Interview with Adrian Cartland

Speaker A: Foreign. This is the Future of Law podcast where we explore what it means to be a lawyer and law firm of the future. I'm Cutis from Australia.

Speaker B: And I'm Tessa from Canada. We are two entrepreneurs working on each edge of the planet, bringing you a platform to explore what the future holds for the legal industry. Foreign.

Speaker A: How you going mate?

Speaker C: Very good, thanks for yourself.

Speaker A: Yeah, very, very good. Thanks so much for taking the time out to have this discussion with me on the podcast.

Speaker C: Pleasure.

Speaker A: Um, we had a great conversation I think initially, uh, and some really interesting things that I um, have been wanting to actually cover. But I'm glad to have had uh, that conversation with you. I think you've really been playing in that field, um, in action and there's a bit of experience we can draw from. Um, so today I think we wanted to look at several things, but a lot to do with. When venturing into applying new technologies to the law or to law ish. Services. And I know we use that word, um, we'll look into that. Um, there's this question of how uh, regulators and regulation plays a role in that and that was one of the things that we did talk about. So, um, is that something that we could probably start off on?

Speaker C: Yeah, yeah. Um, and I um. Uh, thank you for introducing the uh, term uh, law ish. Because that's my distinction of terms between um, what I see as uh, classical legal services as you might have defined under the Legal Practitioners act and what um, we as lawyers are used, ah to providing for clients and what clients come to expect from lawyers. Um, and then things that are law ish. That is to say they have some relation to the law and they haven't. They impact the public and the profession. That and the judiciary's experience of the operation of law. But aren't legal services per se?

Speaker A: Yeah.

Speaker C: And so. And um, I'm inspired in this definition by Chrissie Lightfoot's excellent definition of law tech and legal tech. Um, uh, Chrissy uses uh, the definition of legal tech being things they're being technology that is for lawyers to enable them to produce law and law tech being things the technology that is directly provided to clients. Now, right. Um, in the uk they, they've had a. Where Chrissy and her robot lawyer Lisa. Yeah, and where they operate, um, there's uh, there's been an express repeal of. Of um, of problems and or uh, of um, restrictions on who can provide certain services. And so there is. There are things that are wholesale presented. I think that for as far as I'm concerned There's a. Um. Um, I actually, uh. So the normal discussions as I see them are, uh, between, uh, where does consumer facing practices switch, um, over into becoming legal services. But actually the reason I like to define things instead of that way, as Chrissie has, but in my way, as in legal services provided by people and then all other things, which encompasses legal tech and law tech as Christie would define them, um, put all the technology in one bucket because I think that there are important risks that come about even from legal tech by virtue of the nature of technology itself. And um, uh, in my view, um, for the efficient running of the um, profession, we should have some different and new types of regulation, um, to deal with specific problems that I think they, they give rise to.

Speaker A: Okay, that's, that's interesting. So I remember when we spoke about it, there was a distinction. There was a interesting parallel you drew to distinguish between law and law ish. And we did get into a conversation about, um, perhaps rather than convincing that something falls outside of the gambit, assuming, at least the way I understood it, actually assuming that, well, you know, how is it different from other very commonly used tools that we would use for. You gave the Google example. Could you expand on that a bit? Yeah.

Speaker C: So, um, what happens at present is there's debate over should we take regulations, um, that are ah, there to apply to law M. Uh and legal services and try and extend them out into law tech or legal tech or law ish products as I would call them. Um, and there's a lot of problems with that. Um, and it's um. The first of which is the problem of the difference between lawnmowers and terrorists.

Speaker A: Okay?

Speaker C: So, uh, um, we're going to divert to some, um, um, accidental, um, observations by Kim Kardashian, who last year retweeted a. An observation by the US Statistician General MHM, saying that, um, in 2017 there were, uh, I think nine people who died in the US from terrorist attacks and um, and uh, 69 people who died from accidental deaths from lawnmowers.

Speaker A: Okay.

Speaker C: And he's. And he says, well look, there we go. Lawnmowers are more dangerous than terrorists.

Speaker A: Right?

