Data & Analytics in the Law – NYC – Sep 27 2017
Articles,  Blog

Data & Analytics in the Law – NYC – Sep 27 2017

0:00:01 Aaron: Hey everyone. My name is Aaron Wright. I’m a clinical professor here at Cardozo,
I also run Cardozo’s blockchain Project. I just wanted to welcome you to Cardozo and
I wanted to especially thank Mary for putting together this wonderful program here at the
law school where we’ve been deeply interested in legal technology and how technology will
impact the law. And it’s our pleasure to be able to host these
types of events. So thanks for coming and I’m gonna turn it
over to Mary. 0:00:26 Mary: Okay. Well, I wanted to start off by thanking Aaron. It’s like the mutual admiration society up
here but thank you to Aaron for inviting us back. We’ve been here I think two other times so
maybe this is the third time. But what’s really interesting is we had an
event almost two years to the day here was our first official Evolve Law event in New
York. We had done the evening before our first official
event which was in Boston, which is where I think I met Bennett and Cognate. So we’re really excited about some of the
things that are now happening with Above the Law. I’ve been explaining this. I was just at Clio’s conference. So I was explaining this over and over again
that I’ve actually merged the companies and call it Evolve the Law but… [chuckle] 0:01:19 S?: [0:01:19] ____ No no, I just had
that. 0:01:21 Mary: So I actually had three people
tell me that that’s actually a really good name. [chuckle] Maybe. I don’t know, it’s over to you. So we are super excited to have, Evolve Law
join forces with Above the Law and what that means for our members is a huge increase in
reach and the community that we’ve built over the last couple of years is now grown, it’s
over 120. I can’t really, totally keep up. I know I have a lot of podcasts to do in the
next month with the new members. So there’s quite a few. And the stories that people have told us about
what’s come out of this has been really gratifying because it’s not just, although sales, sales
are important. It’s also about the connections that are made
and the strategic partnerships between the members. We actually had an acquisition of one member
through Evolve Laws. 0:02:19 Mary: So, very exciting. And so tonight we’re gonna talk about data
and analytics. That’s our little tag line. I think most people here might know what Evolve
Law is but we’re this community for legal innovation. And we really wanna focus, our theme is going
to be for 2018, it’s gonna be talking a lot more about adoption. ‘Cause we’ve talked a lot in the last two
years about a lot of theoretical things but then a lot of technology and I think that’s
great but we wanna really… One of our themes, it won’t be our only theme. But one of our themes is actual adoption and
what’s going right and what’s not going so well. 0:02:57 Mary: So our Darwin talks are usually
five minutes but we wanted to thank Wolters Kluwer, who’s our sponsor this evening along
with Cardozo Law. So we’ve given Dean a bonus five minutes. So he is doing a 10 minute Darwin talk and
we’re really excited to have him come up and talk to us. [applause] 0:03:22 Dean: Thank you very much and thank
you for the extra five minutes. I think that’s actually a reflection of the
fact that the last five minutes didn’t go quite into five minutes but we’ll see. So I’m here to talk to you a little bit about
a historical perspective of artificial intelligence. Why would I have a picture of Bob Marley up
here? Well, I think, first of all I always love
to promote good musicians when I can, but the quote here is, “In this great future,
we can’t forget our past”. For those of you who don’t know who Bob Marley
is, he’s a reggae musician or was a reggae musician based out of Jamaica. This quote was reflective of the fact that
there were a lot of political changes going on in Jamaica and it was impossible to understand
those without looking at the context of that which came before. I think the connection that you get into with
artificial intelligence is that, I think it’s very similar. I don’t think you can really understand where
we’re at with AI without really having a sense of what has happened heretofore. 0:04:18 Dean: And so, I’m gonna talk a little
bit about that. I think it’s a good topic if you google robot
lawyer or whatever have you at this point in time, you get a bevy of articles come back. There’s endless speculation about what’s gonna
happen whether lawyers are gonna be here or not. I say this is the topic, I would say, blockchains
probably the other topic and perhaps the more hot topic at this point in time, but it’s
still a very hot topic. But I think it’s important to realize that
this is not something in artificial intelligence that just actually happened overnight. 0:04:51 Dean: In fact, artificial intelligence,
the term is older than I am. I’m not gonna tell you how old I am but AI
was coined in 1956 at a conference in Dartmouth, that was the term. And there was a lot of funding and optimism
about a change in the world at that point in time. And in fact, I have a quote here from 1970
from Life magazine, from a professor at MIT, who talks about the fact, his opinion, in
three to eight years they’ll have a machine with the intelligence of a human being. Those of us who lived through that period
of time know that things didn’t quite come to pass that way. And what you saw is you saw a sense of disappointment
that we weren’t getting through the optimistic projections that occurred and they had what
they called an AI winter which is a take off of the term nuclear winter. And then you saw some resurgence in the ’80s
with the idea of expert systems at that point in time. And then those didn’t quite deliver in the
way that we thought they were going to and you saw a second AI winter. 0:05:50 Dean: And things started to turn probably
in the mid ’90s about the time the internet boom started to gather a little bit of steam
and you saw IBM in what was a brilliant marketing coup, if nothing else. Finally built a computer called Deep Blue,
which beat the world chess champion, Garry Kasparov at the time. And that continued along, and we all saw Watson
win Jeopardy at one point in time recently. And what you saw is that processing power,
prevalence of data started to increase, and what you also saw is a shift, philosophically
speaking. When you think about expert systems, what
we try to do is we try to program machines to think like people. And now what you see at this point in time
is we’ve said, “Well, machines don’t do that very well, but they process stuff very, very
well.” And so what we do now is we teach machines
to brute force go through large amounts of data. And they do that very, very well. And that’s been the shift that we’ve seen
along with some of the development of algorithms, that’s really started to bring AI back into
the core. 0:06:50 Dean: To talk a little bit about the
things that drove this. Moore’s law roughly stated, “Every two years
you have a doubling of processing power.” And so you can see here, just on this graph,
this exponential graph, you go back to 1950 forward. That’s held. So this thing in my pocket here has a phenomenal
amount of power compared to the machines that I went to college with. So much more powerful, it’s incredible. The other thing that you see is that data
has become cheap to store. This is an exponential graph going the other
direction. So when I went to college again, I had an
IBM XT computer which had a 20 megabyte hard drive, which was about the size of a shoe,
a big shoe, and that was really cool at the time. Now you get multiple, multiple gigabytes in
tiny little sim cards. So it continues to plummet also, and then
that’s important because we have a lot of data. You see, and this is the quote that was given
to me, “2.5 exabytes of data created every day.” I don’t know what an exabyte is, it’s a big
number. What I’ve been told is it’s about the equivalent
of having 250,000 versions of the Library of Congress created every day. And we’ll create more data in 2017 than we’ve
created in all of recorded history. 0:08:06 Dean: So, you’ve got these three things
going together. We can process data really well, compared
to we used to be able to do. We can store it, so we can track it, and we’ve
got a lot of it to track. So what’s the implication into law, at this
point in time? Well, broadly speaking, when you have a data
set, you have an opportunity to apply some AI types of technology. And really, I think about two general goals. I wanna do something faster or more efficient
at doing something, and the second thing I wanna get to a better outcome for my client. If I can do those two things, I’m gonna be
successful as an attorney or as a law firm. I’m gonna be more profitable, my business
is gonna grow. What types of legal data sets do we look at? Well, a lot of different things and a lot
