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      "body": "<i> After Ivona's blog about lawtrepreneurs last week, the second ehvLINC blog is here! Written by one of the new faces at ehvLINC Levent Aslan! A practical analysis of smart contracts, from the lawyers point of view. It probably is the future of contracting, but what legal and conceptual difficulties do we have to overcome to get there? Levent gives you some practical insights!  </i>\n\n2017 has been the year for Blockchain technology. Its most famous creation, the big daddy of all cryptocurrencies, Bitcoin is breaking record after record. You can hear people sighing “only if I threw some cash at it in 2013”. Initial Coin Offerings (ICOs) are on the rise too, and no matter how risky they are people are willing to bet on them. A quick web search will show you hundreds and hundreds of articles, all dedicated to how Blockchain will change the world as we know it and in what ways this technology will disrupt every industry. \n\n<div class=\"pull-left\">https://steemitimages.com/DQmPeRZcCNDswinF56VUauMGksxykJmKzteV1aCzSzBBL5u/image.png</div>\n \nThis statement sounds bold, maybe even outrageous for a technology that is only 9 years young; but come to think of it, another technology that is currently an integral part of our lives, the Holy Internet was nowhere to be found till 1990s. With that in mind, key players from different industries are digging in Blockchain to figure out new applications of it. One such application, smart contract is particularly fascinating; vowing to eliminate middleman for all kinds of transactions. \n\nFirst result of the Google search “smart contract” brings you an article titled “Smart Contracts: The Blockchain Technology That Will Replace Lawyers”. As a law student, I am – as you can imagine – intrigued so to say at least. Does this mean I will be without a job, living on the streets, remembering that dreadful day when I wrote this blog? Maybe, but even with its slow rate of development, law (and lawyers) will eventually adapt to fit into this new era. Till then, let’s take a look at the smart contract and see whether it is as smart as it claims to be.\n\n<div class=\"pull-right\">https://steemitimages.com/DQmNPcmzRpL43ij87A27YJaBsXY6WW2ycojsokeTK7Tmmqw/image.png</div>\nThe origin for smart contract can be found almost everywhere, thanks to a highly developed (?), automated machine that has been here for over 400 years: The vending machine.  First designed by the Hero of Alexandria - an engineer from Roman Egypt - vending machines act as the ledger, recording your input (money) and delivering the corresponding good (e.g. chocomel). Smart contract, on the other hand, uses a decentralised ledger (Blockchain). Stored in Blockchain as a piece of code, contract executes itself when its conditions are met. \n\nLet’s use this example from the aforementioned article: “Suppose you rent an apartment from me. You can do this through the Blockchain by paying in cryptocurrency. You get a receipt which is held in our virtual contract; I give you the digital entry key which comes to you by a specified date. If the key doesn’t come on time, the Blockchain releases a refund. If I send the key before the rental date, the function holds its releasing of both the fee and key until the date. The system works on the If-Then premise and is witnessed by hundreds of people, so you can expect a faultless delivery. If I give you the key, I’m sure to be paid. If you send a certain amount in bitcoins, you receive the key. The document is automatically cancelled after the time, and the code cannot be interfered by either of us without the other knowing since all participants are simultaneously alerted.”\n\nSo on paper, smart contract is visible, traceable, verifiable, secure and self-executing. One may ask “Well, why don’t we start using this magnificent technology right away?”. Indeed, there are already early examples of smart contracts, however certain issues have to be resolved before smart contract becomes the norm. Contract Law definitely will have some say on this topic:\n\n<i>Validity of Contractual Consent</i>\n\nIf you are not familiar with coding, a smart contract might be difficult to understand. \n\n ![](https://steemitimages.com/DQmbiMk4hAByao3PvfAK5L9xRMF1Ey3G2CUmmn28pBBpbEC/image.png) ![](https://steemitimages.com/DQmZR9G1KyaCu2MLSkn393dp4ckZrpoKfbbCCsRw7piZWoD/image.png)\n\nIdeally, a contract should be easy-to-understand for a “common person”, someone who doesn’t necessarily possess a legal or computing background. Rights and obligations arising from the contract should be clear, otherwise one party (in a cheesy Hollywood movie fashion) may say “I didn’t sign up for this!”. Validity of contractual consent depends on whether parties have a mutual understanding of essential contract terms, otherwise contract can become voidable due to invalid consent. What is meant here is not the comprehension of the entire legal mumbo-jumbo lawyers love to put in a contract, but rather the terms without which there will be no contract. \n\nA smart contract, with its complex nature, is vulnerable from this perspective. However, smart contracting engines like Agrello and Hawk may eliminate this problem by setting a standard framework with a focus on the accessibility. Time will tell.