 OK. And we're live. Great. So welcome to the third class of MIT Future Law Graduate Seminar. And I'll pull up our class syllabus for today. We've got three speakers who'll be joining us broadly on the topic of blockchain and law. And our speakers are first, Casey Coleman from Monax, who's on the line. Let me just check. Casey, can you hear us? Yes, I can hear you well. Yes, I can hear you well. OK, terrific. And Casey's going to break down what is blockchain and then talk about implications and uses in the law. And this is really like, and I'd like to engage with you on some of your projects related to it. It's dual integration between smart contracts and legal contracts. Then we'll be joined by Greg, who is CIO of Baker Hostetler, a large law firm and collaborator on this MIT legal forum on October 30th and 31st. And we'll talk in conversation mode more about what's happening with transformation of the law into a digital era, and specifically options and issues and opportunities for use of blockchain and an idea for a global legal blockchain consortium that Bob's helping to put together. This could be very fundamental as an anchor for transformation of this field. Maybe some more ideas to creatively start to brainstorm and anticipate our event on the 30th. And then we'll hear from a special guest who's in town from the Economic Space Agency of Vienna, Louie, who will just give us a quick peek at an interesting way that this group is looking at having law expressed as objects in economic spaces using blockchain. Very interesting stuff. And so without further ado, here we go. Hey, Casey, it's great to have you back at the Media Lab. I remember you were here when we convened that group on blockchain was like three years ago now. And basically, you taught me about blockchain. And it's all too fitting to have you back now to give us an update on what's happening with your company Monax. And then I'll say, if you're willing to, just take a few moments for the class to walk us through some of the fundamentals of blockchain. And then I know you have a few topics you want to hit. But I'd be very grateful if you could include dual integration in there. So with that, rather than have me give you your background, maybe you can introduce yourself and hit it. Sure. Can everyone hear me OK? Yep, coming in great. So my name is Casey Kuhlman. I'm the CEO of Monax. We're a company that's been around in the space. We used to be called Eris Industries. We've been really at the forefront of the blockchains for business trend within the industry. We were the first to market with a permissionable smart contract style blockchain. And it'll get into what that means here in a little bit. And we have been working on building scalable systems of smart contracts for industry for, like Daza said, for coming on three years now. My background is as I've had a windy road through life, let me say it that way. I started my career first as a structural engineer at the University of Illinois. Instead of building things, I decided to go blow them up. So afterwards, I went and was an infantry officer in the Marine Corps. After that, I went to be a ski bump and a rider for a while. And then I decided it was time to go to work. So I went to law school at Vanderbilt University in Nashville. And instead of doing the big firm route, I wanted to work in the development world. And so I went to Africa first to West Africa, where I worked on war crimes tribunals. And then to East Africa, where I first started doing governance reform work and then ended up running my own law firm there for quite a few years. And it was while I was in East Africa in Somalia that I became very interested in how to really re-envision how the practice of transactional law worked. And I began building open source tools at the time that were focused mostly on document assembly systems. And the biggest system that I built was a system called Legal Markdown that allowed me to build my contracts and other transactional documents using sort of opinionated overlay around Markdown, which made it very simple and easy for me to quickly and effectively deliver documents for my clients. And this was in the early teens. And at the time, there were very, very few people within the space that is now kind of growing, that we now call legal hacking or legal tax space. But at this time, there was very few of us around. And it was a small number of lawyers that were on GitHub, shall we say. But it was quite interesting. And during this time, I spent a lot of time researching the ideas of what used to be called computable contracts. Now we call these things smart contracts, typically. But in the old academic literature, what I currently work on are called computable contracts. And there's a whole range of research going back to, as far as I can tell, the 70s about looking at how computers can run and operate contracts for us. The problem that this line of research always had was that there was always a way in which one party to a contract could easily run a program that would track a particular contract. But there was never an infrastructure on which to have both parties co-manage the operation of a particular program that would oversee and moderate and regulate. Regulate is not the right word. But moderate and administrate a contractual agreement. And so since the 70s and 80s, we've had electronic transactions that have been legally binding. However, what we haven't had is a neutral framework on which multiple parties to an agreement can co-manage the execution and administration of that agreement. And this was because, frankly, we have traditionally built applications with a one-to-one mapping. In other words, you've had a one-to-one mapping between the person or entity that is operating, a particular application, and that one application. And because you have this one-to-one mapping between the two, you didn't really have any sort of framework on which you could co-manage across organizations' applications. And this is why, in my opinion, we never really moved forward aggressively outside of academia with the ideas around what we now call smart contracts, what in the older academic literature used to be called computable contracts. Then in 2014, I became aware through a whole variety of circumstances, which I could get into, but I won't. I became aware of Ethereum, which was a new type of blockchain that was married a virtual machine on top of a blockchain infrastructure. And the reason that I became aware of it was mostly because it was calling it, it was touting itself as being a machine that was capable of running smart contracts. And for someone that had been building document assembly software that was interested in transactional efficiency, this instantly caught my attention. And so we, or I became very interested in the technology. I built the very first package management system for the Ethereum style of blockchains. We then formulated our company in 2014. And since that time, we've been working mostly on industrial applications of blockchain and smart contract technology. Traditionally, we've been operating sort of as a horizontal software provider. Now we're moving much more aggressively into the legal tech market, which was the market that I've always been very interested in, but we needed to wait until that market opened up. And now is the appropriate time for us to move into that. So that's a little bit about me and my company. And what we are really here to talk about today isn't me or my company, but to talk a little bit more generically for me to fill in the blanks here about what is blockchain and what are smart contracts and why does this matter for law. And these are the first three topics that I really want to tackle. And hopefully these three topics will set the stage for the rest of the discussion over the course of this hour and a half that we have together today. So first off, let me do the what is blockchain. And so I don't have the video, and I can't really see who's in the room. But let me assume that we're going to start from an audience