This is part of our major series on Blockchain Technology and its impact on different industries. In this article we will look at Blockchain Technology’s impact on Law. Access the main article: What is Blockchain and its impact on various industries
A quick overview of the profession
The legal profession is known to be a significant contributor to the wider economies of the US and UK. In 2017 UK legal sector alone employed 315,000 legal professionals and was valued at 32.7 Billion which was a 3.8% increase over its market value in 2016. Further modest growth of 2.8% is expected by 2020.
The American legal sector currently employs 1,338,678 legal professionals.
With so many litigators, U.S. ranks among the Top 5 most litigious countries. However, the legal services operate in a fragile manner leading to legislative complexity. The rising count of litigations and related legal costs are jeopardizing the economic state of nations.
According to the Federal judicial caseload in U.S. report of 2017, the appeal filling went up by 10% to 58,951. The numbers are alarming. As the number of litigations is rising, the cost of litigation is also magnifying which has a direct impact on the micro aspects of the economy like car insurance prices, tax advice, and legal solutions.
The complexities are multi-faceted.
As per a survey conducted by the International Survey on Dispute Resolution in Technology Transactions, court litigation is a price intensive task as compared to arbitration and mediation. According to the estimates shared by the respondents, average litigation takes 3 years to be resolved. Due to the system inefficiencies, legal battles the costs incurred surpassed USD 475,000 in home jurisdictions and USD 850,000 in other jurisdiction.
With these complexities, the business executives and other participants end up wasting their productive time.
Looking at another example from world’s largest democracy, the Indian judicial system is no different where since a decade 60,000 cases are pending in Supreme Court of India, 4.2 Million cases are pending in High Courts, and 27 Million cases are pending in the District and Subordinate Courts. In India, the government is the largest litigant in India.
The legal system across the globe is in need of technical support that will address the core issues like the accuracy of judgment, the speed of the system, transparency of the judiciary set up, a jam-free case clearance system, court file integrity management, instant and trackable penalty payment set up.
Blockchain technology is expected to address the challenges of the legal profession. The decentralization and immutability offered by Blockchain Technology could help mitigate the inefficiencies of the judiciary ecosystem.
Possible use cases of Blockchain in Law
The legal system is paralyzed by the administrative burden, corruption, backlog of pending cases, lacking transparency, growing queue of detainees awaiting trial and more. Let take a closer look at how blockchain can help the legal system get rid of its inefficiencies:
Shorten the Time of Dispute Resolution
In Jan 2018 Financial Industry Regulatory Authority (FINRA) received 240 customer and 80 Intra-Industry new case filings. Despite solving 330, the backlog figure of pending cases was around 4,512. The overall turnaround time of the dispute resolution rose up by 6 months in 2018.
There is no fall in the dispute resolution time despite the overall lawyer population going up by 0.2% across the US. All the more, the number of open dispute cases rose up by 10% from Jan 2018 to Jan 2019.
The disputes keep coming in from multiple domains but the legal system is using legacy systems to handle the administrative load that adds to the dispute resolution time. The court systems are working severely under austerity. To quote an example since the last decade for the US immigration court system the workload has inflated by 146 percent. Surging the average pendency per case to 627 days. Working a paper-based system, the court system is turning more sluggish. In the UK every year 365 million pages are generated by the judicial system which adds to the cost and resolution time of legal cases. The bureaucratic structure and intermediaries are adding to the wait time. Many times a single missing legal document led to case adjournment considering it as the situation of insufficient evidence.
According to a study, almost 65% of the legal professionals agree the paper-based judiciary system needs to be replaced by a trustless automated system.
Blockchain projects like LegalThings bring automation to the legal system by securing each legal document signing event on the blockchain. The adoption of such systems not only makes the entire value chain paperless but ensures the access to legal documents is almost instant and secure which will bring down the case resolution time down significantly.
Bring down the cost of the legal system
Almost 9/10 Americans have shared the statement that the current cost of legal services is severely high. As per the 2019 repost by NewYork Times, the case fee charged by the private litigators is overwhelming leading to overburdening of public defenders. In the state of Louisiana, each public defender is handling 413 felony caseloads which are 3-4 times the average caseload.
The overburden has a severe impact on the legal system leading to the inefficient defense of defendants.
The situation is no better in judicial systems of growing economies like India where the additional cost of litigation per litigant is INR 861($12.31) due to inefficiencies of the system. When aggregated over a year, these productivity losses surpass 7.1 Billion USD.
Blockchain promises transparency which can be utilized to build platforms to network the lawyers and the people who require the legal service. As the intermediaries will be eliminated from the ecosystem and the legal fees will also be competitive enough to make justice affordable for all.
Legaler, the blockchain platform signed up more than 1,000 legal firms across 80 countries. The flagship app Legaler Aid of the initiate will aid people who can’t afford legal advice from the network of the legal firms it has. The legal service providers who are willing to offer pro-bono services will receive the tokens of Legaler platform as an incentive.
Corruption in the legal system
In 2013, the Texas state convicted a judge of the act of bribery that amounted to be more than $250,000. The stats may be old but nothing much has changed, according to research conducted by Pew Research and Yale Law School, 2.5 million bribes are paid in the U.S. Justice System every year.
The impact of such a scale of corruption is leading to unfair trials because of which 2.3 million people have ended up in prison without ever going to a trial. While many judiciary systems have identified the advocacy objectives, it requires the support of a recording system which will time track each activity that happens in the judicial system.
Blockchain comes with a ledger that is immutable and can record all the activities with a time stamp. If the bribery act tries to penetrate the system, it would require the recorded entries to be altered. As all such activities can be tracked, no one can anonymously change the entries to overrule lawful acts.
Development in Spain
Spain, the European Union’s lowest-ranked country due to its high-corruption rate is amending its anti-corruption laws and utilizing the support of blockchain to implement the new laws. EU Blockchain Observatory and Forum has invested almost 80 million euro into Blockchain and AI projects to fight against corruption in both the private and public sectors.
Enhance the response time of agencies that support justice
The lawmakers or litigators depend on agencies like FOIA (Freedom of Information Act). The lawmakers put across a request for information that is crucial for litigation. But the system currently takes 20 days to process each request. The lawmakers and the system pays high fees to the system and after a long wait receives redactions. To make the process efficient government spends $500 million every year on FOIA but more than 93% of the cost is spent on the traditional request processing system alone.
The system offers no transparencies to the lawmakers which is indeed a troublesome situation. The impact of slag in accessing the correct information is so severe that it adds to the resolution durations which defeats the purpose of existence of FOIA.
The introduction of blockchain solutions such organizations will significantly bring in transparency and speed to the access of information. There will be no information manipulation as all the information will be secured by the blockchain.
Recordkeeper is a full suite of record keeping infrastructure based on by blockchain. The system supports well-structured and easily accessible data in a highly encrypted and secure manner. The integrity of data will be always maintained as the distributed ledger is impenetrable.
It is hard to deny the blockchain technology seems to hold a lot of promise to iron out the inefficiencies of the legal set up. It has proved to be the necessary toolkit to address the issues like inflation in legal fees, delays in trials and judgments. The time is ripe to reinvent the legal system with blockchain solutions.
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