of data that’s out there. Traditional things like case law, dockets,
court records, contracts in transactional law, the rules, the laws itself, patents trademark,
filing data, news content, there’s a whole heck of a lot of data out there, that one
can go through. 0:09:05 Dean: So I see three trends going
on. The first trend which is alarming to somebody
like myself, who works for a large vendor, is we see law firms dis-intermediating the
vendors, investing directly. Partnering with people like IBM, with ROSS
Intelligence, or taking their own data, hiring data scientists and building their own analytics
around that. I got a couple of examples that you see here. The next trend we see is a lot of the folks
in this room. Legal tech start-ups that are employing AI
technology, trying to break into the legal tech environment with large law, mid size
law, small law. And a lot of success in those around the area’s
of document review, e-discovery in particular. And then the third trend that we see is of
course the large publishers. Each of us have invested in artificial intelligence,
albeit in different ways. See Thomson has formed a partnership with
Watson. Bloomberg is building their own. Lexis has bought analytics companies, and
we’re doing a lot of partnering ourselves to bring things to market. 0:10:05 Dean: Now, any AI presentation is
not complete without a picture of the terminator robot. But I do have a word of caution here. This is a concept called the Hype Cycle, which
is a Gartner concept. And this talks about the idea that technologies
start by being hyped up, expectations aren’t met. We go into what they call the trough of disillusionment
and eventually we moderate out to a productive use of that technology. I would argue right now that artificial intelligence
is probably on just over the hump and we’re starting to roll into some missed expectations. I would argue the blockchain which we’re gonna
talk about in a little bit here, is probably on the ascension right here of expectations. And we get into these situations where the
technology solves every problem, irrespective of what that problem is. 0:10:58 Dean: And so I think that the danger
that you get into with this is the disillusionment of some of the promise, starts to tar the
image of the whole thing. And you see the change in the narrative already
in the medical area with Watson. MD Anderson kicked Watson out very publicly
and said some pretty nasty things about return on investment with them. And you’re seeing things where we’re not quite
getting to what the hype is saying it’s gonna be. And the danger that you get into is that we
may be going into another AI winter. I don’t think that that’s the case, but I
think that that is something that is a danger that’s out there. I should technically have a Game of Thrones,
winter may be coming here, but I chose not to violate any copyright or [0:11:39] ____
on there. But I do think that there’s a couple of things
to remember, and this is what we look at when we invest in any type of technology, be it
artificial intelligence, be it blockchain, be it anything that we’re doing, is that,
I think it all starts with a legitimate customer problem. If we’re a solution that’s searching for a
problem, we’re gonna have a very tough time convincing customers that we gotta go after
this. You start with a legitimate problem. My favorite one on this is Netflix. 0:12:05 Dean: If you go back to the world
where we had to go to the video store to rent things, we had late fees associated with that,
the videos that we wanted were never there. Netflix came up with the idea of “Hey, we’re
gonna mail DVDs to you and come back.” And it took off because it was a legitimate
problem it was solving. Albeit in an old school way through the mail. This was before they started streaming. And I think that the other thing that we find
great success in, is finding a client that wants to build this out. And I won’t go through the whole concept of
what’s the early market versus the lagging market but find customers that have been trying
to solve this problem themselves and partner with them. And I think that if you can do those things
instead of AI winter, you’ll get to another Bob Marley quote which is a favorite of mine,
which is that, “everything is gonna be alright”. Thank you very much and I’m right at 10 minutes. [applause] 0:12:57 Mary: I think we should leave Bob
Marley up [chuckle] for the panel, what do you think instead of the… [background conversation] [chuckle] 0:13:05 Mary: Thank you very much Dean. And I wrote at the top of my paper, not during
the panel ’cause the paper was up here, that “blockchain is the new AI.” That was something that somebody said at Clio. It might have been one of the Integra people. So, today, we’re gonna have a panel where
we’re going to talk a little bit about AI, and blockchain, and the data that’s coming
out of this, and the analytics. I’m gonna let the panelists introduce themselves
kind of going down or starting with Susan. But, that’ll be the only time that we’re kinda
going through the panelists and with the size of the folks that have shown up, why don’t
we make it kind of interactive. If people have questions don’t wait until
the end. Just put up your hand and go for it. So, Susan. 0:13:55 Susan: Hi, good evening. I’m Susan Chazin and I’m Portfolio Director
at Wolters Kluwer and I’m responsible for product development in the corporate and securities
area. 0:14:03 Bennett: I’m Bennett Collen, I’m the
founder of Cognate and we help companies protect their trademark rights using blockchain. 0:14:10 Houman: I’m Houman Shadab, I’m a professor
at New York Law School also co-founder of Clause. And very interested and involved in all things
Smart contracts, blockchains, Data, Legal Tech. Thanks for having me. 0:14:23 Aaron: And my name again. I’m Aaron Wright. I’m an associate clinical professor here. I also direct the Cardoza’s blockchain project. My sister calls me a unicorn, I’m a programming
lawyer. I think there’s about 50 of us. [chuckle] I’ve also been building out a legal
technology platform called Open Law which is really the first platform that enables
you to take a normal agreement and then embed into a Smart contract to employ all the benefits
and efficiencies of blockchain technology. So, it’s a pretty cool project. 0:14:53 Mary: Awesome! So, this is our esteemed panel and Houman’s
gonna lead us off by telling us some contexts and definitions around some of the words that
we keep throwing out. Now, Dean of course has done an excellent
job on AI but, maybe you can delve into the others. 0:15:09 Houman: Yeah, great I can scratch
AI off my list. [chuckle] 0:15:12 Houman: I wish I would have known,
I would have saved a few hours today. [chuckle] 0:15:15 Houman: Okay, thank you that was a
great conversation. And thanks for having me here by the way,
as well. I didn’t see you at Clio Con I was there too. I think I walked by you for like a second
but you were very busy. So, hello. 0:15:24 Mary: Hello. [chuckle] 0:15:26 Houman: Definitely a lot of exciting
technologies growing these days, a lot of jargon that we hear being thrown around so
certainly definitions, if I can provide some clarity I’d be happy to. I think maybe the first one is to talk about
blockchain. Blockchain is really a type of distributed
ledger system in the sense that… Or in contrast to a centralized ledger, or
a central housing, or central entity in the traditional default sense will keep a record
of transactions and what transactions are true or valid. What distributed ledger technology makes possible
in a sense for the first time is to have the same or maybe even better security, and verifiability,
or immutability of transactions and trust without having to trust a central party in
the classic sense like a bank, or a clearing house or maybe an accountant to keep tracks
of various kinds of records in the most general sense of any kind of, in theory at least,
financial or business transaction. 0:16:32 Houman: A blockchain is a type of
distributed ledger that achieves that same goal of verifying transactions, keeping records
up to date, and consistent and secure without a central party by using a certain type of
software system that orders transactions into blocks and using certain types of cryptography
ensures to quite a high level of certainty that all of the transactions are valid, verified,
verifiable and typically at least in the default sense, will be public in some sense so they
can be verified in that sense. And the most well known blockchain is Ethereum. Or sorry is Bitcoin… And the second most well known one I think
is Bitcoin. 0:17:19 Aaron: You just described the future. 0:17:20 Houman: Yeah, maybe the future. Maybe that was a freudian slip. But there’s certainly two very important ones,
Bitcoin and Ethereum. Two very, in some sense, very similar public
open blockchains. There are private ones as well such as the