that knows next to nothing. So for those that may be a little bit deeper in the funnel, just forgive me for a few minutes while I lay a little bit of foundation for those that may not be so deep in the funnel as to what are blockchains. Also, your video is going to go to our archive. And so this could be helpful to many people to come. So a little foundation before we setting the table before we get to the main course would be great. Great, great. So a blockchain is a technology that is very boring, frankly. I don't really understand why this technology, which is really an assembly of other technologies, has been on the cover of The Economist, on the cover of Forbes, on the cover of a whole range of different magazines, and has a huge hype cycle behind it. Fundamentally, what a blockchain is, it's an authenticated, ordered event log. And it has a special property to it, which is called its Byzantine fault tolerance. And this is crucial for distinguishing what a blockchain can do versus what other distributed data management systems can do is this idea of Byzantine fault tolerance. And in various distributed systems, you have various levels of classifications that come into play, which is called fault tolerance. And fault tolerance basically means that if you have a database or a portion, a node of a distributed system, and one of those goes down, you will have multiple redundant copies of that node that will be able to then take over the processing or data management so that there is not a loss of service for the users of that particular application. And most databases today, especially large-scale databases, are ran as fault tolerant databases. And fault tolerant, essentially, the way that this works is you have one node of many, let's say there are three, and the three nodes elect a master. And that master node determines what is true for all three of the nodes. And it does all of the processing and data management for the complete data set. And then it tells the other worker nodes what they should be doing. And it remains the master node until it goes down. And if it were to go down because there was a glitch in the system or because it had a fault or because the power to its machine went down or any other of the innumerable reasons why programs die, if that program had died, then the two remaining nodes would go through what's called a leader election process and determine that one of them was going to then become the master. And the master would then determine for these two nodes and then maybe other nodes that would be booted up in afterwards, they would determine, the master node would determine what is true for the entire data set. Now I'm explaining why, how a fault tolerant system works, which is how the majority of applications that we use in websites operate for a particular reason. And that's to set the stage for the differences in what a Byzantine fault tolerant system can do. And in a Byzantine fault tolerant system, you do not elect a particular master for any, until that master node goes down. In other words, you only elect a master for a small period of time. And then you essentially go through various processes of changing that master for a different set of time. And the way that this works in a blockchain is, and there are various mechanisms for how this works, but functionally you have a master for a specific block. And that master for a specific block propagates that block of transactions or as I call them events to the rest of the nodes on the network. Then they have an ability to verify and independently determine if they think that all of those transactions or events should be, are appropriate according to the rules as they know what the rules of this network are. And then when it comes time for a new block, a different node on the network is able to say, I think that this is true for this particular block. And a block of events can be anything from, and this is very dependent on the type of blockchain that is used, but a block of events or transactions can be anywhere from 10 to 12 minutes all the way down to one or two seconds. And no matter if you have a kind of a blockchain time that is at the high end of the spectrum or at the low end of the spectrum, the key important idea here is that you only, if you are one node within a particular network, you only typically will be the master for a, for one single block, and then others will be masters for later blocks in time and the mechanisms for when you would then become master again vary. But the idea here is because of these two factors, the number one, the idea that you are not a master node until you go down, but rather you are a master for a discrete set of time and a discrete set of events. And then also the fact that you have your node independently verifies what all of the events or transactions that you receive from other nodes in the system, rather than you just update your system and dataset based upon what the master node tells you. These two ideas are very, very different and very much differentiate a Byzantine fault tolerant system from a fault tolerant system. And this idea, what this gives us when we put these two, when we put these two pieces of functionality together is a set of infrastructure, a data management infrastructure that we can run either globally or even just in less than globally, but across companies. And within the blockchain for business schema, this idea that we can start to run datasets across companies is incredibly appealing. And to get back to my prior story about computable contracts, what this gives us functionally is the ability to have a data management and program management infrastructure that we can then operate from a multi-party context. And we also shatter this idea that there is a clear one-for-one mapping between an application that is, a computer application that is running in a single legal entity. And because now we are having a single application that is co-managed by a multitude of companies using this blockchain-based collaborative data infrastructure. And this is huge. This is really quite transformative. And what this is fundamentally is a mechanism in which we can order and authenticate events and propagate them across a distributed network. I might wanna pause there before I move forward to talking a little bit about what smart contracts are and ask if there are any questions about just the appetizer of what is blockchain. Any questions at this point? Okay, no, and people definitely paying attention from Sandy and everyone here. So you sound the table well, I'll be like, I'll be using that description in the future. And I might just highlight some of the words you're using for those law students in the room and others that enter legal procedures, you know, or also functions that parliamentary process, for example, as designed in other legal processes to protect them from being a leader in the event of uncertainty about who's the charge or whether a salesman will compromise or whether it's representative or legitimate. So just, I hope everyone's thinking in the back of your head. I wonder if some of these Byzantine, volatile, or analogous entities and census-based distributed algorithms could possibly be used for large-scale deliberative or civic processes as they could be of investment to invent that. Okay, back to you, Casey, smart contracts and please don't forget to touch, please touch the base on dual integration. Yeah, that'll be in the third category. So let's talk about what are smart contracts. First, let me say what I often say, which is that smart contracts are neither smart nor are they by default contracts. The idea that we call these things a smart contracts is a complete misnomer and in any event, what they really are are dumb scripts that run on top of a blockchain infrastructure. Now, this gives us a whole lot of interesting possibilities, but functionally, a blockchain itself is, as I mentioned, a mechanism of authenticating and ordering events or transactions. And so all that gives us is essentially an ability to understand what