\n\n<i>Identification & Capacity of the Parties</i>\n\nBlockchain’s main selling point is its decentralised character. There is no authority regulating, gatekeeping or checking the information within the system. In an era where the “Big Brother” is watching, this sounds perfect right? Yes and no. Authorities – even with their flaws and incompetences – do serve an important purpose: Examining the authenticity of information. Your personal/public records (ID, driving license, birth certificate etc.) ensure you are the person you claim to be. \n\n![](https://steemitimages.com/DQmQKg3QGQXEXKFpccVxpDRsVoBJvQbqixFx6d1wMDV9Wk1/image.png) \n<i>“Let’s rent Mommy’s car out for some Bitcoin, \nI need new toys”</i>\n\nWithin Blockchain there is no such guarantee. You can never be sure about the identity or the capacity of the counter party (without aforementioned documents at least). From a Contract Law perspective, although there are some exceptions where identity of a party is irrelevant (e.g. contract between an auctioneer and a bidder), in principle parties to a contract should be properly and unambiguously identified. This rule holds extra value for contracts where identity is a fundamental element (contract with an athlete for instance). \n\nAuthentic identification is also vital in determining the legal capacity of a party. Without the necessary legal capacity (age, mental capacity, consciousness etc.) a contract is deemed to be voidable and liabilities arising from it will not be held against that party. Proving these points in a smart contract is much harder since everything is digital and parties usually do not interact with one another in real life.\n\n<i>Legal Definition of Smart Contract</i>\n\nEach legal system has a definition of “contract” and what elements it possesses. There are formal (e.g. date, being written) and material (parties’ identity, performance etc.) requirements for different types of contract. Of course, there is logic behind all this legality: Since contracts are binding and usually putting parties under certain obligations, you would want legal security and unambiguity in a contract to eliminate unwanted consequences. \n\n<div class=\"pull-left\">https://steemitimages.com/DQmZzw238af7yMmSUMcyMjMzK2NZVtSDP18YfZ1LWUdbUEe/image.png</div>\n\nWith smart contract there is no certain framework on its elements. So how can one party contest the validity of a smart contract if there is no set list of its definition or requirements need to be fulfilled? Another question may rise in case where smart contract has interjurisdictional aspects (e.g. an American buying a summer house in Italy). Which jurisdiction will be applied when a dispute arises and smart contract needs to be evaluated? One may see the need of integration into local and international legal systems, however this can also affect the decentralised character of smart contract.\n\n<i>Liquidity Issue</i>\n\nAs you may have noticed in the smart contract example, your payment is hold within the code until the execution date of performances. This means you lose the liquidity of your money when you sign the contract, even though you receive the return at a later date. Having multiple smart contracts of this nature will not be financially rational since it may cause illiquidity problems.\n\n</i>Privacy & Security of Personal Data</i>\n\nContrary to popular belief, Blockchain does not offer anonymity but rather pseudonymity. All transactions are transparent, but they are not explicitly connected to real-world individuals or organisations. However, with ever improving technology there is a future possibility of identifying a contracting party from the transparent data. National governments may also demand “backdoors” to private encrypted Blockchain systems for law enforcement purposes (looking at you NSA). \n\n<i>Irreversible Transaction</i>\n\nThis can be the Achilles heel. Transactions in smart contract are both immutable and irreversible, meaning once the contract is signed, it is a done-deal, there is no going back. However, a lot of things can happen between the signing and the actual execution: A party may change his mind, required performance may become impossible, aliens may invade Mother Earth… but smart contract will still execute itself. Under Contract Law there are multiple options to renegotiate or terminate the contract. Let’s use the smart contract example for a third time to understand the value of these options.\n\n<div class=\"pull-left\">https://steemitimages.com/DQmeuipsGvfHwzdE3PNgbw6QPcyyfzntY2xHEqw3ZmYxr4Y/image.png</div>\n\nYou paid for the apartment through Blockchain and your counter party immediately sent digital key. So both parties actually completed their performance, right? However, the day before the execution, a neighbouring apartment caught fire and took down your rental with it. Should you still pay for it? In a normal contract both parties would have been relieved from their performances since it is impossible for your counter party to rent his apartment. Smart contract, with its irreversible and immutable nature, will simply execute itself; transfer the money to your counter party’s account and deliver the digital key – which is worth absolutely nothing – to you.\n\n<i>Last Words</i>\n\nAs a TED talker (whose name I cannot recall) once said, Blockchain can very well be the technology that will define the 21st century. But before jumping on the hype train for smart contracts, one should bear in mind the multi-layered character of a contract and how it is regulated to ensure mass enforceability. All problems mentioned here are solvable though, so in the meantime law students like me better prepare themselves for the future, otherwise we will become just another victim to automatization.\n\n(Oh and the next time you use a vending machine, remember Hero of Alexandria, the “greatest experimenter of antiquity”. From what I read he was more or less the Elon Musk of his time)",