Hyperledger Project. Private in a sense of they have various degrees
of permissions for entities to be involved in writing transactions and to reading transactions. And to verifying them as well. Another one, another sort of more private
type of blockchain is… Or a distributed ledger that’s not a blockchain
actually is something like the Ripple Network. And finally as a consequence of being a distributed
ledger, in principle, it is a sort of a global ledger, a universal database of records because… And that’s achieved as a consequence of being
distributed. So if everyone or every, at least member of
the network, the nodes, if they have a copy of that record, in that sense, that copy that’s
shared is a universal ledger, a universal database. And so people look at blockchains in terms
of what problems they’re trying to solve to the extent that people are trying to match
up different records across different companies or across divisions within a company to overcome
let’s say problems of being siloed. 0:18:38 Houman: People view distributed ledgers
as being a solution to that kind of problem and to the extent of, in the more public sense,
perhaps even in a public or governmental sense that governments are trying to make a single
record that can’t be changed, at least not very easily, of important governmental business
records like land titles. People look to a distributed ledger, a blockchain
technology in that sense as well to use as opposed to again somebody’s computer or some
company’s computer and their servers and having to sort of trust them, in many ways that we
think about trust, both in a sort of technical sense and also in a operational risk sense
as well. So if the software is operating correctly,
if the incentives are there and blockchains in principle offer superior record keeping
functionality, but it may come with some costs as well in terms of power usage or in terms
of regulatory goals that may not be as easily achieved under a distributed framework. So that’s blockchain I think, which should
be crystal clear now. [laughter] And another one is I think big
data or data analytics that goes with it and that’s basically a buzz word that’s not as
buzzy as it used to be, but maybe it still is. 0:19:58 Mary: That was the topic of our panel
in 2015 was big data. So I think it’s on Dean’s curve. I think it’s not cool anymore. 0:20:06 Houman: Yeah. So maybe that describes me as well. I think I was cooler in 2015, but big data
is just a consequence of the growth and information in society and as a consequence of keeping
information and everything becoming increasingly digitized and recorded, whether it’s your
emails or where you’re sitting right now because your chair has a sensor on it. There’s been an explosion of data. We saw that and certainly how that impacts
lawyers I think is what we probably care the most about. So in data about your clients, your prospective
clients, judges, juries, how they’re gonna make decisions and ultimately just reading
through all the information and literature of big data, I think that ultimately it’s
really trying to make… And especially for lawyers, I think just make
better decisions, make the decisions data driven. 0:20:53 Houman: Should I appear on this panel
or should I not? What’s the data about the consequences of
it historically. Kinda make a prediction about what’s gonna
happen afterwards. So I think ultimately lawyers are certainly
trying to improve their decision making about what clients to take. How much time you spend on them, what price
to charge them and of course all other decisions that go into the toolbox of litigators or
transactional attorneys or maybe more regulatory orientated attorneys as well. So that’s what I think when I read this information
literature about big data, about how that could impact a legal practice as well. I think that’s it. 0:21:26 Mary: Aaron, did you wanna talk a
little bit about Smart contracts? Define what it is for me too. 0:21:30 Aaron: Sure. So that was a great description. Thanks again for inviting me to chat about
this. So blockchains are not just a data storage
system, but more advanced blockchains particularly Etherium which Houman mentioned off the bat,
they don’t just store data, they actually store computer programs. Those computer programs are referred to as
Smart contracts and they’re a little bit different types of computer programs than what we’re
used to in the past. So they’re computer programs that are run
by multiple different parties and what that means is that the computer programs are fairly
autonomous and that is particularly important in the context of certain commercial transactions. So you can program a computer program to do
things like transfer assets, to facilitate payments and you can trust using a blockchain-based
network that those payments and those transfers will occur. 0:22:21 Aaron: So it prevents opportunities
for opportunistic behaviour which if you’re a lawyer, you know that there’s plenty of
opportunities where parties will try to back out of a deal, will try to reinterpret a deal
in ways that would be favorable in their interest, but not necessarily in the spirit or the intent
of what the parties initially thought about. So a Smart contract is basically just this
little little computer program that’s really great at transferring assets that are secured
on a blockchain. So that asset could be something like Bitcoin. That asset could be something like Ether. That asset could be something represented
on a blockchain like a title to intellectual property or something else like that. But you can begin once you have these computer
programs, to model out portions of legal agreements using computer code. That’s pretty exciting and you’d say why would
we really wanna do that? 0:23:05 Aaron: Well computer code is pretty
precise, if I program it purposefully and correctly, I can begin to do things really
fast in real time. So we can build things like real time payment
systems or real time transfers of assets and since assets on a blockchain can be divided
’cause they’re digital, I can break them down into really really really tiny pieces. So we can begin to facilitate things like
micro payments and begin to facilitate transactions related to that. And again you may think why would we need
micro payments? Well the answer is most things online are
actually paid for in micro-payments right now. So if you’re streaming something on Spotify,
you’re effectively facilitating a transfer of 0.005 cents from Spotify to a label into
the various different publishing companies. If you’re viewing an ad, those advertisers
are paying micro-payments effectively to the publishers. So we can begin to re-imagine how we engage
in commercial transactions and more seamlessly transmit payments and other things like that. 0:23:58 Aaron: And the other thing that you
can do with these Smart contract programs is begin to disintermediate certain functions
and a lot of these functions are quasi-legal in nature. So you may have heard about token sales. It’s a little small program that’s basically
dis-intermediating what investment banks do in part, what accountants do in part, what
other intermediaries that facilitate the sales, products do in part. So we’re dramatically reducing the cost of
selling things online by relying on these small little programs. And that’s why there’s so much excitement
related to it. And that’s why, frankly, whether there’s hype
or not, in the long run, we’re gonna see increasingly, agreements that are not just based on natural
language but also in part written in source code. 0:24:38 Mary: And so, Susan. On that note, is this AI, is this blockchain,
is this gonna replace lawyers? 0:24:45 Susan: I think, first of all, as much
as everybody or some people would like to see a world without lawyers, [chuckle] I do
not think that that’s gonna happen. At the end of the day, AI is just another
tool in the lawyer’s toolkit to help them work to become more efficient. It can’t replace a lawyer’s judgement. That’s what they’re being paid for. And even the best AI needs some human intervention
there. In many ways, AI is making the lawyer’s life
better. It’s doing very mundane tasks. Who wants to spend time going through 10,000
documents when you can use technology to do that in a much quicker and actually more accurate
way. So, what it really does is leave time for
attorneys to spend their focus on the more bespoke higher value work. And that’s the work that our clients wanna
pay for. They don’t wanna pay for the lower value work. And that’s the type of work that I think AI
is gonna help us move to the side and free up our time for. 0:25:44 Mary: Okay. And Bennett, did you wanna comment on the
impact that you have seen or are predicting with the blockchain and for lawyers? 0:25:55 Bennett: Yeah. So I think you can sort of start to extrapolate