is true within a particular network. And these nodes are decentralized in the fact that they independently verify what is true, as I mentioned, and they are also visit default tolerant as I went through in details. Now, this just really tells us what is true. This doesn't really give us much in terms of processing or functionality or things that an application typically needs to do. In other words, computation or things to compute. Well, this is where smart contracts, as we call them now, despite me very much disliking the name, I will use the name as the industry uses it. This is where smart contracts really come into play. And smart contracts are scripts that run on top of a blockchain infrastructure and they run, they are ran by every node within a particular network. There are a few nuances there, so if anyone is super deep in the funnel, let's set aside those nuances. But just for simplicity reason, if you have five different nodes on a particular network, those nodes will be doing the various per block leader election that I talked about in the previous section. They will also be independently verifying the authenticity of the events or transactions, as I mentioned, and then they will also be doing the processing of smart contracts. In other words, they will be running these little dumb scripts, as we call them. And how these work functionally varies between different styles and types of blockchains, but the idea essentially is, if you need to be able to calculate something, then what you can do is you can send an event to a particular smart contract. It can then perform a calculation. Maybe that calculation is very simple, such as take 10% of what I send you and send 10% to DASA and then send 90% back to me. Now, I don't know exactly why you would want to do that. We can start to get a little bit more complex and a little bit more real world here in the following sections. And as we go along over the course of the rest of the hour and a half that we have together, but just for simplicity and because we're only on the amuse bouches here of the day or maybe we're in the appetizer phase, I'm not sure. Let's say that we wanted to send 10% of the amount of things that I send to a particular contract, go to DASA and then 90% go back to me. So, PC, just so you're aware, like definitely finish what you're saying. It's very high quality. It's why we come to class to learn. But we also would like to have a little discussion time when you're done. And then we'll hear from Bob Craig. Have some discussion. So that's kind of how we'll be sequencing the, and we can blend together as well while you're online if you can stick with us. Okay. Maybe I'm gonna perhaps another 10 minutes or so of lecture. Okay, great. So smart contracts then are really what do the processing. And so every node within the particular network will understand that maybe 100 tokens come to a particular smart contract address. Then they will send 10 tokens to DASA and then the 90 tokens back to the sender. And the key portion here is to understand is that every node within the network will do this processing. And then they will come to an agreement as to what the outcome of this transaction is. And what this gives us is an ability to really have what we call process assurance across companies or at a global level if you were talking about public blockchain technology. And this process assurance gives us enables some very, very interesting things such as really the ability to now start actually building computable contracts. And this is where things start to get extremely interesting from me, a legal hacker and someone that's very interested in transactional efficiency. This is where I start to get very excited. If I'm only talking about blockchains, for me I'm not really a huge data person so it isn't that interesting to me but smart contracts really start to open up a whole range of possibilities. But they have a limitation which is that for there's probably only so much that we can reflect within code as to the complexities of human existence. And humans are incredibly complex beings, our interactions, especially our real world, actual business interactions are exorbitantly complex. And they have a ton of what coders and hackers would call edge cases and corner cases. And this is where the ideas of dual integration come into play. And so I'd like to talk for a little bit about the possibilities of dual integration and what dual integration is. There is a couple of different names for this. If you are a little bit deeper in the funnel you may have known of this as Ricardian contracts. We call it dual integration. We think that's a little bit more indicative of what is actually happening. But the idea of dual integration is that you want to marry a real world legal instrument with a smart contract wrapper that is administering a particular contractual relationship. And the way that you do this is there's a range of ways that you can do this. But the basic idea is that you deploy a smart contract to a particular blockchain and you retrieve the address and the ID of the particular blockchain that you are running. And this smart contract can be a bundle of other smart contracts. But essentially what it does is it manages the relationship in code between the various parties. Now it can, as I mentioned, it probably is not able to leverage and embrace all of the complexity of this particular relationship. But it can probably get all of the mainline events within this relationship. And this relationship could be the issuance of a corporate bond. It could be an insurance policy. It could be a supply chain agreement. It could be a real estate investment trust or any number of different contractual instruments. You can represent a whole lot of that in code. But you probably cannot get at all of it. And so typically then what you do is you have a smart contract that is written in code and you deploy that to some particular blockchain network. You retrieve its address and other identifying characteristics. And then you take a real world legal document that will be actual, that actually determines what is the relationship. And this would be no different than we currently do today. But typically you would add a clause into it that would say, that would be an integration clause that leverages and says this relationship is administered between the parties and the parties agree to that this relationship will be administered by a blockchain based piece of code that is running at this particular address on this particular identifier. And then what you do is you digitally sign or wet sign that particular PDF or real world contract as we would call it the pros contract. You go through a signatory process and you execute that side of the equation. And then the final step is that you would then take a hash of that document and send it into the smart contract. And the hash is something like a digital fingerprint. Any file that exists can be ran through a special algorithm that will output a unique identifier or fingerprint of that document. And if one sort of zero or one within binary encoding of a document were changed, then the fingerprint would be completely different. So this gives us a certainty of uniqueness that a particular smart contract or sorry, pros contract is what we are referencing. And so then we add that hash into some field within the smart contract. And this is why we have what we call dual integration. So we have integration between a pros contract and a smart contract. And what this gives us is then an ability to really drive interesting relationships forward. Wow, thank you, Casey. So one thing I wanna highlight for those that are maybe not deeply steeped in the law or maybe haven't got this far on contracts if you're a first year law student is Casey mentioned integration clause. And we're also talking about integration as a technology process of combining harmoniously services and functions and components. So just a quick show of hands. How many people know what an integration clause in a contract is? How many people