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Thompson n8584222
Innovation and Intellectual Property Law Student Name & Number: Hunter F. Thompson n8584222
Hunter F. Thompson
Law Student
Queensland University of Technology
Email: hunterfthompson@outlook.com
Phone: (04) 7907 7966
I submit the following article titled Disruptive technologies and the law: The
implications of recent applications of Artificial Intelligence (AI) & Distributed Ledger
Technology (DLT) for legal practitioners, to be considered for publication in the
Australian Intellectual Property Journal (AIPJ). This paper contains a 3000-word
analysis of the impact both DLT and AI are currently having on the legal industry.
The purpose of this analysis is to speculate, based on the already disruptive effect
these technologies have had, the rate at which these technologies will continue to
disrupt not only the legal sector but also other areas, such as finance and
agriculture. It is the further purpose of this paper to inform readers of the AIPJ,
particularly those in legal practice, of practical ways in which they can safeguard
their careers from disruption.
Kind regards,
Hunter F. Thompson
Innovation and Intellectual Property Law Student Name & Number: Hunter F. Thompson n8584222
Disruptive technologies and the law: The implications of recent applications of Artificial
Intelligence (AI) & Distributed Ledger Technology (DLT) for legal practitioners
Hunter F. Thompson
Law Student, Queensland University of Technology, Brisbane, Australia
Gartner Inc., a leading research and advisory company based in the United States that provides information
technology (IT) related insight for a range of industries, releases an annual Hype Cycle which depicts the
symbiotic interaction between the hype surrounding emerging technologies and actual commercial activity
(e.g. investment, development and utilisation). Machine Learning (an AI technique) and Blockchain (a
component of DLT) have passed the peak of the hype curve within the last 12 months, meaning the real
activity will soon begin.1
1
Future Committee, The Future of Law and Innovation in the Profession (The Law Society of New South Wales,
2017) 33.
Innovation and Intellectual Property Law Student Name & Number: Hunter F. Thompson n8584222
1.0 Introduction
This article will now consider a more in-depth analysis of the disruption these
technologies are causing in the legal industry among others, as well as their
strengths and limitations, after which a conclusion will be drawn about the approach
lawyers must take to disruption-proof their careers. It might be tempting for legal
2
Ibid 10.
3
Michael Janda, Commonwealth Bank faces 'very large' shareholder action on money laundering scandal (23
August 2017) ABC News http://www.abc.net.au/news/2017-08-23/commonwealth-bank-faces-shareholder-
class-action/8833860.
4
Katie Walsh, Shine Lawyers faces $250 million class action over market cap wipeout (27 September 2017)
Australian Financial Review http://www.afr.com/business/legal/shine-lawyers-faces-250-million-class-action-
over-market-cap-wipeout-20170927-gypmp4.
5
Future Committee, above n 1.
Innovation and Intellectual Property Law Student Name & Number: Hunter F. Thompson n8584222
practitioners to start to believe these developments are the beginning of the end of
lawyers, but in the words of British legal futurologist Professor Richard Susskind,
dependent upon the adaptability of lawyers to new technologies, the future for
lawyers could be prosperous or disastrous.6
An application utilising AI deployed this year by King & Wood Mallesons, is able to
assist international clients in determining whether a proposed deal requires Foreign
Investment Review Board (FIRB) approval.7 The program achieves this by allowing
lawyers to capture their expert knowledge within the program, and then replicating
the decision-making that lawyer would undertake to provide fact and context specific
answers to legal, compliance and policy questions.8 This application combines an
expert system, 9 with other AI techniques including on-demand natural language
processing and machine learning.10
6
Richard Susskind, The End of Lawyers (Oxford University Press, 2008) 269.
7
Michael Mills and Julian Vebergang, Artificial Intelligence in Law: An Overview (2017) 139 Precedent 35, 37.
8
Ibid.
9
Graham Greenleaf, Technology and the Professions: Utopian and Dystopian Futures (2017) 40(1) University
of New South Wales Law Journal 302, 310.
10
Above n 7.
Innovation and Intellectual Property Law Student Name & Number: Hunter F. Thompson n8584222
11
Dorothy Leonard-Barton and John Sviokla, Putting Expert Systems to Work (March 1988) Harvard Business
Review https://hbr.org/1988/03/putting-expert-systems-to-work.