Speaker C: Um, now, um, on average, more people buy from, uh, lawnmowers than terrorists. And the problem with that is that the, the density of the distributions between lawnmower deaths and terrorist deaths are totally different. So, um, the lawnmower deaths might range from say 10 people a year to 100 or 500. And they're normally distributed like a bell curve, as we might look At a population's height, people range from 4 foot to 7 foot and most people are 5 foot 10. So um, but, but terrorist attacks are like, like wealth. They, they have a long tail distribution. You know, on average people might be, might um, you know, might have 70, earn $70,000 a year. But there's some people who earn nothing and then some people who earn hundreds of millions of dollars a year.

Speaker A: You're talking about the standard deviations from

Speaker C: the, ah, it's a fat tailed distribution. That is to say it goes long, it goes extremely long to the right. And so terrorist attacks, sure we might have nine, but we could have 100 or 1,000 or 10,000 or a million people die from a terrorist attack or affected.

Speaker A: Right. Do we include affected or. We're just looking at.

Speaker C: There is a non zero chance of 10 million people dying in the US from a terrorist attack. You know, someone could let off a bomb right now it's unlikely, but there's a non zero chance. There is an absolutely zero chance of 10 million people dying from accidentally cutting their toes off by, with their lawnmower. Right now if you're going to regulate like two different um, industries like that, um, the regulation is totally different. Let me give you another example. The difference between financial planners and banks.

Speaker A: Okay?

Speaker C: So um, they deal with one person. Uh, and the risks that a financial planner might have is they might steal from the person. They might give them negligent advice. They might give, uh, they um, might fail to do something on time and

Speaker A: stuff up, may mismanage money if they're involved.

Speaker C: Yeah, that's it. So you know, so you're going to need to have regulations that, that penalize them from stealing money from their clients that um, that you know, penalize them from being negligent, that penalize them from you know, for doing those type of unprofessional um, things for a bank. A bank is very unlikely to just steal from a client because you know it's, it's so big, you know, there's, there's millions of clients that a bank will have. Um, and so for it to get that big it must have systems in place, transparent to people that say we're not going to steal your money off you, we're not going to give you something negligent. Um, so you don't need that kind of similar regulation. But what a bank has a risk of m is totally destroying the financial system. Just like Bear Stearns did, uh, um, trading in complex financial instruments, um, trading out money that's many times the amount that it's, that it has. Losing everyone's money. It has ah. Banking disasters happen every 20 years or so and um, they don't happen frequently but when they do happen they're absolutely catastrophic.

Speaker A: Yes. And the impact is huge.

Speaker C: Yeah. And worse, the impact is not felt by just the bankers. It's not felt by bankers who usually um, get away with very little damage to themselves. It's felt. It's. They're bailed out by the government and, and it's paid for by nurses and florists and, and um, and firemen and uh, and all sorts of ordinary people who have to have to pay for this catastrophic systemic loss. So, so technology causes.

Speaker A: Right.

Speaker C: So there is. So with technology it's very unlikely that you're going to have some you know uh, like small scale problem like you would have with a human. So you're more instead of. So law ish services provided by technology. Uh, like banks and lawyers are like financial planners. Okay. Law ish are like terrorists to use a negative example. And lawyers are like lawnmowers.

Speaker A: Right.

Speaker C: Uh, they have totally different risk distributions. So when you're regulating these, um, you can't. So um, uh first of all if you apply um, existing like financial plan and regulations to a bank, the bank's going to easily comply with them. But the problem is that the bank is. That's going to provide um, an illusion of stability and in fact might even encourage bad behavior that is encourage um, behavior that appears to comply but exacerbates the big risks.

Speaker A: Right. And also it doesn't cover other capabilities uh that a bank may have but it's not tailored to the solution.

Speaker C: Right, of course, of course. You know. So um, uh so, so if you're so what you, so you can't just, it's um, you can't just pull the regulatory blanket over to, over from, from financial planners over to banks, you know, or from lawyers onto, onto law ish products. Um, because it's, it's not going to be helpful. It's, it's. It's probably going to be negative um at best. Or um. Or at best it's going to be. It's going to miss. Miss the harms. M. Um.

Speaker A: So what becomes the regulator? Like let's, let's start talking about then what becomes the regulator's role in the future of law? What, what's the way that they. Yeah.

Speaker C: Well I actually think the Register regulators need to expand their reach to things beyond what they consider at present. Uh, at present a regulator looks to um, human lawyers and says we're going to monitor you, regulate you. But what about Internet search engines? I won't talk about any in particular. I'm m sure it's not hard to work out which what um, search engines there are.