based on what we’ve heard so far, where this is going. But I think it’ll happen in three basic phases;
first, there’s gonna be awareness; second’s gonna be understanding; and then there’s going
to be competency. First, lawyers are gonna become more aware
of the blockchain. What it is. What it can do. Similar to the general public understanding… If a client wants to do something interacting
with the blockchain whether that’s use a Smart contract for an aspect of their business or
set up their stock certificates and their company ownership, their corporate structure
through the blockchain. Understanding what that means for their clients. And then second will be a more in-depth understanding. Once they’re aware of what it is. And just sort of being able to speak knowledgeably
about a blockchain, really understanding what the implications are if an agreement is executed
via Smart contract. 0:26:58 Bennett: Is there any possibility
for versability. What sort of things are you setting yourself
up for? What are the specific terms of the Smart contract
around self-execution and payments and micro payments? Sort of understanding the full scope of it
and then finally I think they’ll be, sort of a competency or expertise in that area,
where there will be blockchain specific practices or blockchain specific practices within different
aspects of the law. Right? Because there could be a blockchain specific
IP practice, a blockchain specific securities practice. Because as Dean said it’s not gonna solve
every problem in every arena but specifically within the legal field, there are gonna a
lot of different applications where blockchains are involved. And I think that specific practices and attorneys
with competency and expertise within those fields are going to start to pop-up. 0:27:53 Mary: Okay. Susan, did you wanna add something about in-house? 0:27:56 Susan: Yeah. I think on the in-house side, again I think
blockchain is really new. I think it’s a question, does it live up to
the hype or does it live up its promise? I think if it does live up to its promise,
it really can change the way contracts are made and enforced, and the way they’re handled
within a company. Making it much more efficient for corporate
counsel to manage their documents and to execute and enforce them. So, I think there’s a lot of promise there
for the inside counsel within the corporation. 0:28:32 Mary: So now we can all sort of… Do you have anything to add to that? 0:28:36 Aaron: Yeah. I think to the point before, the law firms,
they’re already onboard. I’m also the chair of the Enterprise Ethereum
Alliance Legal Industry Working Group. It’s a consortium of about 300 different enterprises
at this point in time. Legal Industry Working Group has about 30
law firms. These aren’t small law firms. They’re top AM Law 100 law firms; Wachtell,
Skadden, Davis Polk, Simpson Thacher. They’re all interested in this because their
clients are demanding expertise in this area. And there’s a number of specific practice
groups that have emerged. So I think lawyers just said, basically I
need a fluency for it. When it’s actually gets embedded into practice
on the day-to-day basis, I think that there’s a lot of prototyping going on, I think it’s
mapping out what are the true capabilities. 0:29:20 Aaron: And the way, I’ve kinda conceived
it and I really think about is, if you wanna program an asset and program the transfer
of an asset, that’s what a Smart contract’s really great at. And that’s pretty powerful. So things that you can set up with a Smart
contract are things like virtual escrow accounts. So you don’t necessarily need to have a trustee
service to manage and hold custody of certain assets. You can just have that managed by this little
autonomous program. So that seems like a fairly simple task but
there’s a number of large businesses and financial services companies, that’s what they do. They basically are custodying assets on behalf
of their clients. Well maybe we don’t need to use them anymore. We can actually begin to use these little
programs to manage it, ’cause they do a better job. The second thing is, I mean, I’m sure you’ve
all heard about how there’s been a wave of cyber security attacks that impact law firms. And why has that happened? Because there are single points of failure
in the system. They’re storing documents, those documents
are very valuable, and so, not surprisingly, hackers have been trying to obtain them so
that they can trade on that information. That’s a problem, and it’s a problem because
law firms are not particularly great at IT. 0:30:24 Aaron: Why should they be handling
this? Why don’t we instead use a blockchain as a
way to actually facilitate a more decentralized way to store these agreements, so we can keep
our agreements private and we can basically make it much, much harder for any cyber security
attacks to occur. So I think we’re going to see a lot with that. The third thing is, is that blockchains are
fundamentally a chain of signatures and signatures are really important to legal agreements and
right now we have systems that are appending on signatures onto the contracting process,
but in reality we should be starting with e-signatures at the base and building up from
there, that’s in part what we do through our Open Law platform. 0:31:00 Aaron: So it’s really that combination
of starting with e-signatures, using a blockchain to store it, ’cause it’s a really, really
permanent… Fairly permanent database that’s gonna last
a really long time. You pretty much can’t shut a blockchain off,
so a lot of these blockchains, Bitcoin and Ethereum, they’re likely gonna be lasting
for decades, if not longer, before they become obsolete. So that’s great if you have a long-term contract
to store an e-signature. I don’t really frankly trust centralized e-signature
services to maintain my client’s information and I don’t know if they’re gonna be around
for that long of a period of time, but a blockchain can actually remove that functionality. I can begin to think about storing all these
agreements, which are really valuable, in a more secure way, then I can begin to automate
anything that involves the transfer of an asset, so that’s most of, in a large part
of finance, it’s just structuring those transfers of assets and that’s what lawyers are often
tasked with, structuring them, building them and participating in them. 0:31:51 Bennett: Yeah, and you mentioned data
security, I’m sure everyone heard about the Equifax breach. That’s something that wouldn’t be possible
on a blockchain because there’s no single point of failure and on the blockchain all
of that data could be encrypted. If you think about it on a more macro level,
they had data on every one of us in a service that we didn’t opt into and blockchain in
a decentralized network, you would have to opt in to being a part of that network in
order for them to have access to your data and there’s a lot of decentralized identity
solutions out there. There’s couple, Netkey, Civic, that are trying
to solve this digital identity problem, where in order to do something really simple, you
have to give your social security number. They wanna have blockchain-based identities
where you can only provide certain amount of information, only what the service provider
needs to perform that service and share that data in an encrypted way on a blockchain and
that’s another really big application that will be much more efficient and much more
secure on a blockchain because Equifax clearly didn’t do a good enough job taking care of
everyone’s really sensitive information. 0:33:01 Mary: I just have a question, which
isn’t on the list, but, as sort of the average consumer, am I gonna have to learn how to
use the blockchain or… 0:33:11 Bennett: I think that the user interfaces
will be similar to any other internet application and the blockchain will just be operating
underneath and I think most people won’t be aware that there are blockchains operating
underneath the services they’re using, it’ll just work and it’ll work better. 0:33:28 Houman: I just want to add though,
that using a blockchain, although blockchain, in a sense, can’t be hacked because it is
so distributed and there’s so much computational power behind it, safeguarding its record keeping
essentially, that the applications built on a blockchain certainly have their own issues,
they can have their own issues, similar to or even new that’s the plague of legacy technology
from either a cyber security perspective or just, say, bad code perspective. So you probably heard of the DAO Hack where
a application, essentially, that was built on Ethereum was hacked because the code was
just not written well, and basically the way they timed the funding and transfer of assets
under the DAO was such that the account was updated after the request for funds was made,
so one of the hackers just found that flaw in the code and kept requesting funds and