12
Alan Tyree, Expert Systems in Law (Prentice Hall, 1989) 1; Richard Susskind and Daniel Susskind, The Future
of the Professions: How Technology Will Transform the Work of Human Experts (Oxford University Press, 2015)
187.
13
Ibid 221.
14
Richard Susskind and Daniel Susskind, The Future of the Professions: How Technology Will Transform the
Work of Human Experts (Oxford University Press, 2015) 85-88.
15
Trevor J. M. Bench-Capon et al, Logic Programming for Large Scale Applications in Law: A Formalisation of
Supplementary Benefit Legislation in Thorne McCarty et al (eds), Proceedings of the First International
Conference on Artificial Intelligence and Law (ACM Press, 1987) 190.
16
John Mannes, DoNotPay launches 1,000 new bots to help you with your legal problems (12 July 2017) Tech
Crunch https://techcrunch.com/2017/07/12/donotpay-launches-1000-new-bots-to-help-you-with-your-legal-
problems/.
17
Debbie Ginsberg, Expert Systems and Robot Lawyers (6 July 2016) IIT Chicago-Kent Law Library Blog
http://blogs.kentlaw.iit.edu/library/2016/07/expert-systems-robot-lawyers/.
Innovation and Intellectual Property Law Student Name & Number: Hunter F. Thompson n8584222
The key difference between machine learning techniques and expert systems
is the emphasis on prediction.22 Expert systems seek to merely model the
decision-making processes undertaken by the expert whose experience the
system relies on. In contrast, machine learning algorithms utilise vast
quantities of data, pattern analysis and even its own past experiences
predicting to make decisions in a way that is unique to machines.23 Machine
learning algorithms are also not subject to the onerous requirement of
continuous updating required by expert systems, as they are able to adapt to
new available data, can search for new patterns and thereby improve
forecasting accuracy.24
18
Above n 16.
19
Harry Surden, Machine Learning and Law (2014) 89 Washington Law Review 87, 88.
20
Peter Flach, Machine Learning: The Art and Science of Algorithms That Make Sense of Data (Cambridge
University Press, 2012) 3.
21
Surden, above n 19, 103-104.
22
Cary Coglianese and David Lehr, Regulating by Robot: Administrative Decision Making in the Machine-
Learning Era 105(5) The Georgetown Law Journal 1147, 1156.
23
Ethem Alpaydin, Introduction to Machine Learning (MIT Press, 2014) 3.
24
Coglianese and Lehr, above n 22, 1159.
Innovation and Intellectual Property Law Student Name & Number: Hunter F. Thompson n8584222
Expert systems are entirely reliant on the expertise with which they are
programmed, and the expert knowledge acquisition initially required to create
the large datasets on which these AI systems rely is incredibly time-
consuming and costly.28 A specifically legal expert system requires regular
updating, as new legislation or cases that alter legal advice must be
programmed into the system. Legal expert systems are also unfortunately
limited by foresight if a particular situation or variable is not programmed
into the system, it will be unable to provide advice in circumstances involving
that situation or variable.
25
Surden, above n 19, 89-90; Cary Coglianese and David Lehr, Regulating by Robot: Administrative Decision
Making in the Machine-Learning Era 105(5) The Georgetown Law Journal 1147, 1147; Ian H. Witten, Eibe
Frank and Mark A. Hall, Practical Machine Learning Tools and Techniques (Morgan Kaufmann, 3rd ed, 2011)
1.3.
26
Quintin Hardy, Wealth Managers Enlist Spy Tools to Map Portfolios (3 August 2014) New York Times
http://www.nytimes.com/2014/08/04/technology/wealth-managers-enlist-spy-tools-to-map-portfolios-html.
27
Theodore W. Ruger et al, The Supreme Court Forecasting Project: Legal and Political Science Approaches to
Predicting Supreme Court Decision-Making (2004) 104 Columbia Law Review 1150.
28
Lyria Bennett Moses, Artificial Intelligence in the Courts, Legal Academia and Legal Practice (2017) 91
Australian Law Journal 561, 563.
