Blockchain developers and Shakespeare have in common the same dream: let's kill all the lawyers. This blog post explains why the dreams of both aren't possible, by exploring the need for lawyers in complex technological systems.

The Dream: A World Without Lawyers

In the early days of Ethereum there was a lot of excitement around smart contracts and the ability to do without lawyers. The idea was that code would do what contracts do. Some of this built on the early ideas of Nick Szabo from his 1990s papers on smart contracts. But Professor Szabo himself thought that smart contracts would be enhanced by lawyers (more below). And those who advocated for a world without lawyers never quite explained how that would happen. Some of this is a conceptual confusion between computer programs and contracts, but there's a rough outline of the idea in the thought that computer programs can remove the need for lawyers.

One reason people are excited about the prospect of a world without lawyers is the perception that their existence is a type of tax on everyone else, taking too much without giving enough. But are lawyers really a cost like stock brokers (who used to charge a lot for basic stock trades that are now free or very cheap through online services)? On closer inspection, lawyers aren't a superfluous cost in many cases. There's a few reasons why, which depend on the type of lawyer. I explain more about that below, but first let's look at what Nick Szabo had to say about smart contracts many years before technology made his vision much easier (through blockchain technology).

Professor Zsabo's Thoughts On Smart Contracts In 1997

Long pre-dating Ethereum, here's an excerpt from Dr. Szabo's 1997 paper on smart contracts:

In principle, since any computable problem can be solved on this virtual computer (they are "Turing complete"), any computable economic mechanism can be implemented without a trusted intermediary. In practice, these secure virtual computers run very slowly (one virtual machine instruction per network message), and the order in which participants learn results often matters. But the existence proof, that any economic mechanism can be run without a trusted intermediary, up to temporal issues, is very exciting. This means that, in principle, any contract which can be negotiated through a trusted third party (such as an auction or exchange) can be negotiated directly. So, in some abstract sense, the only remaining "hard" problems in smart contract negotiations are (a) problems considered hard even with a trusted intermediary (for the standard economic reasons), (b) nonsimultaneity problems in learning the decision, and (c) the task of algorithmically specifying the negotiating rules and output contract terms (This includes cases where an intermediary adds knowledge unavailable to the participants, such as a lawyer giving advice on how to draft a contract).

What's noteworthy is that he saw a role for lawyers as filling in the gap that exists in the knowledge of the participants. But there's more that lawyers do than just add knowledge that they're missing, because knowledge tends to drop in price as technology expands, and that hasn't been the case with lawyers.

What Do Lawyers Do?

Lawyers do many things, because the law does many things. There's laws that govern prisoners, protesters, divorces, multibillion dollar mergers, state conflicts, and virtually everything else in our world. There's little that escapes the grasp of the law, and as a consequence there's little that lawyers don't involve themselves in. Or, put another way, there's little that people don't need help with. And lawyers are the people who help with the law, in many (but not all!) cases.

Lawyers are the intermediaries of power structures. Whether that's between companies, or between individuals and the government, they help to bridge gaps between those who have power in society. The most obvious example is the one where a court holds the power to do something. That's the traditional idea of lawyers who go to court and argue that a court should award something to someone. But there's a lot more to the profession of law, and many lawyers (like the author of this blog post) almost never show up to courtrooms.

Lawyers help fill gaps in knowledge, like Dr. Szabo noted in 1997, but they also help people to articulate their requests to other people. They smooth over the disagreements that characterize a society in which people often want what they don't deserve, or don't get what they do. Most legal problems are settled out of court, and this process is very often facilitated by lawyers because they're essentially professional negotiators.

Other lawyers help to avoid problems by guiding their clients to just outcomes. This can be in the form of good business practices (which might be resisted by marketing departments or executives, who are constant advocates for increasing profits). It might also be in the form of contracts that respect the general rules of society, so that the people who make the contracts don't have to go to court. This is one of my specialties. In this type of law, the lawyer acts as a very particular type of technical writer/consultant, who embodies good practices that are within the law, while also carefully describing what each party will do for the other. A good contract can be worth a lot of money, and they can often be used in a standard way, sometimes with millions of customers, without any variance. It's this type of lawyering that seems most obviously similar to writing computer programs.

