The Crypto Applicant

The World Economic Forum predicts that 10% of global GDP will become blockchain based by 2025. The interesting factor to be explored is how law firms will take the benefits of blockchain based applications without absorbing the negative consequences which, in the context of sensitive client information, can be severe. 

Blockchain systems refer to shared decentralised databases which contain data stored in blocks, which are linked via cryptography, recorded, and cannot be changed in any way. The result is peer-to-peer transactions between individuals and/or businesses without the need for a trusted authority.

The benefits for law firms are straightforward; legal transparency is created by a distributed ledger accessible by all parties, incapable of alteration. Legal fees are reduced as a result of saving time and money on organising and storing documents, and data protection is bolstered, which is critical for law firms holding confidential information. A survey by Lubbock Fine has shown that law firm cyber attacks have increased by 77% in the past year. With 75% of the UK’s top 100 law firms being impacted by cyber attacks, the battle lawyers will have to overcome is how to streamline blockchain use cases without leaving a gaping hole for cyber crime, which will continue to evolve as the technology does. This is particularly important with regards to ‘no-fault’ disclosures of sensitive information (no-fault meaning disclosure due to technological error or third party interference or negligence).

In addition, the financing related benefits of blockchain are immense. They include reducing borrowing costs, reducing counterparty risks in clearing and settlement transactions, and reducing systematic risks in the event of defaulting parties. The potential macroeconomic implications of adopting blockchain and decentralised finance on a global scale are all the more reason why the legal foundations must be explored further.

How does this link to your applications?

1) Identifying forward thinking firms: If you’re interest lies in cryptocurrency, innovative technologies, or new systems/methods of financing, you should be able to link your interests in a unique matter to the relevant technological endeavours that the firm was involved in. For example, “Technological advancements in blockchain based financing create dual based challenges of ensuring regulatory compliance and understanding the technical details of new technologies, in order to properly advise on them. As an investor in NFTs and digital assets, (X firm)’s recent advice in constructing the first ever digital bond interests me due to...” Consider what firms (a) have a Fintech practice or Fintech cross-practice team; (b) serve the most prominent blockchain related companies (Binance, Crypto.com, etc.); and (c) have dedicated resources to advancing legal tech and utilising decentralised technologies in any aspect of work.

(2) Addressing concerns: A strong way to demonstrate your passion is to show your initiative in thinking of solutions to  the issues involved in new technologies. What happens in the event of ‘no-fault’ disclosure of sensitive information? How do we ensure that clients are legally covered in decentralised transactions where smart contracts are written in code by computer, not in a common language by lawyers? Where blockchain assets are misappropriated, do current regulations provide recourse to clients in an efficient and effective manner? The recent High Court ruling in LMN [2022] EWHC 2954 (Comm) which addresses blockchain pseudonymity and jurisdictional issues simultaneously suggests positive steps forward, but does not quite answer the aforementioned question in the affirmative.

(3) Considering future practice: As an applicant demonstrating your fitness to be operating in an increasingly digitised and technical legal world, your understanding of how legal processes such as drafting, proofing, and organising are being enhanced by automated systems and new applications is important. Tie your interest in technology to the key practice area(s) of interest and key legal processes of interest, appreciating how they interact and overlap. In doing so, you can provide an answer grounded in a specific, well researched, and understood area of practice that better demonstrates your fitness and passion to practice commercial law in the modern market.