Innovation and Intellectual Property Law Student Name & Number: Hunter F. Thompson n8584222
Similarly, while machine learning algorithms are touted and prized for their
accuracy, this boon comes at the cost of understanding the way in which
these algorithms interpret data, commonly referred to as black-box
procedures.30 The process by which an algorithm takes input data, analyses
patterns in the data and eventually associates certain characteristics of that
data with specific outputs, is well understood. However, the way in which the
algorithm reaches these conclusions or what exact characteristics the
algorithm is relying on are completely unknown to the user.31
This interpretative limitation means the use of machine learning may only be
appropriate where results that are accurate enough are satisfactory, savings
in costs and efficiency are valued over an understanding of causality and
precision results,32 and where strong approximations are acceptable,33 which
would certainly not be the case for many applications of this technology in
legal practice.
29
Ibid.
30
Leo Breiman, Statistical Modelling: The Two Cultures (2001) 16(3) Statistical Science 199, 199.
31
Leo Breiman, Random Forests (2001) 45 Machine Learning 5, 5.
32
Coglianese and Lehr, above n 22, 1160.
33
Surden, above n 19, 97.
34
Ibid 97-98.
Innovation and Intellectual Property Law Student Name & Number: Hunter F. Thompson n8584222
These two developments considered in unison suggest this technology may pose a
very real threat to the role of both lawyers and banks as necessary intermediaries in
35
Future Committee, above n 1, 17.
36
Nassim Nicholas Taleb, The Black Swan: The Impact of the Highly Improbable (Random House, 2nd ed, 2010)
1-10.
37
Surden, above n 19, 105.
38
Valeska Bloch et al, Blockchain Reaction: Nine months on (Allens Linklaters, 2017) 10.
Innovation and Intellectual Property Law Student Name & Number: Hunter F. Thompson n8584222
The blockchain, is simply the history of transactions that have been entered
on a distributed ledger. While individual transactions are being verified they
are added to the blockchain as one transaction in a block of transactions,
creating a permanent record of transactions that is open to every participant
to the blockchain.44 The potential benefits of the use of a distributed ledger as
a replacement for a physical title registry are clear. Just as a transaction is
39
Ibid.
40
David Rountree, Navigating the Blockchain and the Law (2016) 26(9) Law Society Journal 72, 72-73.
41
Ibid 72.
42
Ibid.
43
Peter Yeoh, Regulatory issues in blockchain technology (2017) 25(2) Journal of Financial Regulation and
Compliance 196, 196; Primavera De Filippi, The interplay between decentralisation and privacy: the case of
blockchain technologies (2016) 9 Journal of Peer Production 18, 18-19; Primavera De Filippi and Benjamin
Loveluck, The invisible politics of bitcoin: governance crisis of a decentralised infrastructure 5(3) Internet
Policy Review 1, 1-2.
44
Rountree, above n 41, 73.
Innovation and Intellectual Property Law Student Name & Number: Hunter F. Thompson n8584222
entered onto a ledger, information related to the title to a piece of real property
could also be entered. Once entered and verified, the owner of that property
would no longer need to engage with the registry when transferring the
property, as each new transfer would simply add to the chain of title publicly
accessible on the blockchain.45
45
Alexander Savelyev, Contract law 2.0: Smart contracts as the beginning of the end of classic contract law
(2017) 26(2) Information & Communications Technology Law 116, 119.
46
Ibid.
47
Brydon Wang, Blockchain and the Law (2016) 19(1) Internet Law Bulletin 250; James Eyers, Blockchain
smart contracts to disrupt lawyers (30 May 2016) Australian Financial Review
http://www.afr.com/technology/blockchain-smart-contracts-to-disrupt-lawyers-20160529-gp6f5e.
48
Gideon Greenspan, Beware of the Impossible Smart Contract (12 April 2016) Blockchain News
http://www.the-blockchain.com/2016/04/12/beware-of-the-impossible-smart-contract.
49
Michael Bacina and Katrine Narkiewicz, Smart contracts: just how clever are they? (2017) 36(8) Law Society
Journal 78, 79.
Innovation and Intellectual Property Law Student Name & Number: Hunter F. Thompson n8584222
50
Ibid; Savelyev, above n 46, 121.