Lawyers Vs. Computer Programs

There are limits to what a computer program can specify, which are not constraints on what a contract drafter can write. Computer programs work on definite inputs (although LLMs are changing that) and give an output. A contract can be much more ambiguous, and usually is designed with future ambiguity in mind. The reason for this is that the real world varies much more than the digital world. In the real world, just about anything can happen, and the contract has to answer to that. A computer program doesn't have this problem because the digital world is enormously more constrained in terms of input (and output).

Today, technology lawyers very often work closely with product teams in order to develop computer programs that adhere to real world rules (like laws). If the programmers could gain that knowledge themselves, they could perhaps do away with some of the lawyers, but unfortunately the law has expanded enormously since the time of Shakespeare (and since Nick Szabo was writing in 1997). As law becomes more complicated, the field of lawyering becomes more specialized. The vast majority of lawyers could tell you very little about criminal law, divorces, real estate, patents, and privacy laws. They might be an expert in one of those areas. Today, they're often even more specialized, like lawyers who deal only with pharmaceutical patents, or only with contracts drafted for technology companies.

Interfacing With The Real World: Boulders Rolling Down Hills And Code As Law

Computer programs have to interface with the real world through companies or individuals, which are usually the point where law most particularly applies. I often have clients ask me whether they can make a business based around a computer program that is autonomous. By that they mean a computer program that someone writes, then launches on Ethereum (or another network), and that can't be updated/upgraded/deleted - so it just runs indefinitely, doing some task. The problem with this idea is that this is asking courts to abandon control over results that affect people without their jurisdiction. This is a tall order. And it's really to ask the court to find that the person who pushes the boulder down the hill isn't responsible for its consequences. This is not something that judges accept. It's actually very rare to find anything that judges view as being beyond the law.

There is a phrase that people have given to the idea that the law is purely what the computer code says: code is law. That the law has no place in the functioning of a computer program on a smart contract. If this idea were ever accepted, it might mean a lesser role for lawyers. This idea was even raised in a case that I was an expert witness for:

[5] There is a theory in some cryptocurrency academic thought, that because blockchain technology is based on publicly available or “open source” programing code and is based on a laissez-faire contract theory, that “the code is law”. That means, that if one is able to trade with a blockchain participant within the parameters of the programming code or the notional contract among the voluntary participants, the result is lawful whatever it may be.

[6] The theory postulates that voluntary participants accept and are bound by the results of the use of the technology. That means that if a clever person can devise a way to exploit a loophole or weakness in the code to induce the holder to enter into an unexpected and unfavourable transaction, more power to him or her. The code is public and the users are deemed to take the risk of placing their cryptocurrency assets in a repository with a program that functions as it does with whatever vulnerabilities it may have.

The judge made no finding about the code is law concept because the defendant could not be located at the time. But I doubt this idea will be accepted in Canada, or other countries where there is a strong tradition of no one being above the law, and no subject beyond the law.

Reducing The Need For Lawyers

People have always predicted that technology will reduce the need for workers. Whether that means horse and buggy makers, or lawyers, there's a degree of common sense to the idea that technological change will put people out of work. But as technology advances, worker productivity has increased, so that a person who would have been assembling buggies by hand can now build aircraft engines with multimillion dollar automatic welding robots.

Lawyers today make far more than they used to, but probably not due to huge increases in productivity. This is probably more driven by the massive expansion of law, and the huge expansion of the state since the time of buggies. But even had that not happened, I think lawyers would still be doing well if they have the necessary skills to understand smart contracts and other high-tech systems. Someone has to give the advice about how to build, operate, and deploy these systems. The need for lawyers will exist not so long as computer programs haven't replaced them, but so long as the real world exists and there remains touch points between the real and digital world. And since we all live in the real world, I'm afraid Shakespeare and certain blockchain system proponents will have to continue waiting for the death of lawyers.