Magic circle firms double down on legal smart contracts

The Accord Project, a group launched last year to push for industry standards around legal smart contracts, has won some buy-in from major UK law firms.

Allen & Overy, Freshfields Bruckhaus Deringer and Slaughter and May are all joining the project, adding to ranks that already include US firms such as Dentons, K&L Gates, DLA Piper in an attempt to jointly create standards for legal smart contracts specific to various practice areas.

Peter Hunn and Houman Shadab, co-founders of the Accord Project, said they’ve seen large multinational firms express particular interest in their effort to produce industry-wide legal smart contract standards.

“We have had enormous interest from global firms. We see this as indicative of the potential for smart legal contracts to change large-scale, cross-border commerce, and the immediate need for common standards if these efficiencies are to be realised,” Hunn said.

Each of the three joining magic circle firms issued statements noting that the Accord Project aligns with the firms’ various interest in supporting legal innovation.

“We recognise that smart contracts and blockchain infrastructure have the potential to revolutionise the markets in which we work, so it’s vital that we establish robust standards for their use and ensure consistency,” Shruti Ajitsaria, head of Allen & Overy’s tech innovation space Fusesaid in a statement.

Although blockchain and distributed ledger technology has quickly become synonymous with smart contracts, thanks in part to the rise in interest around cryptocurrency, the Accord Project is intent upon creating “blockchain-agnostic” infrastructure to legally enforceable smart contracts. The group is looking to develop standards around both “on-chain” and “off-chain” contracts.

“When we consider smart legal contracts, it becomes apparent that one doesn’t necessarily need all of the characteristics that a blockchain can provide. In fact, to mandate this may be detrimental,” Hunn and Shadab said. “To maximise the benefits distributed ledgers can bring the counterparties to a contract, there is a need for a hybrid implementation that merges the benefits of on-chain execution where applicable with the benefits of off-chain execution.”

Given that the standards are set to be industry-wide, the interest and broad participation from large law firms seems like it could potentially skew standards to favour big multinational corporations, but the Accord Project founders are hoping that their broad partnership model can help ensure that consumer-facing law practices are given an appropriate voice in the development process.

“We have a number of consumer-focused law firms involved, as well as partnership with Clio that supports this. It is certainly one of the reasons that we open sourced the technology in the first place,” the founders said.