What Are The Challenges To Blockchain Adoption In The Legal Industry? 10 Experts Share Their Insights

  • 10 May 2019
  • Sam Mire

It doesn’t take Ruth Bader Ginsburg to rule that blockchain technology is on an upswing. It’s clear that this stuff is on the rise, but what’s a credible assessment of blockchain adoption in the legal industry look like?

Challenges to  broader industry adoption include technological illiteracy and an aversion to investment without a guaranteed return. Lawyers must see blockchain’s impact in order to invest. Without a basic understanding of blockchain’s unique benefits, it’s a substantially harder pitch.

Scalability presents another hurdle. Will a multinational law firm see the same impact that a local one will? This remains to be seen.

Then there’s the most pressing concern of all: will blockchain help attract and retain clients? Even once it’s implemented, proving blockchain’s immediate impact will be nearly impossible.

There are several other barriers to industry acceptance around the corner, but these are secondary to educating lawyers on the benefits of blockchain. Until then, implementation will likely be stuck on pause.

1. Charley Moore, Founder and CEO of Rocket Lawyer

Charley Moore“The biggest challenge facing blockchain in the legal industry right now is scalability. Blockchains depend on miners to validate smart contracts. This can be costly to build and operate, and involves long settlement times. This is a major hurdle impeding adoption rates right now, and something we’re looking to improve on.”

2. Casey Kuhlman, CEO of Monax Industries 

Casey Kuhlman“A hindrance to blockchain adoption has been a lack of education about the technology. However, the biggest challenge to adoption among legal services practitioners is lack of client demand. This is the biggest change we will see over the course of 2019 as our system and others move into general availability and start to scale in terms of number of using companies. This will, in turn, increase client demands on legal services practitioners, which we expect will be the deciding factor in increased use by that portion of the legal industry.”

3. Todd S. Kartchner, Vice-Chair of Litigation at Fennemore Craig, P.C.

Todd S. Kartchner“Most people are resistant to change, and when they tolerate it, they generally prefer that it be slow and incremental.  Some of the proposed uses for blockchain, if adopted, may result in sweeping, systemic changes.  The greatest challenge to blockchain adoption, whether in the legal industry or otherwise, is educating people about the benefits and advantages blockchain will bring and garnering sufficient support and resources to implement the necessary changes.”

4. Nick Gibson, Managing Director, Operem

Nick Gibson“Frankly speaking, it’s lawyers. I’m sure that won’t be popular, but it is sadly the truth. Blockchain has the potential- much like the internet did 20 years ago- to disintermediate many transactions that used to rely upon the presence of a lawyer to produce and monitor contracts, or to opine on changes to a draft agreement, for example. With blockchain, many of the traditional roles that human lawyers fulfilled will be automated. Clearly this doesn’t mean ALL roles where lawyers provide expertise will be eliminated. But some will. And I think certain lawyers don’t like the looks of this and are probably as a result less accepting of blockchain technology as a whole.

The second but related challenge I would identify is the sometimes unsavory reputation of various cryptocurrencies – it is hard to easily square cryptocurrency with legal frameworks for many people.”

5. Peter Buck, VP of Product Strategy at NetDocuments

Peter Buck“Blockchain is frequently associated with currency or smart contracts. Many incorrectly view smart contracts as digitized legal contracts. A smart contract optimizes and automatizes elements of an agreement using the authority granted by blockchain.

The essence of blockchain for legal is related to digital trust – the ability to trust data across entity boundaries. It's that digital trust that allows cryptocurrency and smart contracts to exist. As we move into an entirely digital era, we need trust agents. Blockchain is the platform or agent.”

6. Robin Sosnow, Partner and Principal of Sosnow and Associates PLLC

Robin Sosnow“The legal profession is, in particular, a risk-averse profession, specifically in terms of technology. After all, it is considered as one buried under paperwork and not perceived as a profession inclined to be early adopters of cutting edge technologies. Therefore, I believe that the #1 challenge that blockchain will face is the industries’ cherished aversion to new technological developments.”

7. Hando Rand, CEO of Agrello

Hando Rand“One of the biggest challenges is that there are many ICT engineers who still are in belief that most of the things blockchain can offer, can also be achieved with more conventional ICT technologies. Many people still mostly understand that blockchain technology does not scale at an industrial level and takes too much energy. This, of course is a superficial understanding. Blockchain can also be implemented in a lightweight fashion in smaller clusters and without Proof of Work consensus and mining mechanisms. Applying this tech in a way that the nodes keeping the network up are those, who actually need to use it, could make it very scalable. The big challenge is that blockchain is still mostly understood as a fully decentralised network of miners. There is not enough experimentation with other approaches that could deliver the same value.

Another very big challenge is that the immutable nature of blockchain really conflicts the way many decision makers operate in the world. Being able to retroactively modify information enables corruption, while blockchain heavily restricts such activities. Corruption is a major obstacle of blockchain technologies being adopted.”

8. Matthew Shearing, Founder of BlockSense

Matthew Shearing“Hype and misinformation is also a major challenge. There’s a lot of people out there positioning blockchain as the answer for everything. It’s not. Education is key to dispelling these myths – otherwise many lawyers may become frustrated and abandon blockchain technology altogether.”

9. Jay Arcata, VP of Client Operations at BX3 Capital

Jay Arcata“The biggest challenge to blockchain adoption in the legal industry is the uncertainty that exists from a regulatory perspective. Lawyers tend to be a risk-averse bunch and because blockchain’s mainstream applications and use cases remain largely untested, the legal industry has remained on the sidelines.

Around the world, we are seeing countries grapple with how blockchain and cryptocurrencies should be regulated. When you couple that with already-existing regulations in the finance (SEC) and data privacy (GDPR) sectors, it creates an environment of uncertainty. General Data Protection Regulation (GDPR), with its stringent safeguards on personal data, has had a particularly stifling effect on the adoption of blockchain in the legal industry. Once the industry is able to reconcile blockchain’s compatibility with regulations such as GDPR, we will start to see an uptick in adoption.”

10. Daniel Tarr, Associate at Duane Morris LLP

Daniel Tarr“The biggest current hurdle to blockchain adoption is an understanding gap, both in capability and functionality.  Most lawyers and legal industry professionals that hear “blockchain” either tune-out  or think of public, fully distributed blockchain cryptocurrencies such as bitcoin.  Getting lawyers and other law firm leaders to understand that there are other variations of blockchain—and that blockchain can include private, controlled ledgers with limited access—is going to be a key to wider adoption and testing of blockchain technologies in the legal industry.  Until there is a greater understanding of what blockchain generally is and the specific solutions that are enabled by its use, the adoption rate will stay low.”


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About Sam Mire

Sam is a Market Research Analyst at Disruptor Daily. He's a trained journalist with experience in the field of disruptive technology. He’s versed in the impact that blockchain technology is having on industries of today, from healthcare to cannabis. He’s written extensively on the individuals and companies shaping the future of tech, working directly with many of them to advance their vision. Sam is known for writing work that brings value to industry professionals and the generally curious – as well as an occasional smile to the face.