don't? Couldn't define that. The room is in German integration clauses. And I'll take a swing up, but just this, it's part of why Casey's approach to dual integration. So we're going into elegant. If you scan through contracts, encourage you when you get home, just go on the web and just scan through some, you'll find integration clauses. And it's a clause that will say something along the lines of this contract is the entire agreement between the parties. We may have had other communications and emails. We may have had other contracts in the past that this represents the entire agreement and maybe this contract plus an MOU and two purchase orders. Or if you may, and you were in mind pre-poll, you don't want to do it right, several things and say that's it, nothing else is. And so we've integrated together our whole legal relationship and expressed it in a contract. So it's called an integration clause. And it's one of the examples where attorneys have thought like engineers to some extent and they've been explicit about order of precedence and the boundary conditions. And in case you just extrapolating forward, saying, okay, we'll do what we should. Leverage of legal integration clause and explicit integration of the legal contract into an entry, like a transaction entry goes, a blockchain, like an offer term, for example, on Bitcoin review where you might put the hash of legal contract, I think. And then, so you have a record of it and vice versa. We should reflect the blockchain smart contract and the legal contract. So it's pretty elegant. I apologize to the extent of oversimplified butchered or got wrong or characterized wrong dual integration that's my general understanding of what you're saying. And I wanted to highlight just what is this phrase that you kind of just glossed over a little bit but there is such a thing called integration clause and a contract. We've had this as a part of contract law for a long, long time now. And that's something that can be part of engineering a well-harmonized business legal and technical approach to giving the most of the technology. So kudos, Casey, for doing that and putting the explainer online which we've looked at going to on the class site. So let's go to discussion. And because we're joined by Craig and I know that you guys are barking out the same tree, so I'll just ask, do you have any questions or ideas? And then we'll throw it into the room. If not, that's going to pass. Although I'm going to build off some Casey's comments. Okay, what are your comments? All right, so questions, comments, ideas? Great. Thank you very much. My name is Ely. So you started by saying that you were initially turned onto the theory of being interested in transactional efficiency. But a lot of the innovation you will start with today can be based on having modes of redundancy. So integration can watch some of the redundancy potentially to give you an idea of all the format that you got redundancy. So why don't you take a little bit about how you're using those words? It's okay, just there. Okay. And what aspect do you think is being made more efficient and what aspects of that are being made more redundant? Could you hear the question, Casey? Yeah, I could hear most of it. So the areas within industry where blockchains and smart contracts are being leveraged and I don't want to go too deep here because this is a whole rabbit hole. But in terms of where the efficiencies are versus where the redundancies are, let me take a whack at that. The areas where most companies within the sector are leveraging blockchains are areas where there has been a lot of unauthenticated interactivity across company lines. And so within various domains, you have a whole range of different use cases where for example, companies will be emailing back and forth Excel spreadsheets to determine this is a snapshot of some particular data that then needs to be processed within some engine that is in another company's data center and then that needs to maybe even flow on to others. And this happens within the banking sector, within the insurance sector, within a whole range of different sectors. And by leveraging blockchains and smart contracts technology, we have an ability to reduce all of this inefficiency of emailing back and forth Excel documents. The redundancies do exist across nodes. This is a functionality of where the data is stored and this is sort of a necessity of the actual data management system. There's not a lot of efficiencies that blockchains can offer outside of authenticated coordination. Blockchains are slower than any other database that exists. They have a lot more overhead. They have a lot more redundancy in how they store things. But these costs have the benefit that we have this ability to have this authenticated coordination infrastructure that is Byzantine fault tolerant and therefore we can run it across companies or at a global public level. And so that's kind of the difference between where I see the redundancies and these are the efficiencies. And Dom, she's got a quick announcement. I want to, on the future of our national network, there is a link to the program so you can ask questions by Twitter and talk a little bit about the program. Prioritizing them for me, Bob, for me, for you. I wish to add a good comment. One of the benefits that this mentioned was that blockchains are authenticated at a lot of events. And I just wanted to clarify that, again, the security and photography industry authenticated means notarized, right? So the great, vast benefit here is that a whole bunch of entities, a whole bunch of servers all over the world have notarized the end-of-the-dent head pass and sound off on it, right? So I just wanted to clarify this. Can you just unpack a little bit? Oh, actually, Casey, did you want to? Maybe you're going to do it for me. Oh, I can, yeah. That's exactly right. So when I'm saying authenticated, I'm saying a few things. So at the first level, I'm saying authenticated in that an event has been signed by a particular key pair. In other words, what this gives us is functionally an ability to say that Bob Craig did this. If we assume that Bob hasn't lost his keys, then we can say with some level of authenticity that Bob actually did this, whatever this is, or that Dawson did this. And then this event is further notarized by all of the validating nodes within a particular network, as we call them, not to get too technical too fast. But there is a notarization function. And the key point here is that the event log isn't saying that a particular event is true objectively. In other words, whatever Bob did, we're not saying that that is true. If Bob said that a price feed was X, at the blockchain level, we don't know that the price feed actually was X. But we can authenticate that Bob said it was X, which is a subtle nuance, but it is an important nuance to understand. Okay, great. Thank you, Casey. I want to say, just for those of you that are interested in burning a legal side on what a notarization is, what authentication is, what attribution of an act to a party is going to be responsible, there's some lingo in it. It's definitely worth talking about. There are subtle terms, but which ones we use and how they relate to technical functions and capabilities is very much what we should be thinking about. There's business models. There's gold and dentharials too. All right. Okay, I have two related questions. One is, is there an example of an action of a smart contract committee that is not sending money or something that are essentially money from one party to another? And second, for a smart contract which takes an action based off of some information, that action by nature of the law thing cannot be changed afterwards. And if the action was taken on the basis of indirect information, how would you deal with that when there isn't an ability to go back and change or run into a situation within this context of the law thing? Sure. So there's a lot of things that smart contracts do that are not sending money back and forth. Typically, they