart Contracts and the Role of Lawyers (Part 3) – About Lawyering Transactions on Blockchains”

Smart Contracts and the Role of Lawyers (Part 2) – About “Code is Law”

In my previous post I described how “smart contracts” are not really contracts in the comprehensive or strict sense of the term as understood and used by lawyers. Smart contracts only explicitly model the performance aspect of a real world contract and implicitly assume the form and formation aspects of a contract. If we simply admitted the term, “smart contract” is an unfortunate historical accident and relabeled it to something like “chaincode” or just “script” as some platforms refer to it, then a lot of the conceptual baggage and terminological confusion would probably disappear. Of course, a lot of the sexiness of the term and apparent relevance to lawyers might disappear as well. Nevertheless, the expanding interest in blockchain-based transactions by financial institutions, exchanges, other businesses and governmental agencies seems like fertile ground for lawyers to plow, regardless of how the particulars are labeled. Or is it a quagmire instead? The answer is not a simple one to give as is well illustrated by the recent failure of what is probably the single largest blockchain-based smart contract ever created. Continue reading “Smart Contracts and the Role of Lawyers (Part 2) – About “Code is Law””

Smart Contracts and the Role of Lawyers (Part 1) – About Smart Contracts

Legaltech is awash in buzz terms these days, and “smart contract” appears very near the crest of the legaltech hype wave. The reason is obvious enough: everyone knows that lawyers are the ones who draft contracts, so surely the law biz needs to pay attention when contracts get “smart.” Plus, smart contracts live on blockchains, don’t they? Hasn’t the recent fintech interest in blockchains chummed the waters for all sorts of activities by big banks, big tech companies, government agencies, consulting firms and other well-heeled and high-paying clients of biglaw? You bet it has, and you can safely bet that lawyers are taking note! So let’s check out this very fascinating but complex topic in greater depth.  I’ve broken up my thoughts into three separate posts – this first part provides critical historical background and context for understanding what smart contracts are; the second part uses a recent notorious blockchain incident to delve into some of the interesting legal theory implications of smart contracts; and with the groundwork laid in the first two parts, the third part deconstructs the likely (and not so likely) impacts of smart contracts on transactional lawyering. These posts are lengthy and dense, but if you stick with it, I believe you will emerge with a fuller and more nuanced understanding of the hype and substance of smart contracts. Continue reading “Smart Contracts and the Role of Lawyers (Part 1) – About Smart Contracts”