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RegTech, LawTech and the Future of Lawyers | Henri Arslanian | TEDxYerevan - YouTube
Channel: TEDx Talks
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Transcriber: Eunice Tan
Reviewer: Tanya Cushman
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(Armenian) Good morning.
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Good morning.
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Very, very excited
to be here this morning.
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Let me start by asking
all of you a question.
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I want you to think about the last time
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you had to enter into
an important legal contract -
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say, a new employment contract
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for a new job
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or a lease for a new apartment.
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You probably would have liked
to consult a lawyer, right?
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But you probably didn't,
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as you thought, like many others,
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that it would be too expensive.
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I want you to think about a time
that you were confronted with a situation
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where you needed to understand
what your rights were,
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like the sudden death of a family member
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or being unexpectedly fired from your job.
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Was finding the right information easy?
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Probably not.
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Well, you're not alone.
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Even in a country like the United States,
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with one of the highest ratios
of lawyers per capita,
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around 80% of the population
does not have access to legal services.
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And it's actually a bigger
and broader problem than that.
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The United Nations estimates
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that around 4 billion people
around the world
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are actually excluded
from the rule of law.
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But wouldn't it be great
if we can actually change that?
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Well, we may have a chance,
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using the latest innovations
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in the field of legal technology
and regulatory technology -
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"lawtech" or "regtech" for short.
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Lawtech or regtech
are the use of new technologies,
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from artificial intelligence
to blockchain,
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that can help us deliver not only
legal services better and more efficiently
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but also help us tackle regulatory
and compliance burdens
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more efficiently and more effectively.
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And what I want to share
with you all today
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is how these latest innovations
in the field of lawtech and regtech
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will not only change
centuries-old professions,
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like being a lawyer,
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but will allow us to conceptually change
many of the big concepts we've had,
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like trust, contracts,
and access to justice.
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And this will have not only impact
on each one of you in the room today
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but billions of people around the world.
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Let me give you one example.
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Imagine next time
you have a legal question,
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you can take out your smartphone
and ask a robot lawyer for the answer.
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Well, some lawtech start-ups
are building just that:
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legal chatbots.
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These messaging apps
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allow you to actually talk
as if you're talking to a human lawyer,
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but actually, instead,
you're talking to a computer program
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who can answer you anytime, anywhere,
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with answers to
your basic legal questions.
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Just for example,
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imagine you separate with your partner
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and you want to know
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what are the relevant custody rules
that apply for your children,
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or you're a single mom
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and want to know what state benefits
are available to you.
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While the most complex
and bespoke legal questions
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will and should be answered
by human lawyers,
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the reality is that we can now program
a lot of basic legal answers
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into decision trees
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and deliver this via chatbots
to the public at large
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via tools that people use every day -
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from Facebook Messenger
in the West and in Armenia
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to tools like WeChat in Asia.
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And where this becomes really powerful
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is when we are able to help
those who need it the most.
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Think about refugees
looking at making asylum claims.
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In that instance, the chatbot -
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accessible via any smartphone -
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can ask the relevant questions,
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determine what are the rights
of that individual,
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propose some options,
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and potentially file
on that refugee's behalf.
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It allows us to actually help the people
who need it the most
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and do it in a cost-effective way
and scalable way.
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And with the advances
we're making right now
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with voice recognition technology
and voice as a user interface,
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we are finally able
to offer these services
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to the 750 million people
around the world who are illiterate
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and who cannot read and write -
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500 million of them
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being in developing countries
and being women.
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But even when you look beyond
the most vulnerable,
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the reality is that legal services
are still not accessible
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to even the middle class.
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When I was starting out as a young lawyer
in Canada and in Hong Kong,
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one of the things we would do
for corporate clients
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was to go through hundreds of past cases
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to find the specific ones
that would have helped our client's case.
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That's quite common
in the practice of law,
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but it's a bit like sending a human
to find a needle in a haystack.
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According to some studies,
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lawyers spend up to a quarter -
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and in certain cases, up to one-third -
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of their time doing such research.
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Not only does this actually make it
very costly for those who can afford it
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but also acts as another barrier
to access to legal services,
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including for the middle class.