are, and this relates to your second question, typically they're storing things. In other words, they're storing what we want to be a mutable variable. Now, a blockchain is typically known as immutable. In other words, this means that within the system, it cannot be changed. And this is typically true, although strictly speaking, it's not exactly true. But without getting too deep into the nuances here, let us just assume that it is true, that a particular blockchain transaction is immutable. In other words, it cannot be changed once it is sent into the system. However, as you know, there is a whole range of things that we want to do that are where we need to be able to correct things or to update things. So let us take, for example, the state of a particular contract. For those that are in law school or have gone through contracts, you will know that a contract goes through particular events over its lifestyle cycles, such as offer, acceptance, execution, and then termination. And this is something that you would potentially want to track within smart contracts that a real-world contract has been offered, accepted in execution phase or in termination phase. And so you would store that variable within a blockchain-based smart contract using the mutability ideas that smart contracts allow. And so the storage of that particular state function, finite state machine variable, would be something that you would do that was not sending money back and forth. And it's also how you would leverage both the immutability ideas of blockchain-based singular events, but then also leverage the mutable abilities that you really need for various contracts. So we should... Thanks, thanks. So platinum stockings, thank you. And we're going to... So we need to take a little bit from the end of an economics-based agency on their object approach to contract agreements and track and state transitions, I think to find it on the approach of a feather. And so only because we're locked in time and space on this planet, as we move forward, I really wish you could go on at length. And I can't wait to have you back in person on October 30th. And if you can stick with us, I'd like to transition to Bob Grape now to broaden the discussion to the profession of law. So we just learned a lot about the connection between blockchain smart contracts, legal contracts, and some of the deeper processes underlying that. What does it mean for the transformation of law as a profession? What is the implications of the technology on the practice and what are the legal issues related to using the technology and are there new opportunities that arise that could change what the law is and what it means to be legal counsel and what the nature of the work itself product and the service. So that's been more or less as well as keeping the lights on and the servers working and all the technology operational as a CIO one of the largest law firms in the world. These questions have been very much Bob's day job to start to resolve with attorneys and the big chef and as a chief information officer. And so I'm glad that you're with us in person, Bob. And if you could maybe introduce yourself a little bit and start to get us into the issues, we're going to deepen the dialogue. Great. So one of the things I'll talk about is this notion of creating a global legal blockchain consortium. And for those of you who follow blockchain, you know there's plenty of consortia already out there across all sorts of industries and hopefully I'll explain why I think having a blockchain consortium for the legal industry can be transformative. The first bit about me and then you can decide whether my comments or opinions have any merit or not based on that. I am a 34 year career in technology. 26 of those years I have spent with law firms and so you can make of that what you will because I'm not a lawyer but I always said I could play one on TV because I spent so much time observing them on TV now over the years and I'm on TV now. Specifically 20 of those 26 years has been with my current law firm, Baker and Hostel and I say that because that I think has me in a unique position relative to the latitude I have to explore certain things and I'll talk about that in a little bit. But I believe that we are at a unique time in the world. I believe that a lot of the technologies that Casey so eloquently described are transformative in nature and will serve to transform the very nature of the legal industry and I'll give you some thoughts and comments on why I believe that is. I also believe that while it's transformative it's only transformative for paying attention. If you're not paying attention it's disruptive. And that disruption factor that disruption factor is at the core in the guts of big law firms today I'll explain why I believe that. So the way that I have over the years communicated with my law firm is to try and put these market forces in some kind of a framework for it to make sense. But also to be able to correlate what could otherwise be viewed as independent forces that converge together. We call it the legal nexus of forces and there's three key forces there's more but there's three key ones I'm going to talk about today. And the first one I think is the most impactful and that has to do with increasingly sophisticated clients. So our corporate liars if you will corporate general counsel sometimes their governments and other large enterprises but for a whole host of reasons those corporate liars have gotten increasingly sophisticated over the years and largely that's because the cost of providing legal services inside of the corporation has escalated by orders of magnitude some of that has to do with compliance activities and regulation much of it has to do with privacy issues especially today and a lot of it has to do with the nature of so much information being digital and all of that information coming to bear on big money litigation in various forms and so the cost of legal services inside a company has increased exponentially and CEOs and CFOs aren't necessarily enamored with that reality and so they have pressed their general counsel to continue to create more value and to reduce spend and a way that that's been done has been to apply pressure to their outside counsel which is forcing us to be more and more insightful and proactive and introspective actually in a way to really think about what is our highest value place in this increasingly diversified service marketplace so the second force that really has come to bear because of increasingly sophisticated clients is there's increased diversity of service offerings in the legal industry today it wasn't that long ago that if you had a legal issue that if you were an in-house counsel you couldn't handle yourself you just handed the whole issue over the wall so to speak to your outside counsel and they figured it out more and more today we see sophisticated general counsel really acting almost as a form of general contractor and saying I have a lot of litigation in a certain category I know that sometimes they use the term serial litigant they're sued they're a large manufacturer for example so they know the patterns they know the data they deal with and because more and more this data has to be maintained in a more pristine way in order to comply with things like litigation requirements they may have access to that data so we're seeing if you will legal process outsourcers and other legal entities that pick a very narrow but deep band of activities and they do just that for large corporate counsel and so we will have corporate counsel come to us and say I'm going to use this legal process outsourcer for these kinds of activities when I need you for litigation you'll engage with them so our marketplace as a big law firm the ecosystem involved in that marketplace is getting more and more diverse and we have to find the best way to fit into that ecosystem to make sure that we're continuing to add the right value to our clients and lastly and obviously emerging technologies and that's of course