Speaker A: Well I'd already mentioned one, so that's from me. But yeah, let's just take the example.

Speaker C: I mean but um, um, so Internet search engines, if you go out and so they provide massive benefit to the community. Most people start their legal searches to assist them with their legal issues by going on to a search engine and looking up uh, negligence, um, medical negligence or fencing dispute.

Speaker A: Um.

Speaker C: Or fencing dispute. Yeah, exactly right. And that's great. And that is really good for the operation of our legal system. Both people, people can find lawyers um, in a better way. They can find out information. The more information that we get out about the law, the more it assists the operation of the rule of law. It's a positive thing. But just to give a simple example, um, what happens, uh, so law firms constantly write updates. I do myself. People, um, search on search engines, find for information about law, they find updates. Um, how often do law firms go through and monitor to see the correctness of the information that they have published and whether it is up to date.

Speaker A: Right. Most get away with uh, disclaiming at the bottom or some don't even do that. But a lot do actually say accurate as of the date that it was published. But again fine print. It's not something that comes up in the Google search um, as an actual response.

Speaker C: Yeah, yeah. And in particular um, it's common for search engines to highlight particular information. Correct. And say this seems to answer your question exactly right. So now you. I think it would be impossible to regulate a search engine like a law firm even though it's providing law ish services. It helps people get um, to their, get their legal needs satisfied. Having, trying to regulate a potentially um, massive corporation that has revenues far in excess of the entire profession, um, is probably located overseas, uh, has mass consumer appeal. So um, any regulatory impost was probably likely to be overturned legislatively. Like you know, just like Uber, Uber comes in and you know it, it breaks the law. But then everyone says we love it so they change the law and it's allowed.

Speaker A: Yeah. So I mean public interest loophole.

Speaker C: Exactly. Well it's not even a loop. It's, it's, it's, it's actually a change of law.

Speaker A: Um, so uh, fascinating me as an example, sorry to cut you off. But it also speaks to how culture informs law and law Informs culture. Right. The tool that. The trick in Uber's example is almost that, yes, sure, they, you know, broke the law, you know, quote unquote. But, but the reality is that they, they promoted a behavior that became happenstance, were extremely useful within society to the point where removing that would create more problems than keeping it there.

Speaker C: Okay, well then let me put to you a question on that. That's a unique conundrum for lawyers, which I'm not sure that I have an answer, but I think it's something that needs consideration. And the question is this. Could a lawyer ethically, um, create, uh, a new technology that leads to a change in the law in the way that Uber did, that is they create something that, um, at the head of their law firm or technology company, whatever.

Speaker A: Right.

Speaker C: That is presently not allowed and clearly not allowed.

Speaker A: Right.

Speaker C: But they are confident that there will be a change in law or a change societal behavior. Change in societal behavior that then leads to popular opinion to change the law.

Speaker A: Right. So the question is, is that, can we ethically do that?

Speaker C: Could a lawyer ethically do that? Now, obviously, um, a non lawyer, sure. Like Travis Kalanick, um, he did it. And you know, not ignoring his other moral failings, um, he's, yeah, it's uh, he's um, successfully changed the way we

Speaker A: approach travel and ease of. Travel and ease of transit. Right, yeah. Mobility as a service.

Speaker C: But as a lawyer, so it comes into a question is what is law Now? Um, if you're a natural lawyer from a jurisprudential point of view, you might say, um, you might look at the apartheid, um, era or the grudge informer or your rules, uh, looking at like Nazi Germany. And you might say there are certain laws that are improper or against the natural order. Um, and there is something that's overarching. And so therefore, um, you could, um. If someone says you must do something that is generally immoral to. According to a natural, Natural laws, then you can trump it. Sure, that makes sense. That's, that's a lawyer could certainly, you know, um, break, um, a, uh, a Nazi death camp instruction. I mean, we, you know.

Speaker A: Yeah, yeah, yeah. Yes.

Speaker C: As we saw in the Nuremberg trials, you, you're, you're obliged to, you know, and so you might say that, you know, apartheid state, um, uh, laws are, uh, immoral. I don't have to follow them. But it's very different to say that, um, a technical regulation as to whether a particular business model is allowable or not is against the natural law. How is the ability to not get a taxi License against natural law. I don't really see that standing up.