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Well, the good news is now we have
a lot of actual lawtech technologies -
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solutions being built by start-ups,
powered by artificial intelligence -
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that can go through
all the available case law
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and intelligently flag the ones
and summarize the ones
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that the lawyer should focus on,
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not only on key terms
but because of the context as well,
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allowing us to bring down the work
that would take hours into minutes,
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and bringing down
the cost of legal services,
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and making it more accessible.
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But when you look at this,
often the question that comes up
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is how can we actually use
these technologies
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to solve the big global problems -
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the ones that are cross-border,
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at transnational level?
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The good news is we can now use
these regtech solutions
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to solve these problems as well -
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at least try to.
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Let me give you the example
of global money laundering.
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Today, banks around the world
spend billions of dollars a year
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to try to spot and stop funds
coming from criminal organizations
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and those coming from corrupt politicians.
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The goal is to stop these funds
from entering the global financial system
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because once there,
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they can go to fund terrorism,
human trafficking,
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or other corrupt practices
that end up affecting us all.
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The process is actually
a pretty big problem.
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The United Nations estimates
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that the global volume
of money-laundering transactions
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around the world
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is between 1 to 2 trillion
US dollars a year.
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And the problem is we're able, today,
to stop less than 1% of that amount,
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which means that despite all our efforts,
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all our efforts against
global money laundering,
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have, in practice, failed.
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One of the reasons, actually,
is that the process is still very manual.
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It's very costly, time-consuming,
and prone to mistakes.
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And here again, we have
a lot of regtech solutions now
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that can not only do the work
being done today by humans
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better and faster,
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but also you can plug in
into these regtech solutions
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big tons of data,
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and the AI can actually
go spot the patterns
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that even a human money-laundering officer
could never even spot.
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And the beauty of these solutions
is that the more we train them,
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the more data we give them,
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the system becomes even more accurate,
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allowing us to get one step closer
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to stopping the funds
from these corrupt politicians
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from entering the global financial system.
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But where this becomes real exciting
with lawtech and regtech
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is when we're able
to take these new technologies
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and completely transform how we do things.
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One technology that enables us to do this
is blockchain technology.
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You've all probably heard
about blockchain by now.
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But to keep it simple,
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it's really a database
that is decentralized -
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basically, not staying at the same place;
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immutable -
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once the transactions are agreed,
they cannot be changed;
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and consensus-based -
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for a transaction to go on it,
everybody has to agree.
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And blockchain will change many facets
of our lives over the coming years,
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but it will have also
a particular impact in the field of law.
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Let me give you an example.
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Today, in most countries,
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if you want to go buy a house,
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you have to go see a lawyer or a notary,
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depending whether you're in
a common law or a civil law jurisdiction.
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That individual will perform some checks,
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say, to ensure
that the house you're buying
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actually really belongs to the seller,
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but also will try to verify
that the title you're buying
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is clear of any hidden mortgages
or other liens attached to it.
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Once again, the process
is not only costly but not very efficient.
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And by the way, that is not even
the big problem.
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The problem is that for most of the world,
that legal title does not even exist.
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Again, according to the World Bank,
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70% of the world's population
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does not have access
to proper land titling.
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To put that in economic terms,
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some experts estimate
that the value of "dead capital" -
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in which people do not have access
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to the legal title to the land,
the house, the car,
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and other assets that they own -
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at around 20 trillion U.S. dollars.
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And the problem with this
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is it traps people
into this vicious cycle of poverty.
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You cannot borrow money
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based on the land that you have
or the house you have,
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but also you can lose the roof
that you have at any moment
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or the one you just thought you paid for.
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And probably even worse than this,
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you are at the mercy
of corrupt government officials
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who can come and amend those land titles
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whenever they want
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in exchange for bribes -
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a problem that is still, unfortunately,
common in many countries around the world.
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Well, blockchain
can be part of the solution.
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Not only putting land title transactions
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on the blockchain
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makes it cheaper to buy and sell houses,
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as you don't need
those lawyers anymore or notaries
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to act as those trusted intermediaries
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as the blockchain can do that work,
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but most importantly, actually,
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it makes it practically impossible
for corrupt government officials
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to amend these land titles
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and take the property away from those
who probably deserve it the most.
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And the advances we're making in the space
are actually quite impressive.
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Let me give you another example:
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contracts.
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All of you enter into contracts every day,
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from buying goods online
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to actually accepting those terms
and conditions that you never read.