the updating would not take place. 0:34:24 Houman: Another recent sort of hack
of an application using a blockchain happened with a multi signature wallet, where two out
of three… Or at least two out of three signatures need
to happen and basically the hacker there found a pretty obvious flaw in the code where they
would send in a function that wasn’t defined and that would essentially allow or cause
the wallet to reset the parties. So, just keep in mind that while blockchains
themselves are highly secure from a certain point of view, or generally speaking, the
applications built on top of them may not be and may have the same type of risk that
people just need to be aware of. Again, it’s not a criticism of blockchains
at all, but it is an awareness of risk that still goes into applications that use the
blockchain. 0:35:10 Aaron: Yeah, I think that’s right. The only point that I’d add to that is there’s
a slight conflation there of using the Smart contract, which is the program, so there’s
obviously gonna be bugs in programs, people are working out those issues. And then it’s using it to actually anchor
storage, so those are two separate things. So what’s happening is people are recording
a reference to documents that are being stored in a decentralized way, not on a blockchain
but on various different networks. So that is actually particularly secure, but
running a program, a Smart contract program, that can still have bugs. So think of it as when you first saw the internet
and it was blinking GIFs and it looked kind of funky and it looked kind of immature and
had a immature veneer to it. So everybody looked at the internet and some
people said, “This is not gonna work.” Other people looked at it and said, “This
is the best thing since sliced bread, this is gonna change the world.” I think we’re in that early stage when it
comes to blockchain technology, where it’s gonna look a little bit funny. There’s gonna be a lot of new challenges,
but the direction of it is, it’s growing at a pace that actually far eclipsed what even
I expected when I started really digging into this in about 2012. 0:36:17 Aaron: It’s moving at an exponential
rate that I think is really only akin to what we saw with the internet. So this isn’t like… I don’t actually think this is a lot like
AI. I think it’s much more akin to the internet,
where this technology will just be pervasive in ways that we don’t really anticipate, and
even really notice. Very few people understand how the internet
works, but they all enjoy internet technology. I think it’s the same thing. But I do think for lawyers, lawyers are actually
gonna be in charge of building these types of agreements, so lawyers are… They may not need to program these Smart contracts,
but they will need to talk to programmers and likely will hire programmers who can do
it for them, and I think that that’s what’s happening. 0:36:57 Aaron: For example, in the financial
services industry, they’re trying to model out pretty objectively verifiable financial
transactions of derivatives. That’s a huge portion of what most of the
large financial services companies do in New York and in other financial capitals, and
they wanna turn that, for the most part, into code, because it lowers their costs. It solves a lot of their pain points. It prevents abusive practices on the part
of counter-parties, and a lot of problems. Just to give you a quick example of that,
Ripple, which Houman mentioned, actually entered into a transaction with another company called
R3 where they agreed to sell a cryptocurrency at a pretty low rate, and they didn’t fulfil
their end of the bargain, allegedly. That cost R3, this consortium that was on
the other side of the deal, a billion dollars. If they actually embedded and used one of
these Smart contract programs, there would probably not be a dispute, and now it’s gonna
wind up being a massive, massive litigation. So these are they types of issues, and these
are the real pain points that are faced by financial services companies, in particular,
that I think are gonna first get addressed by blockchain technology, then it’ll bleed
into all these other areas. 0:38:00 Houman: And just one quick… One thing for lawyers, perhaps, just maybe
automating, with a Smart contract, collecting fees from clients, right? I mean, that’s probably a major pain point
for most attorneys that have any kind of practice. Essentially, though, would that require putting
their funds in basically a Smart contract escrow account before the provision of services
is required? That could be one requirement to [0:38:23]
____ essentially the transaction ahead of time, and the automate the payments to the
attorney. Assuming, of course, the clients agrees with
them, and is not going to argue over the bill. 0:38:33 Mary: Yeah, I don’t know if the bar
associations are ready for the blockchain just yet. I think there’s just a lot of… Did someone put up their hand? No? Okay. 0:38:44 Houman: Yes. 0:38:45 Mary: Sure. 0:38:46 S?: You prompted me to. [laughter] You… So over the longer term I’m pretty excited
about blockchain [0:38:54] ____… One thing that’s fundamentally a challenge
now is, I don’t know if it’s called execution time or transaction speed but we’re in a technically
pretty constrained [0:39:05] ____ on the number of transactions so there’s no way that, for
instance in Equifax [0:39:11] ____ 157 million, number of files. Could blockchain even reasonably support something
like this given scale and time and [0:39:21] ____ subscription costs and everything. [0:39:27] ____ But it will scale over time
we knew this, but that’s the future. So swapping out an existing system and replacing
it with blockchain today, in a lot of industries it’s a non-starter [0:39:33] ____. 0:39:34 Aaron: Yeah. I think that’s absolutely right. I’d say you’re… We’re in the dial up phase, right? So for those who remember that, just go back
to dial-up internet. It was pretty awful, but broadband was on
the horizon, and people were talking about how they were gonna build higher-speed internet
connectivity, and we have it today, right? What we get on our phones vastly eclipses
what we initially started with, with regard to the internet. So right now on Bitcoin, you can only add
information to the database every 10 minutes, or 10 to 12 minutes. On Ethereum it’s about every 10 to 12 seconds,
but that time is gonna get reduced down shortly on Ethereum to every four seconds. So in a matter of seven years, we’ve gone
from 10 minutes down to, probably shortly, four seconds. That’s a pretty significant increase in speed,
and there’s a number of different proposals on ways to actually speed it up even further. So I think that similar innovation like we
saw with broadband is gonna happen with blockchains, and then they’ll begin to eat up more and
more transactions. But it’s a known problem. When you think about contracts, contracts
are usually not as time-dependent as actual legal agreements. They’re not usually as time-dependent as things
like identity or some of the other potential use cases for blockchains. So this could be an area, actually, where
it emerges first. 0:40:45 Bennett: That’s actually one of the
bigger points of contentions in some of these blockchain communities, is how to scale the
networks. There’s, with Bitcoin, the big… Or, one of the big watershed moments came
about a month ago with SegWit, and then Ethereum is going through something similar right now,
but it’s something that they’re actively working on, because the idea is to have any potential
application that the blockchain could be helpful, they want to be able to have it be supported
by the underlying ecosystem. So there have already been incredible advancements
in that arena, and there’s no reason to think that they won’t improve, but it might be a
little bit messy as these interested parties figure this out, because there are… It is a decentralized network. There’s no CEO of Bitcoin who can say, okay,
this is how we’re gonna scale the network. There sort of has to be these agreements,
and sometimes there’s a fork of the network, and some people involved in it might wanna
do one solution to scale and some might wanna do the other, but I think, given time, there’s
no reason to think why they won’t be able to effectively scale their capacity for transactions. 0:41:55 Mary: Okay, so we’re gonna shift a
little bit, and we’re gonna talk about, maybe back to 2015 I don’t know but we’re gonna
talk a little bit about data and analytics and Susan maybe you could tell us a little
bit about what you think is up on the horizon for products around data and analytics. 0:42:09 Susan: Well, I think it’s really an
exciting time to be on the product side. I think AI presents the opportunity for us
as information providers to create the next generation of content tools. I think we’ve seen a lot of development in
the litigation side, e-discovery, due diligence, litigation analytics, so I see the opportunity