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      "body": "![](https://steemitimages.com/DQmSckFfdxcRCjybuKGRgPytqYM2nf6KkBkGQNNDCYQCst7/image.png)\n\n<i> A story by my ehvLINC Co-Founder. </i>\n\n<i> ehvLINC is an initiative founded in 2016 in Eindhoven. ehvLINC tries to bridge the gap between classic legal service providers and starting companies. We provide legal help to startups from the Brainport Region. We do this by placing teams of students as in-house lawyers at these law firms. The quality of the work of the students is guaranteed due to the cooperations we have with local law firms, who check all the work of students. As part of our program we also write about our experiences in the field! This week a blog about lawyers as startup co-founders. Ivona doesn't have a Steemit account yet, but I bet she will make one if this platform turns out to value our content:) Have fun reading! </i>\n\n<b>Why Lawyers May Be Brilliant Startup Co-founders: The Birth of Lawtrepreneurs</b>\n\nOnly recently, I came across an old blog from Venture Hackers, which has listed the TOP 10 reasons why entrepreneurs hate lawyers. At first, I wondered how long that list actually could be. Then again, 10 reasons is already a lot of negative energy. Amongst others, lawyers were accused of being unresponsive, deal killers, who care only about their overpriced fees. Through my experience in various legal environments, whether law firms, corporates or academia, I have learnt that we, lawyers sometimes act in a way that could be interpreted as hubris, skepticism, lack of attention or lack of empathy. However, for us, it is almost mandatory to display confidence, point out risks, think while we discuss and be straightforward in order to protect a client. Same behaviour, different perception. What we consider as a professional behaviour, entrepreneurs may view as a lack of enthusiasm.\n\nApparently, there is some kind of a gap between entrepreneurs and lawyers. It almost seems like the global legal reputation precedes us. To be fair, American TV series with legal themes have not helped to counteract that image. Lawyers are frequently portrayed as self-centered egomaniacs, who are paid handsomely, but work rarely. You may be familiar with Harvey Specter, beloved character from Suits. While I experienced legal work as a flood of documents that I needed to make sense of, he does not seem to have a single paper on his desk. While I remember being locked up in my office in order to read through dozens of contracts, he seems to have plenty of time to parade around his law firm office. While I was inseparably connected to my laptop, he seems to have all necessary information already downloaded in his head. It is hard to imagine how suit-wearing, polished-looking, always –in-control Harvey Specter could turn into a hoody-wearing, creative startup founder.\n\nHaving this lawyer-entrepreneur divide in mind, I started to think how lawyers could fit into the founding team of startups. Not as advisors, not as professional consultants but as core members of startup teams. Here are few reasons why we, the lawyers, could be one of the most important startup assets.\n\n<i>Because we are used to identifying red flags</i>\n\nIt will not be a surprise to anyone, if I say that legal work is to large extent an exercise in risk management. We often think in “worst case scenarios” in order to explain to our clients all possible outcomes. We have a very fine-tuned ability to foresee situations and connect the circumstances that no one else has taken into account. We literally think in multi-verse of possibilities. Indeed such ability is not reserved only for lawyers but a frequent practice of “what could go wrong” game helps us to scan the situation much faster. In contrast, entrepreneurs often suffer from so-called “entrepreneurial optimism” that prevents them from seeing risks to full extent. Lawyers could thus perfectly complement and balance out other “overly optimistic” co-founders.\n\n<i>Because we are used to learning what we don’t understand</i>\n\nAlthough law studies is definitely not a piece of cake, the truth is that the tough part comes after you graduate. Law schools provide you with helicopter introduction to law and certain crucial skills, but the learning re-starts once you enter the client arena. You realize that communication is above all and psychology should have definitely been your minor. On top of that, you have to keep sharpening your legal acumen especially in highly technical areas. Simply said, you need to keep learning and improving all the time. Who says these skills cannot be applied to other disciplines such as technology, marketing, finance or others? Unless it is a rocket science, I believe lawyers have a capacity to master other disciplines to the extent that they can play multiple roles in a startup team.\n\n<i>Because we are persistent</i>\n\nDespite what Harvey Specter fans think, being a lawyer is a constant, sometimes not so graceful fight, for clients, for deadlines, for a position in a team and occasionally even for sanity. Being persistent is one of traits that we need to develop or improve already during our studies, when we spend long hours reading endless pile of books and articles. Furthermore, we are often exposed to very intensive competition, whether on the job market or within our workplace. Persistence is crucial in a legal job as much as in entrepreneurship.\n\n<i>Because there is not any blueprint to what we do</i>\n\nIn law, almost everything is relative. In many cases, you cannot, beyond reasonable doubt, predict the outcome of the trial or the behavior of your counterparty. There is simply too many unknown variables. You often try certain strategy and reverse it or modify it “on the go”. This is exactly what entrepreneurs need to practice and simultaneously what they often fail to do.