as a CIO my favorite subject and these emerging technologies are coming in all sorts of forms and they're coming in waves data analytics of course referencing back to litigation context I just talked about using sophisticated analytics to look at a body of data and do predictive coding to be able to call 80% of those materials down to 20% of relevant documents or files or information that should be subject to litigation education of those tools has grown exponentially also various forms of AI and machine learning creating great efficiencies in our ability to research the body of law to find the right and most relevant area of law that process has gotten increasingly efficient so all of these emerging technologies in particular by the way advances in natural language processing when you see what's possible today with a machine to understand language in rich context what I will frequently remind our lawyers of is in essence they process language in rich context and so the more sophisticated these machine learning and AI tools get we have to understand how to embrace it use it in an augmented fashion in order to make our services to our clients that much more effective and that much more efficient and by the way one of the questions is not just efficiency one of the questions is have we been looking at the right universe of information to begin with by nature of these sophisticated tools we can look at a much broader universe of information call it down quickly and be able to give better advice to clients in whatever context that is what's been interesting for me having been in the legal industry for six years and honestly a really kind of for many of those years a really limited set of sophisticated technology players because we were generally viewed as a very limited market you only have so much potential therefore you could only derive so much investment in your startups that has all changed there has been in Thompson orders that submits that over the last five years have been a 500% increase in the number of patents filed in the legal tech sector there is an explosion of really sophisticated and really cool technology that directly impacts the very nature of the practice of law and so while that is full of great opportunities to keep better for our clients it also represents an enormous challenge that is the diversification that is in my technology stack that I have to deliver and manage whether it's on-prem, apps cloud hosted and all flavors in between these solutions are diverse and the ability to integrate them all in an effective way is growing increasingly challenging so why does blockchain matter to all that one last industry comment where I go there one of the things that is always challenging in any big organization let alone a large law firm where in my case nearly a thousand lawyers those lawyers have to have awareness and then understanding and then they have to embrace these important technologies and the very nature of what they do every day for it to really matter and so what I've tried to do over the years is try and instill just enough fear about what's coming and what's emerging to then try and translate that fear into action and that's what we're doing today I talk a lot about and I've even gone through a 30 year history of evolutions of technology and various forces associated with the cloud and why these things converge together to create a pace of technological evolution the likes of which we have never seen before and I believe that blockchain is another frontier that's emerging I do believe that we're on the era we're on the verge of a new era of technology of computing and that blockchain in particular would power if you will not to subscribe to the hyperbole there's plenty of out there and there will be plenty of fantastic failures that we'll see but there will also be some transformative capabilities and so the question that I have posed is when you look at some of the characteristics of blockchain in case you've described in particular the notion of being able to instill trust in a transaction record trust is paramount to what lawyers do every day and whether that's in the context of a smart contract that's doing things in a computational contract or whether that's in the context of the provision of legal services to our clients and one example I'll give maybe as a thought experiment I think about blockchain's possibilities in this kind of context when you have a process where you have to trust the outcome but you don't necessarily trust the other parties involved in the outcome that's where blockchain could be brought to bear by nature again some of the capabilities case you talked about in particular this notion of identities and key pairs the possibility of those identities showing up for lawyers at law firms and corporate clients and maybe even documents themselves or clauses within documents and so when I think about I think a representative example a good representative example of a use case is in the bankruptcy process there's all sorts of distrust for obvious reasons in a bankruptcy proceeding you have a whole host of claimants who each have counsel you have a trustee and then you have a bankruptcy court the number of documents that have to be the collateral documents that have to be exchanged and validated and then trusted that they have been exchanged appropriately in a court proceeding you can imagine the efficiencies that could be gained especially for the courts and in a bankruptcy proceeding the more time you spend depending on the type of bankruptcy it is the more time you spend grinding through those kinds of issues the less recovery that your claimants get and so it's only a good thing for the entire outcome if a blockchain enabled legal ecosystem could help to create and still trust in that kind of a process and so the essence of the notion around this global legal blockchain consortium is and I would argue, I should say this because this could be the first time in the history of law that the industry gets together to consider deeply what's possible with important emerging technology like blockchain gets around the table with the corporate buyer the corporate general policy the private law firms and the lawyers that represent them the legal tech ecosystem and even then I have an argument that most especially academia to really help push our thinking as it relates well I won't make that comment because I'll get in trouble with this but the legal industry needs its thinking pushed and these technologies are transformative and if embraced proactively the ultimate outcome I think is for the good of the industry certainly for the good of the legal services buyer so that they can bring the best legal minds to bear on the right problems in order to have their legal names met so I'll conclude with my sincere hope is that on October 1331 here at MIT Media Labs we get a lot of those minds around the table and we begin to really pick apart what's possible with blockchain and really correlate into some of these use cases and really start the dialogue genuinely rolling about how the legal industry can be better because of these technologies and because of blockchain here here thank you so much and glad to see you facing back. Feel free to come off mute at any point so let's throw it open on the remarks that Bob said to a certain extent the gloss that's thrown down what about the transformer potential of this technology for the field of law comments? I am my questions around interoperability of all these different consortiums legal industry has their blockchain consortium is there any hope of interoperability or are we all just going to have that I think it counts it'll probably take smarter minds than mine to answer that or divine answer to that because there are even other consortia in the legal sector over and above what I'm talking about here with this global legal blockchain consortium which is very much oriented towards the operational aspects of the legal ecosystem corporate buyers engaging with outside council and other legal services providers