on the transactional side. Of course, that’s kind of the world that I
live in, particularly in contract drafting, creating standard contracts, being able to
show what’s common language, what’s deviation, as well as using AI to create a statistically
relevant model. I think other areas are in the area of disclosure,
for instance SEC disclosure, what are possible anomalies, what might be flagged by the SEC;
just being able to identify earlier, like where is your possible risk. So, I think from my perspective, on the transactional
side, there’s tremendous opportunity. 0:43:18 Mary: Yeah and I think that echoes
some of what Dean has spoken about prior which is the influence of the accounting side of
things, where you’re looking for those transactional variances and I think that the analytics can
be very interesting. I do wanna reach out to Michael if he’s listening. Michael, I don’t know if you wanna share… You could share what you do… 0:43:43 Michael: I think in litigation analytics,
there’s a huge amount of area that’s out there that’s being used right now for strategy,
there’s a lot of opportunity for using it in other scenarios. I think what Mary is alluding to is I recently
put together a gender diversity analytics system, so you can actually look at individual
law firms, their commitment to gender diversity by looking at the [0:44:07] ____ notes of
appearances that are made on individual cases. So this is a different type of way of using
the data that’s out there, that’s available in litigation data for something very different
than just [0:44:23] ____ litigation strategy. It’s actually can be used for gender diversity
commitments. And actually [0:44:29] ____ not only just
with lawyers, it can look at companies and clients to see what type of lawyers they actually
hire across industries [0:44:38] ____ see if they’re actually committed to gender diversity
as well. You can do this with gender but you can also
do it with as many diversities that you can imagine. And it’s just a way of using just large, big
data in the [0:44:53] ____ public realm is actually trying to get at question other than
“am I gonna win my case or not?” There’s a lot of other questions that are
out there to be answered by this data. I see that as a big opportunity to answer
the questions that people aren’t right now asking ’cause they don’t even know that the
answer exists in the data that we have. 0:45:15 Mary: Just to open it up even further
on the Internet of Things, there has been a lot of panels on that, but the whole… What are the challenges that come up around
that data? 0:45:26 Houman: I think with lots of data,
if you look in the big data area, there’s structured and unstructured. And unstructured data often comes in various
different formats and just getting the data in a similar format or a similar structure,
so you can do the type of analysis or analytics on it is a challenge in general. With the IoT specifically, even with the data
that’s structured, it’s often structured in different ways because they’re coming from
different sensors, from different manufactures or different IoT platforms so even within
the world of IoT there’s lots of variation. And if you look at what is big data, variety
is one of the four or five Vs depending whose school of thought you go with, managing the
velocity, volume and the other Vs out there. 0:46:16 Houman: So, variety of data is a big
challenge with IoT as well, but coming back to the law, as sensors pervade our lives and
increasingly so. You can imagine lots of different ways that
IoT data is and increasingly will be used in legal practice, whether it’s something
like evidence, it’s like “I knew where you were” and when you were there and that you
are either guilty or perhaps innocent of a crime; or something in the civil law transactional
sense with respect to maybe contract execution, increasingly outside of finance as well. People are trying to, in a sense, automate
the performance of contracts by tying them together with sensor data or data from IoT
platforms and that’s something at Clause we’re looking at, in the sense of where the goods
are, what condition they’re in, can trigger compliance with contractual terms and conditions;
and that is something I think could be very powerful in the contract area outside of finance,
which to a large extent is very amenable to being digitized and automated whether through
a blockchain or not. 0:47:24 Aaron: So, it’s be turning contracts
from static objects into more dynamic objects by feeding data into them and then modifying
performance obligations on the fly. 0:47:34 Houman: Right. 0:47:34 Aaron: So thinking about lawyers not
as scribes but more as project managers who are beginning to build out all these contingencies
and clients having real time performance obligations modified and that’s the shift that I think
we’re going to. That’s huge, right? Think about that for a second. Lawyers have been spending centuries just
writing things down, instead now we’re thinking about how we can actually turn contracts into
pieces to manage commercial relationships in more dynamic ways? 0:48:01 Houman: Yeah. So in a sense the contract itself is managing
the relationship. It’s changing in response to what’s going
on in the real world so maybe a warranty term starts out at being 12 months but because
of what happens in the real world, the warranty maybe shrinks to six months or extends to
18 months. There’s definitely commercial desirability
that it would not go too long or too short within the parties’ interests but that ability
to make contracts more dynamic, more dynamic than they are now is I think exciting to a
lot of people. Because it does take out a lot of friction
in the relationships and this steel-ness of contracts that oftentimes are just a point
in time reflection of the party’s interest. There’s a question. Yeah? 0:48:42 S?: So can you give the example of
where this automatic adjustment of a warranty period, how would that… It’s easy to envision Smart contracts doing
financial transactions. But can you give an example… 0:48:58 Houman: Yeah, I mean I don’t know
right now of a contract that actually has the warranty terms adjusting in response to
something out there. But I could imagine if it’s the case that
the quality of the product, the error rates or whatever it is, the defect rate of the
products is higher than anticipated the buyer will say “look, in response to having more
defects in the goods than I thought I would… It maybe should have been 0, maybe it was
0.2% or 2% I want the warranty terms on the ones I have being extended as a consequence. Because most manufacturing supply agreements
often have, the acceptance of the goods often depend on the buyer’s testing period of the
goods as well. 0:49:38 Houman: And if those failure rates
turn out to be higher than anticipated, in addition to maybe a price reduction, an adjustment
of warranty terms, perhaps a change in indemnification, something like that can happen where the contract
is being a little more reflective of how parties would like to renegotiate the contract if
they had the opportunity to do so, but the sort of doing so at the instantiation of the
contract. Besides that right now many of these agreements
already have dynamic price terms which oftentimes depend on not just the general state of the
markets but oftentimes the sellers costs. So it’s just cost plus contract so the price
is some function of the sellers cost and that could be quite easily, or relatively easily
at least incorporated into the contract. 0:50:25 Aaron: And then it’s not just one
dimensional, it’d be multidimensional so if something happened to one agreement, it could
then modify other agreements in the chain, right? So other agreements that may be dependent
on that, I think particularly with the supply chain use cases, there’s lots of interdependent
relationships so you could start threading all those changes all the way though, in some
ways. So think about a most favored nations clause,
let’s say you had that provision in place, you provided another party with more favorable
terms, so it could automatically rework all those provisions without having to go through
that cumbersome amendment and restatement, right? That would be a huge advantage. 0:51:00 S?: Who wants that? 0:51:00 Aaron: Who wants that, right? [laughter] 0:51:02 Aaron: But you negotiated that, right? So. It just creates more friction and… 0:51:06 Mary: Can I ask question? How does that work practically? So I contract with somebody and I have a warranty
of six months and then all of a sudden somebody else does something and my warranty changes,
how do I know that? 0:51:20 Houman: I mean, yeah, I would’ve [0:51:21]
____ it’s still be in the same seller, so if your counter party does something in the
sense that they deliver goods that are more defective than you thought. So it’s already agreed that if a defect rate