Speaker A: Right.

Speaker C: I can't say as a natural lawyer. I have, I wouldn't say that if you took that position that you're a natural lawyer, therefore there are some lawyers, you don't need to, um, um, uphold that a particular regulation doesn't apply. The same as like tax law. It's like, well, what part of it's immoral? Well, it's, you know, you don't. Might not like paying it, but it's, it's really quite bland regulations.

Speaker A: Right.

Speaker C: It's just a bunch of technical stuff. There's nothing that's, you know, generally there's nothing that's really bad. Right. So I would, I would say that there's some difficulty for a lawyer. Um, and that's the, um. Now that's of course, if something's, if there's something black and white, you can't do it. Like in Uber, where it becomes not an ethical question, but more of a practical problem.

Speaker A: Mhm.

Speaker C: Is that if it's grey, what happens if you're not, if you're a lawyer and you're not sure if you can do something?

Speaker A: Right.

Speaker C: So.

Speaker A: And what is the test and what is the balance of that test? Right.

Speaker C: Well, I mean. Yeah, so what you should do is as someone who's trying to decide how to apply the law, in a situation where you're, where you're not sure what the answer is, you should, you know, um, come, uh, to detailed legal reasoning, think through it, and rule of precedent

Speaker A: comes into play sometimes.

Speaker C: Yeah, well, yeah, when we do technology, it's kind of, it's kind of difficult, but.

Speaker A: Well, I mean. Correct. That's the point that I'm making on the tail end of saying that. Right. So where we're used to having precedent or using precedent, when we're faced with something that's so fundamentally different and foreign to that, to the, to that rule, um, the question becomes exactly this.

Speaker C: So the problem is that generally when some, when the answer is unclear, if it's unclear for a lawyer, a lawyer will say, well, we shouldn't do it because it's unclear.

Speaker A: Right.

Speaker C: And the technologist will say, it's unclear. Let's go for it.

Speaker A: Right. It's, it's free reign, it's wild west. Go for it.

Speaker C: Exactly.

Speaker A: Exactly. Yeah.

Speaker C: Let's, let's, let's do it and figure it out and add it into lawyers, natural and rightful conservatism, um, and skepticism.

Speaker A: Risk mitigation. Yes. Yeah.

Speaker C: Risk mitigation. There is There is always the potential that if a lawyer oversteps their bound that they could get professional repercussions or as a technologist they just um, uh, fail fast and then um, raise their next startup.

Speaker A: Pivot and move. Yeah, or pivot or start again. Yeah, correct.

Speaker C: Exactly. So, and where that's problematic is that it means that by having uncertainty as to law, you're highly discouraging lawyers from being the agents of innovation. And that's terrible because whoever does innovation impress, uh, or create something impresses it subtly with their own morality.

Speaker A: Right.

Speaker C: So if you're building a machine learning algorithm, there are a whole bunch of um, indistinguishable or um, unchallengeable decisions that you make along the way. Because creating something new is an art rather than a science. Uh, and so what this means then is that a new technology created by um, a lawyer who has the respect for rule of law, um, will be quite different, um, um, will be quite different to someone who is a Stanford dropout with VC backing or perhaps a, or uh, a company that is owned by an authoritarian government.

Speaker A: Yes.

Speaker C: So as a lawyer we might say we're going to make sure anything we build is fair and just, um, and transparent. But other motivations might be um, uh, might be um, pursuit of profit or suppression of political dissident. Sure.

Speaker A: So less um, uh, sensitive to the otherwise very fundamental elements of the law and being an officer of the court in a jurisdiction. Right, yeah. Ah. So uh, those things aren't necessarily there.

Speaker C: Yeah, they're not necessarily there. And now technology is inevitable. Um, it's an emergent thing. So when we got powered flight, um, there was the Wright brothers, but there was half a dozen other people, um, who were working on it at about the same time. The same thing with light bulbs, um, uh, the same thing with the four minute mile. No one had run four minutes for all of human history. And then in the two years after Roger Bannister did it, six weeks later, the Australian land he did. And then in, in the next two years, 27 people did. Once you, everyone sort of comes to breaking that barrier, um, all at once. So we look at 10 years ago, 15 years ago, where was the emergence of search engines, Google, AltaVista, um, AltaVista could have won Yahoo. It could have been um, the same with Uber Lyft. Um, uh, and so the technology is emergent and ev.