like legal process outsourcers and stitching it together really on a blockchain fabric of identities I guess is the best way I can sum it up so that has a very I think different and unique focus different for example than the legal working group inside the enterprise of theory clients of which we're a member different than the Accord project which is about smart contract program and standards which we're a member of and I think all of those have unique aspects to it obviously overlapping questions and that's where the free market best ideas win I think come to bear I don't think we can over do this notion of standardization I think there has to be a balance so what you could see standards needed for interoperability to avoid they get and less conflicting identity standards I wanted to add on to that answer there's definitely hope for interoperability some of the problems facing the industry are sort of fundamental for example one of the things mentioned was that the blockchain architecture relies on private and public key pairs for identification that's what I mean that some of the problems are fundamental is it remains to be seen will for example the international US law recognize that you can identify a person with the cryptographic key and if the case is yes that enables a whole lot of interoperability between keychains right so and if no then we'll have to go back to the drawing board once the fundamental questions in the legal sense and in the technical sense get worked out first can people be identified and then in the practical sense where are we going to store our crypto keys is it going to be any USB drives on keychains can it be in our browsers this stuff has to be worked out once that is worked out though there's definitely hope for interoperability to be born on the box Hi my name is Catherine I think on one of those delays it needs to be pushed so my question is in two parts the first part is I really struggle to see how this is a revolution I'm kind of seeing how blockchain could work where identity is an issue in terms of escrow or for custodians and kind of replacing that but I really struggle the idea that it can actually change how we do business because I don't understand how other than kind of resolve questions by identity there's going to be more complex transactions which involves so many more things in the real world outside of the database and then I guess the second part of the question even if we can get the legal industry to kind of move and come up with more interesting ways of using blockchain how do we get judges who are ultimately going to be interpreting and applying and kind of remedying stuff when it goes wrong to come on board great questions the I'll give it my general reaction to both questions I do think one of the answers loops back to Casey's conversation about dual integration my general comment is again I have to worry about trying to help my law firm get position for the future and first I have to convince them that the future is going to look different and second I have to convince them how do we need to think differently what are compliance needs and then servicing those needs and one of the areas that we are just beginning to build out is this notion of legal engineering and so in addition to providing great legal counsel across a whole spectrum of legal areas I think different areas are going to have an engineering component that at a minimum has to be understood if not even we are in a position to build those applications going back again to this notion of dual integration we ought to be advising our clients on how they should be looking at the correlation between traditional contract and smart contract the last question is a great one and I left it off but it's also a critical voice in the conversation that sometimes they are late to get started in the conversation and that is the judiciary and the legislature but that is kind of the final gate to be unlocked and I also think just when you go back in history and you see how the courts have adapted to the notion of predictive analytics and litigation process I think the courts are tuned up to the fact that the courts are the courts and they've got their own bureaucracies but I do think we'll see a little different response if the legal industry otherwise again gets around a table and envisions what's possible and then engages the courts the legislature and regulators all into this conversation it's also why you should never just only do a smart contract so I mean one of the things that was interesting I was in Estonia this summer so in Estonia they have about 15-20 years experience of logging all government transactions on blockchain so all access to information all payments all tax payments all interactions with government and law and permission also and it's also to have another interesting thing which is that there's only one repository for every fact so that your age is only in one place and that means that other agencies have to query that one place to establish your age and that query is law and the result of that really indisputable record of exactly how any government interaction was handled and what were the results at every stage and who said what and what was paying and what was not paying and so forth and the shocking thing for us is that he said give me an example for example here turned around his laptop called up his medical record and could show every single person who had queried his medical record what their credentials were and what the purpose was and what the consequences were and I was like oh my god so you may not be that's not a smart contract really, I mean well it's sort of because things have permission but the fact that the entire swath of interaction was easily and incontrovertibly accessible was really quite something that reminds me of the conversation we had last night with legal hackers a little bit it's funny to bring up Estonia have you heard of a company called Agrello they are I'm not advertising for them I'm just intrigued that they're in Estonia they did a coin offering as a way to fund the building of a platform for legal smart contracts and also some form of fashion of applying AI to that and the broader context for why I'm intrigued by that is I think the fact that blockchain is a global phenomenon and there are various jurisdictions around the world who have arguably greater incentive to explore new and innovative things including the law Estonia is one of them and when it comes to identity we have a thriving privacy practice and we do very well helping clients mop up messes from brutes one day my sincere hope is that this notion of self-sovereign identity is better for the world for one thing but it also is another transformation that I need to help prepare our privacy practice for because I think it's the future of a legal privacy practice and my point in that is some of the most advanced work seems to be going on outside the US as it relates to identity which I find fascinating and so those of us who tend to have a US perspective especially in the legal system I think that perspective needs to shift because these forces are going to emerge and I won't go into it but there's already things happening that are external legal services providers coming ashore and again creating more things to be concerned about Estonia recently they decided that anybody in the world should be able to be a citizen in Estonia and so you can become a citizen of Estonia without physically ever having to put there but I think the record for doing that is 18 minutes from beginning to end maybe my sitting up would also once you're a citizen you can set up a company there so you're a citizen setting up a company in Estonia and it'll tax you but of course it's easy to do services in Estonia and so one of the huge things they have is all the people who are setting up a huge amount of people are setting up companies in Britain have become Estonian citizens virtually and setting up Estonian companies because now that can be anything you do I'll take a look at that for