is above a certain threshold, the warranty terms would be extended. 0:51:35 Mary: So it wouldn’t be a surprise
to me… 0:51:36 Houman: Absolutely not. 0:51:36 Mary: I mean it would a good surprise. 0:51:38 Houman: Right, yeah exactly. Just like now service level agreements. So service levels have some expected threshold
and if you don’t meet the service level then you automatically get a service level credit. I think the same approach there. You have a question by the way. 0:51:52 Mary: So it just seemed kind of random
but now I get it. 0:51:55 S?: I have a beginner question about
blockchain. So you mentioned using it’s blockchain technology
to help the law firms, to increase their security level, to better protect the trade secrets
and confidential information of the clients, could you explain a little bit more about
how the law firms would still be able to control and have possession of the information or
documents if they are stored in a decentralized, distributed ledger? 0:52:31 Aaron: Yeah sure, so blockchain are
anchoring a much broader ecosystem, so think of a blockchain sitting at the bottom and
they can anchor references to a document. So you can take a document and put it through
a hashing function and get a unique fingerprint for it, store that on a blockchain and then
you can access that information from decentralized file storage systems that are coming on board. So some blockchains like Ethereum have native
implementations. There’s other projects for example there was
a massive token sale backing a project called file Coin which is intending to build out
a system where it take a files, it breaks it into little tiny pieces, and it scatters
it like seeds across a number of different computers so you can never get the full piece
of the document from any one party unless you have control over the authorization at
a key level on a blockchain based system. So then you sign a transaction to get that
document back, it hits the blockchain and then it threads it all the way back through
to you and then you can see the file. 0:53:27 Bennett: So that way you can share
data files, whatever sort of form you want to describe it in, in a more secure way than
just emailing it or something. 0:53:37 Aaron: Yeah and this is why blockchains
are not just about the ledger functionality, it’s a much broader ecosystem that’s being
built. An entire different way to think about computing
systems from storing references to information to how that’s actually pieced together, so
it’s much broader than Smart contracts. So just thinking about how we can manage things
in a much more decentralized manner. 0:53:57 Bennett: In the simplest terms, it
makes sure that only the people with the correct or the proper authority to view those documents
can view them. That’s the level of assuredness you’re getting
through very sophisticated cryptography algorithms and the decentralized storage network. The attorney would be able to see the documents
that they have permission to see, the client would be able to see the documents that they
have permission to see and the storage, the decentralized storage makes it such that only
those people… It’s not a direct relationship but essentially
that’s the benefit you’re getting, that only the people with the proper permission, the
proper key, can see the documents that have been stored within the system. 0:54:38 Aaron: And the files are broken apart
so it’s spreading the risk, it’s similar what we do in a lot of context. 0:54:44 Houman: But doesn’t that push the
problem of the security then to the key… To keep your key stored. 0:54:47 Aaron: Absolutely. It doesn’t resolve those key management problems
but it solves the honey-pot problem that faced Equifax and faces a number of different companies. 0:54:58 Mary: The gentleman in the… 0:55:01 S?: So is it fair to say that’s the
circumstances you envision lawyers or law firms using this blockchain technology to
store contracts [0:55:10] ____ who has their confidential information, just to, when the
law firms need to transfer the data not that the law firms just keep up the storage on
their own server, instead store all the documents in a blockchain system. 0:55:27 Aaron: They wouldn’t store it on their
server. Think of it as like a decentralized cloud. Yeah don’t store it on a DropBox, don’t store
it on an Amazon AWS server with specified permission. Don’t stored on an Azure instantiation instead
store it in decentralized cloud that’s much more secure. 0:55:45 Mary: Before we take, we’ve got three
questions. How much does a blockchain cost? I wanna know. [chuckle] 0:55:54 Aaron: It’s free. It’s an open sourced protocol so you can spin
it up. Every blockchain has certain incentive systems
baked in. Every time you engage in a transaction you
have to pay a fee to the parties that are adding information into this database or running
computational processes. On BitCoin that fee structure is way out of
whack. It’s about like $7 per transaction now. On Ethereum it’s much lower but it’s pretty
much like AWS you have to pay for each computation, for every bit of storage that to use, that
same type of model is built into a blockchain. 0:56:22 Mary: Okay. 0:56:24 Bennett: Just give it an actual number
we stored something on blockchain like a simple document, a hash of a document the other day,
it was like 27 cents. 0:56:34 Mary: Okay. So the gentleman in the white beside the gentleman
in the green had a question. 0:56:40 S?: I was wondering, how do you guys
see this evolve over time in terms of the erosion of the [0:56:45] ____ base knowledge
it takes to develop some of these things, to develop contracts, there’s [0:56:49] ____
built into the systems, and like when we went from ledgers to Excel spreadsheets and then
you’d put the numbers in, that’s just the way we did it. You look at the formula and you see the formula’s
messed up so everything [0:57:01] ____ after, in succession, was kinda messed up. How do you guys see that in terms of 10 years
from now, nobody knows how they got there, how their [0:57:11] ____ interims problem. [overlapping conversation] 0:57:17 Aaron: I think that’s a fair point. I think that’s a concern. Particularly since a lot of lawyers may just
be relying on programmers who may not know what they’re doing. I would say just developing the technology… The time necessary to develop the technology
has decreased significantly. I think that’s gonna continue. So, for example programming… BitCoin actually has a very light Smart contracting
scripting language. It’s nearly impossible to use, Ethereum has
dramatically reduced the cost of that. I imagine that we’re gonna see other blockchains
and other versions that make it even easer to do a lot of the tasks. Same thing about this decentralized storage. A year ago it was really hard to do that. We built out pretty much an entire system
from signatures to storage to Smart contract execution. It took us two months to build. 0:58:05 S?: [0:58:06] ____. 0:58:12 Aaron: I think it cuts both ways,
like everything else. There’s benefits to it, there’s downsides
and we have to manage that. 0:58:16 S?: Let’s not have the illusion at
this point in time that contract language outside of Smart contract is consistent or
simple. I think that one of the things that we deal
with and Susan’s been dealing with this also, is that you have very complex language that
seems almost designed to obfuscate rather than to do that. [0:58:38] ____ interesting, [0:58:40] ____
I think as you get into more technology you sort of [0:58:42] ____ and you start to get
to the simplicity and standardization of that. I think the Smart contracts to some extent,
give you that same opportunity, ’cause it’s a standardization for things that really shouldn’t
have that much variance in it. So if you get it wrong, of course you do,
but I think there is some [0:59:00] ____ and benefit from that. I don’t know, I’ll throw it back to the [0:59:04]
____ smarts up there. 0:59:05 Bennett: I think there can be many
forms of the standardization too. If you think of a website builder. Someone without any development knowledge
or coding knowledge can through a drag and drop builder, build a pretty sophisticated
website right now something goes wrong someone who is a coder is gonna have to go in and
fix the problem and see what happens, but in aggregate I think it’s definitely a positive
that someone without an in depth knowledge can build something more sophisticated and
complex on top of the technology and there are gonna be things that go wrong, there’re
gonna have to be people who are experts who know how to fix them but I think overall it’s
definitely a net positive. 0:59:42 Mary: Michael, I think has a question
and then the gentleman [0:59:44] ____. 0:59:45 Michael: Yeah, just one of the advantages
and actually disadvantages and also [0:59:50] ____ advantage of a traditional contract is
that there is ambiguity in it. So contracts, not all the terms are spelled