\n\nMany startup founders have a technical background or an engineering degree, so they are used to apply hard science methods with accurate results. Unfortunately, this is not how law and entrepreneurship work. We need to adapt, we can almost say “pivot” on the daily basis. Furthermore, we often apply intuition, internal gut feeling that is very far from a scientific approach. As a startup founder, you sometimes need to do the same. You often have to decide instantly without sufficient information and under time pressure. Being comfortable with using intuition as a working method is important part of founder’s experience.\n\n<i>Where are the lawyers at?</i>\n\nSo now that we know that we, lawyers, can be valuable startupco-founders, the question is why are they not?\n\nThere are naturally some lawyers turned entrepreneurs and many new LegalTech startups on the horizon but in reality, lawyers are not penetrating entrepreneurial sphere enough. Quite to the contrary, lawyers were not able to completely reverse “bad rep” and other professions have come to play crucial roles even in the LegalTech industry.\n\nThe asset (lawyer) is the same, but the application has to change. So what needs to happen to steer lawyers towards more entrepreneurial path?\n\n<i>Mindset Shift</i>\n\nIn order to become good co-founders, lawyers need to change their mindset from advising to executing, from presenting multiple potential solutions to choosing one, from interpreting to creating, from eliminating risk to taking risk. The most profound difference in the world of entrepreneurs as compared to the world of lawyers is the likelihood of failure. It is generally known that startups fail much more than they succeed. So the possibility of becoming jobless owner of worthless shares in failed startup is not so distant. Failure in the legal environment is still perceived as Voldemort, the one we fear but shall not speak of. Many law firms realize this drawback and actively try to introduce their lawyers to entrepreneurship, where a failure is a part of the process. This transition is however still “work in progress”. It requires law firms to not only change the mindset of employees but, in fact, change their DNA, governance, decision-making and their philosophy.\n\n<i>Educational Shift</i>\n\nThe mindset shift becomes easier if (future) lawyers experience their first touches with entrepreneurship already during their studies. Aside from few exceptions, law schools have been picking up this trend in a very slow manner. The main issue is in implementing creativity, the main driver of entrepreneurship, into curriculums of law programs. Creativity in legal terms is often confined to novel ways of legal interpretation. That is not what startups would benefit from. Students should be more exposed to complex business/finance/marketing/PR/legal problems, which they need to approach from multiple perspectives. Naturally, they cannot be experts in all these disciplines and this is the point where creativity shall compensate the missing experience. At the same time, not having a clue how to solve an issue and yet taking up on this challenge, is a cornerstone of one’s work independence and self-reliance, which is appreciated in every work environment.\n\n<i>Experience shift</i>\n\nWhilst legal education certainly provides crucial input for students in their formative period, the real life experience may well be the last building block, which can complete the bridge between the legal realm and the entrepreneurial world. Students or young lawyers that have a chance to experience startup environment can complete the transformation from traditional lawyers to “lawtrepreneurs”. In this respect, startup legal clinics form an important platform that enables student to explore their entrepreneurial self while studying. As a co-director of such legal clinic or as we call it, the legal incubator (ehvlinc.com), I often find myself in awe of the inspiration, excitement and creativity that the startup environment can trigger in almost anyone. Seeing founders profoundly struggle and endure, experiencing the environment, where new ideas are encouraged not suppressed, where thinking out of the box is the basic job requirement, is a transformational experience, which tends to steer people in a very different direction, professionally and personally.\n\n<i>Role shift</i>\n\nWhen you work as a lawyer, you identify yourself as one. Saying you work as a lawyer gives you and your network sense of the role you play in your organization, it also gives you a sense of self-identity. You know what to expect and others know what to expect from you. Being a co-founder of a business is a profoundly different experience. You can hardly define your tasks as you often simply do what needs to be done. One day you are a marketer, the other day you are a product developer and on a third day you find yourself building a PR campaign. Furthermore, you are constantly in a state of emergency. As one startup founder remarked, having a startup is like giving a CPR to a dying patient 24/7. This ability to flawlessly and comfortably shift from one role to the other without loss of a professional identity is one of the biggest challenges for current and future lawyers turned entrepreneurs.\n\nBeing a founder of a startup is one of the hardest jobs out there. Being a founder of a successful startup is one of the most rewarding jobs out there. If we manage to turn these shifts into reality, we will witness the birth of lawtrepreneurs, a new generation of entrepreneurial lawyers who can significantly help startups on their tough journey to success.\n\nIvona Skultetyova, ehvLINC Co-Founder (http://www.ehvlinc.com)",
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