Smart Contract Explained

Smart Contracts Explained: Tech That Lawyers Should Be Using

Our world is ever-evolving with new possibilities in the digital age. Almost everything now has a digital option that can make day-to-day tasks easier…even for lawyers! What about smart contracts? Have you considered using them yet? Are they right for you? Will smart contracts replace lawyers? 

In this blog post, we take a closer look at smart contracts and how lawyers can benefit from using this technology (because…spoiler alert…smart contracts won’t replace lawyers!).

What Is a Smart Contract?

Smart contracts are highly secure digital contracts that rely on software to automate the execution of contract terms. While smart contracts have been around for about 30 years, they only recently became popular. 

Far more secure measures are taken now to protect the data stored within a smart contract. Smart contract transactions are secure, traceable, and transparent. This is very convenient for lawyers as well as their clients. Smart contracts are coded with all the information required for the contract terms of conditions, including any other necessary information.

Related: Legal Document Automation: Is It Really a Form of Artificial Intelligence?

How Do Smart Contracts Work? 

Smart contracts are auto-sufficient and programmed to follow specific coded actions. This automation can be customized depending on what the contract requires from the client’s end, such as photo identification and collecting a digital retainer. 

Once a contract is initiated, set prompts will determine if the contract is successful and move on to the following prompt. If a prompt isn’t executed, the automation fails, and the contract isn’t completed. If a prospective client were to begin the contract but not answer a prompt in the intended way it was coded an answer, the automation wouldn’t continue to the following prompt.  

Three main objects are essential to smart contracts: 

  1. The signatories; 
  2. The subject of the agreement; and  
  3. The terms or rules. 

Smart contracts run off blockchain technologies. This helps make the contract secure and convenient for the company implementing the contract to access it. Blockchain also creates a secure method to take payments, like a retainer, within these contracts.

How Blockchain Technology Works

Blockchain technology is a decentralized ledger. Blockchain essentially works how the name sounds: data is stored on blocks chained together. This makes the data more secure because any tampering wouldn’t be able to change each block of data simultaneously. 

Blockchain is essentially the backbone of smart contracts. These programs come already coded and ready to use, so you don’t have to know how to use blockchain technology to code your own. Smart contracts are customizable, making this technology vastly usable and highly user-friendly. 

Will Smart Contracts Replace Lawyers?

Smart contracts can be used to automate client intake and contract agreements with clients and even transactions and taking payment arrangements. These smart contracts are effective while eliminating the worry of human error. Create the form or agreement you need and implement it in your law firm along with the proper technology. 

The biggest perk for lawyers using smart contracts is time management. A lawyer’s time is important, and the more time they can dedicate to a client, the better. While tasks like client intake are also important, it is something that can easily be automated. Most documents can use the smart contract software. 

Get Your Feet Wet for Free with Client Intake Automation

If you’re looking to automate areas in your law firm, LawDroid can help! LawDroid currently doesn’t offer blockchain technology for smart contracts, but we offer law firm automation solutions. Our chatbot is not only convenient to you but also convenient to your prospected clients! Try LawDroid today and enjoy 30 days of LawDroid for FREE. 

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