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The reality is legal documents
right now, legal agreements,
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are actually not only
lengthy and ambiguous,
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but in many cases - in most cases -
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you need actually to rely
on a third party to enforce it.
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In the event that
your contract counterparty
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does not fulfill its obligations,
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enforcing it is actually
very costly and time-consuming.
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You have to first find them,
hire lawyers, go to court,
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and hope that you're going
to end up with an impartial judge
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who's going to set the record straight.
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The last point, as we all know,
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is not only not practical
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and doesn't exist
in many countries around the world,
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but even when it does,
it's very cost-prohibitive.
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And this is actually
where we can have blockchain
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be part of the solution as well.
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When we're doing this
is via what we call "smart contracts."
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Smart contracts are actually
programming code on certain blockchains -
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most notably, the Ethereum blockchain.
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It allows you to not only
facilitate and execute contracts
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using only blockchain technology;
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the smart contract code
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will actually set the rules,
the obligations, and the benefits
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as a normal contract would,
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but the smart contract
would automatically execute them
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upon the occurrence of a certain event.
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For example,
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let's say you make a bet with your friend
on the outcome of a football game,
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where the winner would automatically
get paid by that smart contract
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as soon as the game is over.
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Or imagine buying
a travel insurance policy
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where the smart contract
would automatically pay you
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as soon as your flight is delayed.
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Smart contracts allow us actually to code
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not only the obligations
the parties have agreed to
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but automatically execute them
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upon the occurrence of often public
and verifiable and available information -
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in the examples I just gave,
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the results of sports games
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or the flight landing and departure times,
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which are all public.
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And again, blockchain
in today's use cases are quite narrow,
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but the beauty of it
is actually we're starting -
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and we're still very, very far
from getting rid of traditional contracts,
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but we are able to solve
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some of the most long-standing problems
we've had for many years
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of actually contract enforcement
and counterparty risk.
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So all these examples I mentioned
are very exciting,
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and the field of lawtech and regtech
will really transform the world we live in
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in the coming years.
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However, it's important to understand
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that we're still
in the very, very early days.
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A lot of the use cases
that I mentioned will succeed,
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but many, many of them will fail.
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But we are so many people trying,
around the world, to fix these problems
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that I'm confident
we will actually get there.
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Many of us in the global
lawtech and regtech community
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are working not only with the regulatory
and legal practitioners
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but also with governments and regulators
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to ensure that we have
the right ecosystem in place
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to allow these technologies to flourish.
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But we also need the legal industry,
the regulatory practitioners themselves,
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to be willing to change.
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For example, for the legal chatbot
example that I gave,
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it will be interesting to see
if bar associations and law societies
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will be willing to embrace
these new technologies
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or actually try to block them
as they are competition to human lawyers,
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a bit like the taxi industry did
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with the arrival of Uber
and other ride-sharing devices.
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Come back to my initial example.
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In the U.S., you have more than
1.3 million licensed lawyers,
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and that does not include the large number
of paralegals and regulatory staff
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that do a lot of the monotonous
and actually time-consuming work.
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Many studies over the years
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have tried to predict the impact
technology will have on lawyers.
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Some predict that 25% to 40%
of legal jobs will disappear,
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to other more extreme ones -
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actually predict the structural collapse
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of law firms.
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The reality is actually
more nuanced than that.
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Yes, many jobs will disappear.
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A lot of the monotonous, regular,
time-consuming work done by lawyers
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will disappear.
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But technology is still very far
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from disrupting some of the real
value-added work that lawyers can provide,
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like strategizing, negotiating,
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making commonsense judgments,
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or even visiting a client in jail.
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But it's true that many jobs
will disappear.
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But also new ones will be created:
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think about smart contract-coding lawyers
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or regulatory data scientists.
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And it's very important
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that we try to focus on training
the next generation of legal talent
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to be ready not only for these roles
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but for this new reality
they're going to live in.
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I remember a joke when I was in law school
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that went like this:
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How many lawyers does it take
to change a light bulb?
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The answer -
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as many as you could afford.
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I'm hoping with the changes going on
and for the years to come,
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in the coming years,
the answer to the question
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of how many lawyers
does it take to change a light bulb
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will change to only one:
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the one who built the chatbot
and programmed the smart contract.
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Thank you.
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(Applause)
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