51
Bacina and Narkiewicz, above n 50, 79.
52
Savelyev, above n 46, 123.
53
Yessi Bello Perez, The Real Cost of Applying for a New York BitLicense (13 August 2015) Coindesk
https://www.coindesk.com/real-cost-applying-new-york-bitlicense/.
54
Rountree, above n 41, 72.
55
Ibid.
Innovation and Intellectual Property Law Student Name & Number: Hunter F. Thompson n8584222
First, accountability must be attributed to either the lawyer who drafted the
terms, the developer who coded the terms into the smart contract or the other
party to the contract. Second, the party who has been wronged must pursue a
remedy, which will likely involve a lawsuit. (For a compelling case example of
a smart contract gone wrong, consider the hacking of faulty smart contract
code on the Ethereum Blockchain which led to the diversion of USD50 million
in 2016).58
56
Paul Gordon, Marni Hood & Henry Materne Smith, Crypto-contracts: The coming of the blockchain
revolution (2017) 39(3) The Bulletin 34, 35.
57
Ibid.
58
Gaye Middleton, The weakest link on the blockchain smart contracts and The DAO attack (2016) 19(8)
Internet Law Bulletin 402; Rob Price, Digital Currency Ethereum is cratering because of a $50 million hack (18
June 2016) Business Insider Australia https://www.businessinsider.com.au/dao-hacked-ethereum-crashing-in-
value-tens-of-millions-allegedly-stolen-2016-6?utm_source=yahoo&utm_medium=referral&r=UK&IR=T.
59
Rountree, above n 41, 73.
Innovation and Intellectual Property Law Student Name & Number: Hunter F. Thompson n8584222
4.0 How can legal practitioners prepare for AI & DLT-related disruption?
The future of mass disruption in legal practice is certain: AI technologies will continue
to develop as algorithms become smarter, legal data increases in volume and
becomes more accessible due to cloud-based servers and computer power scales
infinitely as chips become faster and faster. Similarly, DLT is highly adaptable and
creative solutions have already been proposed that may answer some of its
perceived limitations in relation to dispute resolution and governance frameworks.61
Law, like many other human activities, is subject to the economic forces that bring
automation to all areas of life.62 Therefore, perhaps the most significant factor driving
change in the legal industry will not be technological developments themselves, but
an increasing demand from clients for faster, better and cheaper legal services.63
Faster is essential clients are increasingly aided by technology, work and live in a
fast-paced environment and expect their lawyers to do so as well. Better is
increasingly important we are living in a world climate where pre-existing
institutions such as the law are questioned and not entirely trusted. Lawyers are now
competing for clients trust, against a widening pool of legal resources and services
available for free online (consider the DoNotPay chatbot example highlighted above),
and systems which facilitate trustless and self-executing transactions that threaten
a lawyers role as trusted agent and dispute resolver. Finally, cheaper is crucial not
60
Ibid; Gordon, Hood and Smith, above n 58.
61
Trevor I. Kiviat, Beyond Bitcoin: Issues in Regulating Blockchain Transactions (2015) 65 Duke Law Journal
599-600; Adam Beck et al, Enabling Blockchain Innovations Through Pegged Sidechains (22 October 2014).
62
Thomas A. Smith, From law to Automation (2016) 1 The Criterion Journal on Innovation 535, 542.
63
Michael Mills, Using AI in law practice: its practical now; introducing the stunning and rapid advance of
artificial intelligence technology now being used in the practice of law (2016) 42(4) Law Practice 48, 52.
Innovation and Intellectual Property Law Student Name & Number: Hunter F. Thompson n8584222
just for corporate clients who demand more for less, but for the ever-increasing
population of people for whom legal services have long been out of reach, because
of sheer unaffordability.64
To ensure their role in the future provision of legal services, only one option remains
legal practitioners must endeavour to not only understand the technology that
threatens to meet the economic needs of their clients, and subsequently replace the
need for lawyers, but to augment their provision of legal services with it wherever
possible.
Word count: 2993 words (not including footnotes or first two covering pages)
N.B. Thank you for taking the time to mark my essay, and for co-ordinating a truly
thought-provoking and enjoyable subject with engaging assessment.
64
Ibid.