out and often times parties on both sides choose not to clarify ever single possible
term. Using words like reasonable behaviour, or
reasonable levels of X or Y. It allows some wiggle room later, which also
could lead to litigation and bad things as well. But Smart contracts… I’m not sure, are there avenues to allow for
wiggle room later on or does everything have to be 100% clear cut beforehand and really
set in stone? If that’s the case then how do you deal with
the inherent inability to set everything is stone. 1:00:42 Aaron: Yeah that’s absolutely right,
so at Open Law we’ve solved this problem so you can… They actually live together, so anything that
can be turned into a computable contract term, we have the ability for you to do that. And everything else could just be in traditional
natural language [1:00:56] ____. So I think a lot of people when they look
into this they think everything’s gonna turn into code, that’s obviously not the case. If you’ve ever been a practicing lawyer you
know that that’s not the way contracts work, but I think it’s a world, that [1:01:06] ____
not of or but one of end, where you’re gonna have natural language provisions that work
hand in hand with computable provisions. We saw this in supply chain with EDI arrangements
starting in the ’70s, so this is just an enhancement of what’s already been out there. But once you begin to go into that mode, you
can begin to re-imagine commercial relationships, so you should check out our demos but we’ve
built an employee offer letter where you don’t get paid every two weeks, you could paid every
minute, right. 1:01:29 Aaron: So you can begin to imagine
just having this friction-less transfer of assets, a world that’s a little bit different. So why aren’t we paid… Why are we paid every two weeks? It’s because the payroll processor has to
go through and settle things up. And also maybe the company wants to carry
the float on whatever payroll that they need to pay. But people should get paid every, pretty quick. We wouldn’t have this horrific industry of
payday lenders if people actually got paid faster and that has a significant cost to
it, same thing with managing cap-tables, that’s exceptionally brutal and cumbersome process,
same thing. So we’ve put together a basic restricted stock
award that gets approved by a board of directors. So we’ve combined all these natural language
provisions, but we have a computable provision in place which does straight vesting. So why do you have to wait to get your stock? Why don’t you just get it instantaneously
every minute, and a fractional share once you receive it? We don’t do that today because that’s hard
to do. But with this technology we can begin to streamline
a lot of that process. And in that process we can re-imagine what
we can do commercially and what lawyers can actually be capable of putting together. 1:02:32 S?: I would also add though that also… Oh go ahead, sorry. 1:02:35 Mary: Sorry, I was just gonna because
we’re getting close to the end, so I was just going to ask for the one last question and
then everyone can give their final thought, is that okay? 1:02:44 S?: Perfect, of course. 1:02:45 Mary: And then afterwards we’re going
to have, there’s lots of cool companies out there, people can chat about what we’ve been
chatting about but go ahead. 1:02:53 S?: Okay thank you. Getting back to the decentralized file storage,
and assessing that through the lens of either user error or flaws in end point security,
is there an increased risk in… I understand all the benefits. But is there an increased risk of sort of
irreversibly losing access to the actual content, to the files? The same way that we all read recently about
people, Bitcoin investors getting their phone number’s hacked and then people siphoning
off money, there’s just no way to reverse that transaction. You can’t call the bank and get that back,
similarly, so if you lose whatever that hash is or whatever you need to get to put the
pieces of file back together. You don’t have any recourse or is that not
accurate? 1:03:42 Aaron: Yeah, so the hash is stored
in a blockchain, so blockchains are pretty resilient and tamper-resistant, so even if
the underlying security of the blockchain went completely out the window, you could
always reverse it back. So you’d still know where that file in these
decentralized file storage systems. I think that these systems are solving the
issue related to redundancy, that’s I guess the second piece of what you’re asking. Will there be enough redundant files such
that if there’s some failure on the part of various different computers you can still
gain access to it. My understanding based on reading the various
different approaches is they’ve thought about that and that’s accounted for. The key management problems are there, but
that’s no different than any cyber security issue. But I think what’s better about it is that
if you have that key management issue, you’re not gonna lose your entire corpus of documents,
maybe you’re gonna lose a smaller fraction of that, that’s the advantage. So it doesn’t eliminate the problem but it
narrows that surface potentially, and that’s what people are interested in and excited
about. 1:04:38 Mary: Okay so we’re gonna start with
Susan. And if you could give a tip about if you’re
interested in blockchain AI or Smart contracts, where would you go to learn more? 1:04:48 Susan: I think there’s a very interesting
blog that I’ve been reading, The Artificial Lawyer, so I’d recommend that. 1:04:54 Mary: Okay. Bennett? 1:04:56 Bennett: Same Question? 1:04:57 Mary: Same question. This is down the line and then… 1:05:00 Bennett: So if you’re looking for
one beginner resource, there’s one very specific blog post that I’ve found to be particularly
helpful. If you’re looking for more recurring musings
on it, I’d follow Naval Ravikant on Twitter, he’s the founder of AngelList, he’s really
smart guy, has a lot of interesting thoughts around blockchains and where they’re going. 1:05:22 Houman: Oh yeah I would say… But what was the blog post you were gonna
talk about? 1:05:26 Bennett: Yeah so I just know it as
a really long URL and I think it’s from the IEEE, but I… If anyone… 1:05:33 Mary: Can you put it on twitter? 1:05:35 Bennett: Yeah I can tweet it out,
I can tweet it out after this ’cause it was really helpful for me to understand. 1:05:41 Houman: Yeah and there’s lots of great
resources, I actually think that legal tech publications are pretty good in distilling
things down as they matter for practicing attorneys if that’s your point of view, besides
that I think CoinDesk is a good source for general sort of blockchain, Bitcoin, crypto-currency
information. And then there’s law firms that’s will have
publications. Again that is focused towards the legal issues
surrounding the newer technology, I think tend to be good as well. 1:06:08 Aaron: Yeah, I think that’s right. I’ll make a slight plug. I’m publishing a book in the spring from Harvard
University Press that talks about a number of these issues. Provides a technical overview, talks about
applications in various different areas, including applications that we haven’t even talked about
like building virtual corporations and having machine to machine transactions. So that’s kind of a subset of big data, and
also running AI on a blockchain, which I think a lot of people are interested in, including
IBM and other parties. 1:06:36 Bennett: I’d actually add one more
thing. If people prefer to read books over blogs
or twitter, there’s a book called The Business blockchain by William Mougayar, which is really
easy to grasp but also does not gloss over the technical details of blockchain. And that is a really good read too for anyone
who’s interested in more of the business and practical applications of blockchains instead
of the nitty gritty of the tech. 1:07:01 Mary: And so I will have the final
word. I interviewed Mark Oblad, who has still a
legal tech company called Valcu, but he’s also in-house now. And he is a lawyer who’s also a programmer. And he did a lot of research and talked to
many other people and created this huge paper that we turned into an interview. So it’s on Forbes in five pieces. So if you just Google “Forbes” and my name
it will show up. It was a five part… And it’s very… I read it and I had to go through it and I
tried to make it user-friendly for people that ask questions like my questions tonight. So that’s another good source. And I wanted to thank everyone. This is a difficult subject, and I think you’ve
made it… I’ve come away with a lot more knowledge,
so thank you all for sitting on the panel tonight. And thank you again to Wolters Kluwer for
sponsoring and to Cardozo Law for hosting us. And there’s still a little bit of food out
there, so if everyone can head out that would be great. Thank you. [applause]

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