Speaker A: Right. Tesla's a perfect example as well.

Speaker C: Yeah, exactly, exactly. So, so the technology is going to happen, but, but the form of it. And who particularly does it Might change. So um, so you can't stop all of this, this new law ish technology, but you can stop a particular set of people doing it. Now if you stop, the people that you're stopping are lawyers because, because they're uncertain. That's quite bad. You're pulling a regulatory string when you can't push on it now. Right. There is potential for some bad things to happen. So I know people out there at the moment that I've met in the, in the legal tech sphere, um, who ah, say cryptocurrency enthusiasts who are expressly anarchists who believe that all of government can and should be um, conducted on a blockchain ledger. Okay. Now I love blockchain technology but I think that's not, I don't agree with that at all. Um, I know other ah, technologists who have stated that they wish to make law free. I go that's fantastic. Except their way of doing that is by cross selling insurance products and financial

Speaker A: products, advertisement based platform or something like that.

Speaker C: That's a terribly conflicted model of law. But um, that might win. That might be the technology that emerges. And um, so depends on what you're pointing at.

Speaker A: So if I can get to the point. I think the point you're making is if I've caught on well enough is that m, if the lawyers aren't involved in the process of innovating the law. And law, and law ish. You know, let's say we separate the two, um, other people without the backing, without the, without the training, without the, the understanding of the, the law and how it has served, uh, civilization, uh, you know, or societies up until now. We'll, we'll cut all manner and form of corners that's you know, quote unquote, uh, we'll not perhaps keep certain um, fundamental central ideas uh, at the forefront when, when developing it. And because we're not part of that conversation or because we're not allowed to do it ourselves, we may not like the results or whatever it is that actually emerges in what you've called, you know, an emergent sphere. Which means that if it'll happen anyway and if we're not involved doing it, someone else will. We may not like the outcome.

Speaker C: Yep, I think that's right. But we can, we can pull ourselves away, we can ensure that by uncertainty or even out and out, um, um, prohibition, um, that people who do not think like us are the creators of technology of the future that will emerge anyway. So it's not like we can stop it. It's going to happen anyway, and then we'll end up with it just like Uber was created overseas.

Speaker A: Right. And so the question then, in the context of our conversation today, I think really becomes what is, you know, is it. Is it as simple as, well, regulators take a proactive approach or really. Or is there, or is there something we can cover about whether regulators should change what they do generally? Should it, uh, you know, what do you think about that? Like, is it a matter of. Yeah, go on.

Speaker C: So let's let me again distinguish between law and law ish. So as a minimum statement, and, um, like our existing set of legal regulations, um, is at least suitable for the reason that, um, we don't have like total chaos and anarchy. Um, are there things that could be improved? Yes, but to be honest, it's not something that I've turned my mind to. There are plenty of other people who are. Who turned their mind to it. Uh, that's not my thing. I just want to. Now, what does the perfect system look like? I don't know. Um, uh, to me, um, we should

Speaker A: qualify by saying that you are a lawyer and you're a technologist. Right. We should probably say that too.

Speaker C: I'm m. Both. Yes. Yeah. Yep. Um, so, um. Uh, yeah, so I.

Speaker A: So the law is fine, the way it sits at the moment because of the way that it's.

Speaker C: Yeah, so I'm not saying it's. It's perfect. I'm just saying I don't know what perfect looks like.

Speaker A: Right.

Speaker C: I know that it's. It's not. It's a. At least it is not a totally dysfunctional system. So I don't see any need to totally scrap everything. Yes, it might be the case that we have the perfect system exactly. With a particular set of rules. Um, as a general rule, um, um, every system has some room for improvement. Of course, any improvements. As a general statement, the improvements that I would think that we need would be incremental rather than, um, total change. In regard to the regulation. Yes, exactly. In regard to the general regulation of lawyers. Sure. Um, but, uh, and so where I have seen people proposing fundamental changes, they look at law ish services and say it doesn't quite work. Or to be able to let things through, we need total change. I go, well, no, what you need to do is you need to

Speaker A: keep,

Speaker C: um, remember that one of banks. Law ish is banks and lawyers are financial planners and they need to be regulated differently. They have totally different risk profiles. So for law ish things, they're presently generally entirely outside of regulation. Okay. Now the first thing you should do is, if you want lawyers to be involved in regulation, uh, involved in creation of things, is to give them some certainty that they can.

