Wednesday, 03 July 2019 09:54

Pay check

Leading Spanish law firms are disrupting the legal sector by accepting payment in cryptocurrency for the services they provide – advocates claim that blockchain will ensure there will be more integrity in the provision of legal services and mean clients are billed more fairly

Lawyers are often perceived as very traditional, conservative people surrounded by dusty books. However, law firms are anxious to change such perceptions. In an effort to demonstrate their technological credentials, leading Spanish law firms are bravely leaping into the cutting-edge spheres of blockchain and crypotocurrency. Two recent initiatives launched by major Spanish law firms have caught the eye in this respect. In February this year, Cuatrecasas announced it was issuing tokens for legal services that will be ‘spent’ via blockchain technology. Cuatrecasas said it would be issuing a single package of 80 tokens that will be equivalent to 20 hours of legal advice. Each token will enable the client to have a Cautrecasas lawyer’s services for 15 minutes. The tokens are exclusively for use by Blocktac and FuVeX, which were both winners of the Cuatrecasas Acelera programme. Then, in June, Gómez-Acebo & Pombo launched its own cryptocurrency called ‘Pombo’. In its first phase, the ‘Pombo’ will be used solely to finance pro bono projects, but in the future, the firm said, it will be used to pay for legal services. A total of 350 Pombos will be launched in the first phase. They will be sold in packages of 35 units at a price of €1,000. The initial Pombos will expire after one year.

GUARANTEEING INTEGRITY

In the case of the Cuatrecasas blockchain tokens, the way the system works is the client has a ‘wallet’, through which it displays the tokens. When the lawyer has finished providing the advice, they record the hours worked on a software system in the office, and the purse is updated. The client also has information about the hours billed, the balance, as well as notes and comments from the lawyer. In this pilot project, the tokens were not transferable. Alba Molina, innovation project manager at Cuatrecasas, explains: “In order to provide legal advice to a third party, it is necessary to pass a conflict of interest verification process, as well as complete a questionnaire and a risk assessment.” Cuatrecasas CIO Francesc Muñoz says the blockchain registers all the transfers of tokens produced by Cuatrecasas and therefore, in accordance with the hourly billing system, “guarantees integrity while also providing transparency. 

PROVIDING TRANSPARENCY

Carlos Álvarez, director of digital transformation at Gómez-Acebo & Pombo, says the Pombo is not designed to be a means of payment, but as a cryptocurrency that can be used to acquire pro bono work from the firm. “The purpose of this token is to provide transparency, as well as traceability to contributions, and the provision of pro bono hours, to the Fernando Pombo Foundation.” Although in this first stage it only be used for pro bono work, the idea is that in the future it will used as a method of payment for legal services. There is still some way to go before blockchain technology is utilised to its full potential in the legal sector, it is likely that, in the near future, clients will be paying for legal services using cryptocurrency. While initially it will be used as an alternative payment system, there is a view that, in relation to some types of legal services, it will eventually replace more traditional payment methods. Ramón y Cajal Abogados partner Cándido Pérez argues that the use of new alternative payment systems – such as bitcoins, tokens, ripples, Nxt or ether – is now an alternative to more traditional methods of payment. He adds that such alternative forms of payment ensure that, given the guarantees and security they provide, in addition to the elimination of intermediaries, means they are viable.

THE ‘POMBO’: HOW IT WORKS

Quoted on the public network Stellar (similar to a stock market or virtual stock Exchange), the ‘Pombo’ can be acquired and then assigned to a project run by the Fernando Pombo Foundation. The Pombos are then transferred to the wallet of the chosen project and the foundation then requests that Gómez-Acebo & Pombo provides the corresponding number of hours of pro bono work to the project in question. Once the owner of the Pombo selects the project to which they want to assign the tokens, the information will be registered securely on the blockchain network through a smart contract, and this data can be verified at any moment by the token holder or any third party. This technology therefore facilitates greater transparency and traceability for the owners of the tokens, in addition to to involving them in the execution of the projects.

To read the article in full please download issue N.86 here

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