a second wow I'm feeling so this maybe should be one of the things we hack on with our friends from Estonia in the government there on the 30th and 31st as we're putting together sessions maybe we ought to create a corporation thank you Sandy and see if we can get a workflow or like a company in a box so we'll want to go and hear from Vienna and then we've got some class announcements but TMA yeah you burned it so we're talking about interoperability with smart contracts across different countries so for example if you have a privacy in the US you really value the privacy of your data in China people are very okay with their data being shared with people and also being monitored so I wonder yes there has to be but how could how does smart contracts be used for a change to deal with this issue or have you guys thought about it thank you great deal thank you this is actually a good way to highlight some of the limitations of what smart contracts can do smart contracts are awful at gated information sharing that is not one of the things that one of the feature sets that smart contracts really should be used for there's a bit of the zeitgeist that pushes this idea that smart contracts actually help with privacy but I push back on that really quite fundamentally because everything really within a blockchain network is meant to be completely transparent within that network this is how we get at the Byzantine fault tolerant properties of these networks and so when you're talking about gated information sharing that's not typically a great way, it's not typically a great use case for blockchains of smart contracts technology despite what was talked about in the health insurance case and what they do in Estonia is they just simply log the access record along with your of your information but they don't actually keep the information from the blockchain, thank you so this is great because there's a lot of people that have a lot of ideas and a lot of things to say I want to hear from we're going to move a little forward and hear from Vienna from the economic space agency just because we're fortunate to have her with us at MIT at this point and their team is going to be coming back on October 30th and 31st so we're going to learn more about and maybe start to play with some of their technologies and really it's getting very much into some of the concepts we've been talking about but in a new way so Casey Bob and others who aren't familiar with economic space agency and my friend and colleague Vienna your life is going to get a lot better Vienna thank you if I may I think I'm going to sign off instead great do and I'll drive for you so a little background about myself I actually grew up in Malaysia where I used to organize like color reform one of the things that I was interested in is that if you want to change things in society and you're relying on one to five years of elections that doesn't seem like a way to really make society better quickly so I started working on one how can we have a better form of systems for that like that's how I got into democracy and that's also how I got into blockchain it's for me in Malaysia we have corrupted election commissions and that's how the government has been in power for 60 years they ran elections every five years they didn't have it five years so I started talking about hey let's have elections on blockchain that obviously didn't go down well my friends were for positions or attempts to overthrow the government and probably follow the truth so after getting pretty disillusioned with politics I was just looking at how politics is kind of like an avant-garde art-creator and you don't really know what's true anymore so I started thinking that beyond systemic reform we need to start thinking about it in an ecosystemic way and that's how I arrived at in your slides keep going I got you that's how I got meeting my colleagues at the economy space agency which is basically an interdisciplinary collective of people that's globally distributed it's very much like the media lab in a sense because we have people who are radical economists software engineers all the way to artists and activists so it's always pretty fun and what we wanted to work on is basically an ecosystemic way to generate, capture and distribute value the two open source projects that we're working on the first one is called gravity it's a secure and scalable distributed fabric and we arrived at this because it started off that we wanted to build an activist hedge fund to secure it and we did it only to realize that it's fundamentally not scalable and not secure and we just can't run it the way we want it so we then met a bunch of teammates who were like oh there is a way we could possibly resolve the challenges that are in the blockchain space which I'll go into in the slides after but for now you select your slides I don't know what to click I'll go into more around space as well which is the economy toolkit creation platform and just to also answer a question there just now which is why we think this is important is that we're actually moving from spin protocol that allows for a business model that focuses on capturing the data to one where it's about Fed protocol now so what that means is that the new players are no longer Amazon Facebook Google now for gravity what we are working on is basically taking the baton from what has been done in the blockchain space which is a version of public smart contracts and combining it with private smart contracts a paradigm called object capabilities which has been worked on since the past couple of decades in the academic realm what that means is that when we do this we can actually create a network PC revolution almost if you think about it Bitcoin is kind of like a spreadsheet if you will and if you're it's like a world reframe computer what you really want to do is a PC revolution this network so that is what we also mean by logical decentralization I know that I don't have too much time now but I basically went into a little bit about what object capabilities mean which is if you guys have read Dada's work on open PDF it's basically a full blown version of that to ending so the space part is basically trying to make it usable in a very easily created way for the app user and what we think is that with this we can create programmable economy almost like designing games okay so there's a lot more to this I've been hanging out with these folks awesome collective in Oakland a little bit in Waterman, New York right now it's very interesting stuff I encourage you to check this out especially in the Trust Consortium at MIT and see how they're going about some of the very same things that we're trying that Sandy spoke of so co-instructor Joe Sponson has reminded me to remind you all if you're in the class and you want to do a project or you want to engage fully and you haven't emailed one of the instructors yet email us we want to get together with you as soon as possible also somebody emailed me and I can't find it, I don't know what to look for so whoever you are, if you can hear me I apologize, email me again if you haven't emailed me, if you want to or Yoast or Gabe Tenenbaum or Sandy, especially Yoast and Gabe email us, we'll get together with you and engage in your projects and help put things together tonight Legal Hackers at Cambridge Innovation Center and Diana I will be gathering to continue some of these threads of conversation and tomorrow Diana will be with us at the lab as well if you'd like to learn more and next week and I guess that's basically at the high level so for those of you that would like to stay engaged on this conference coming up go to MIT Legal Forum dot org pre-register and engage with us, share your ideas for programming if you're willing to come and speak and get involved and we'd love to see the students in this class your projects and your themes roll forward as grist for that now to help people like Bob catalyze transformation and law so thanks everybody great class today and we'll see you next week great thanks Tacey