Speaker A: Right.

Speaker C: So you might, for example, you might say, let's create a regulatory sandbox and say if you are a law firm and you come to us and say, I'm creating this thing, we'll look at it and we'll tell you that it's um, that it's okay.

Speaker A: Mhm.

Speaker C: For ah, you know, and give you three years, five years to try it out.

Speaker A: A limited license, essentially.

Speaker C: Yeah. Or not even a license, but just a reassurance that what you're doing is okay. Um, so um, if you're Google, you might say, um, look, I need more than just a limited license. I need a, you know, I need something, something general. But you might say, hey, I need a, um, I've come up with a new idea. Let me come, let me give you, ah, another example. And this one was an example from um, the futurist Mark Petty at the um, Australian Institute of Judicial Administration conference last year. And he was asked to give an example of what blockchain could hold for law in the future. And he gave a great example of um, a contract that uses a ledger based escrow system. And so that when the contract is completed, um, the cryptocurrency that's held in escrow passes from party A to B. Everyone's like, cool, that's great, nice, simple example. It's practical, it solves some trust issues. You can have people operating on totally different sides of the world doing this. And then I said, this is great, except that um, at least in South Australia we could never do, no lawyer could do this. No lawyer could create this. Because by holding funds in escrow you're going to breach your trust account obligations.

Speaker A: Right?

Speaker C: It's clearly, it's clearly trust funds.

Speaker A: Yes.

Speaker C: Now for a starter, you're going to need the BSB and which doesn't exist for a blockchain. Um, uh, you're going to need, uh, you're going to need. There's a whole set of things that you need to tick off and, and um, to create a transaction, uh, to create a compliant trust account transaction and almost all of them would be impossible.

Speaker A: You would fail against them. Yeah, yeah, yeah, yeah.

Speaker C: And you know, besides you're holding, you know, you're not even sure whether your cryptocurrency constitutes money. Is it money? Is it property? How do you, how do you record it?

Speaker A: And when you, and when you say held, who is actually holding it and you know, all those things.

Speaker C: Right, exactly. So, so no law firm in South Australia could properly be a creator of that system.

Speaker A: Right, that's.

Speaker C: Now it's not a bad system. Like it's, you know, it's like, um, it's not something I'm working on, but it's something that at least one other very intelligent futurist has proposed. And I know that there's various systems out there that look like this, um, but that, that, that area is entirely ceded to non lawyers.

Speaker A: Right, so what you're saying is essentially if, if at any point in that juncture a uh, lawyer is tied to any of this, they would be in breach of multiple, multiple regulations that exist in our jurisdiction in South Australia today? Yes, correct. Yes.

Speaker C: It might be the case with other jurisdictions. I don't mean to particularly South Australia, it's just that. I know, yeah, it's a, it's a,

Speaker A: it's a good practical example because, and that's what we're happy to explore that, you know, this is a podcast with an international audience. But you know, in this circumstance I'm sure people can find out what that,

Speaker C: how, you know, it's a great question

Speaker A: to ask for our listeners to take away and go, let me have a look at my um, you know, trust, uh, account regulation and requirements to see whether we could do anything in our area. For instance.

Speaker C: So I mean it's quite clear, uh, that you could mess with any lawyer's trust account by sending them uh, some cryptocurrency and asking them to hold it in trust.

Speaker A: Right, right.

Speaker C: Um, uh, or post them a private key, see what happens. Um, so the next thing is, um, so what I would suggest in that scenario is that you would have the ability to go to a regulator and say, here's what I have to post. I need just a sandbox to work on this. I need you to exempt me from doing any wrong. I'm going to show you what I'm doing, I'm going to talk to you about it. You can see what it is. You can see that I'm not harming the public. You can see that I can't take money out of this trust fund because by definition this is um, a uh, public ledger. Anyone can see it. Um, uh, it's efficient, it's great, can potentially cause great things to the public. Um, can I do this and then get a tick off that? Four, five years you're not going to get pinged.

