Smart contracts will eventually replace lawyers

 

The Swiss legal scene is currently in great excitement. Terms such as smart contacts, blockchain or document automation are making the rounds and are causing sleepless nights for many lawyers. What happened? LegalTech - the connection between digitization and law - has arrived in the time-honored legal profession. Two years ago nobody knew what this meant, today seasoned business lawyers fear for their jobs and think that they could soon be replaced by intelligent software and smart tech companies.

 

In fact, digitization will also change the legal industry, which has hitherto been spared from technical revolutions. And the fact is that legal business models that are based on billable hours in advance and therefore do not offer any incentive to increase efficiency are coming under pressure. Nevertheless, there is no technology in sight today that could completely replace the lawyer. In fact, the opposite is actually the case: digitization helps legal service providers to do their work more efficiently, more customer-friendly and more economically. The condition for this, however, is that the lawyers recognize that they are ultimately nothing more than legal service providers who solve a problem for the customer for a fee. The modern customer will always obtain the desired service where it is provided faster, better and cheaper for him. This does not necessarily have to be with the classic lawyer, but also with one of the many online services that are springing up like mushrooms at the moment.

 

The only technology to which a genuinely disruptive force can be ascribed today is the blockchain and the so-called smart contracts associated with it, i.e. automatically executing digital contracts. The blockchain as the basis for virtual databases, transactions and assets of all kinds is likely to represent the greatest technological revolution since the invention of the Internet or the smartphone. However, it is not primarily the lawyers who have to fear it, but first of all notaries, banks and registry offices (land register, commercial register, etc.). Their functions can one day be completely replaced by applications on the blockchain. And as is well known, everything that is technically feasible will sooner or later be done. It will only be a few years before blockchain applications become commonplace for us. So if you want to become a notary as a young lawyer today, you should reconsider this career choice ...

 

We are currently observing certain traits of hype in the scene: Many players in the legal industry think they are about to miss the post office and therefore want to jump on the bandwagon. It is clear, however, that not all celebrated LegalTech start-ups will survive by a long way. Switzerland's small market size alone will ensure this. In addition, in this country, in contrast to the USA or Germany, access to the law is much easier for broad layers, as numerous associations, unions, magazines, legal protection insurances and trustees take care of the legal problems of tenants, employees, consumers and small businesses.

 

Nevertheless, one should not underestimate the explosive power of LegalTech and its mostly young providers. Small and medium-sized law firms in particular, which often do not pursue an entrepreneurial strategy and only have limited funds for investments in technologies, will come under pressure. A modern clientele will increasingly look for the solution to their legal problem on the Internet and avoid expensive visits to a lawyer. In addition, small law firms are already struggling to find qualified junior staff, as the working model of the traditional lawyer is considered unattractive by “Generation Y”. To put it cynically: As clients age, so will their lawyers.