Speaker A: And that's an exchange, to be clear. Right. You're not just asking for exemptions, it's an exchange of maybe the regulator requires you to disclose this both to uh, them but also to the parties that are involved in the novel way of doing something. Right. It's some form of.

Speaker C: Yeah. And so the more now ultimately rule of law is served by more information about it, the more that um, regulator can set out. This is my views on this.

Speaker A: Sure.

Speaker C: The better things are. I mean it would be better if a regulator came out and said, look, we hate blockchain, just don't touch it at all.

Speaker A: Right.

Speaker C: But we like this, we like whatever else something else is. Um, and at least you can either a work out how to get around it because you say, cool, we can't be lawyers, we're going to all be technologists now. Um, or move to Silicon Valley and do it in another jurisdiction. Um, or alternatively, um, uh, you say, I have confidence that I'm not going to lose my practicing certificate for, for doing something.

Speaker A: Right. Right. That speaks to the fact of what you're saying about the overarching or the undercurrent to this entire conversation, which is that the tech is emergent. So that's a perfect example of if it's not available here and you want to do it bad enough, what are you going to do? You're going to go up, get up and go somewhere where it is available and it is possible and go and build it there. It doesn't mean that it doesn't get created. It actually means that that particular jurisdiction is restricted from participating in a solution that is a part of a global movement. That's it.

Speaker C: Uh, the choice that you have in regard to emerging technology is do I want a seat at the table or do I not?

Speaker A: Right. That's really.

Speaker C: Well it's like, so if you say we're going to allow this technology here now, it still might not be developed because you can't push on a string. You can pull on the regulatory string, stop it from happening, but you can't force people to innovate, you know, um, but you can allow them to. You can say, I'm not pulling on the string. You guys got. And hopefully people do.

Speaker A: Right.

Speaker C: But you can pull on the string and say, sure, let's make sure that um, no one in the jurisdiction that I regulate is going to come to me and ask for my views and allow me to have an input on what it looks like.

Speaker A: Mhm, mhm. Yeah. So it feels like the fundamental thing is, you know, the string of ideas or the sequence of ideas is with the tech emergence. If it's not here it's somewhere else. But overall the regulator's role is to create certainty whether you want it to happen or don't want it to happen. At least create certainty so that the lawyers are not that not in there um because otherwise lawyers will default to their default posture which is risk mitigation. Conservative. No, don't do it if we're unsure.

Speaker C: Exactly. And we, and but we do need regulators to prevent against these um, uh long tail risks which are, which creators of technology uh, are generally blind to. So using that chain example.

Speaker A: Right. It's about getting example. Yeah, go on, go on. Sorry, that's, that's a good point.

Speaker C: Yeah I'm following in the blockchain example. Um, we've had the Dow um fall over. We've had mt Gox with there is massive fraud um and ah market manipulation um in the blockchain. It would be fantastic um if someone goes and creates this blockchain example that I gave overseas we're still going to be at risk of its downsides. People use it um, they could end up losing all of their money which is a long tail risk. Consumers still get scammed. I've seen plenty of people who have put their money into some junk coin um that's been pumped and dumped and they've lost it. They've been scammed, they've been scammed out of their retirement money that they put their superannuation taken out of their superannuation fund and they're taking it and they've put it into junk and then not only they're going to hit the double whammy of some tax problems um come the 30th of June.

Speaker A: Right.

Speaker C: And um, if there was someone that said we're going to regulate this as law, ish, we're not going to stop it. We're going to say it's okay but you have to tell us about it. And, and if you go and screw people over we're going to stop that. We're going to. Now now one way. Yeah it is really hard to think of all of the ways that something can fall over. So I just want to say that and so one thing that is a uh, really difficult thing for regulators is to look and say how can everyone what uh, is all the financial.

Speaker A: Yeah.

Speaker C: What is all of the risks of this? And I don't think even as a, as a technologist like I couldn't look at the blockchain example um notwithstanding I know a fair amount about it. Say I can outline all of the risks.

Speaker A: Yeah. And a comprehensive amount of risk because the risks are generated every day on new territory. Right, Correct. In the same way that opportunity is created every day.

Speaker C: There's a problem with trying to get, trying to regulate things that are new and that uh, have risks.

Speaker A: Right.

Speaker C: We, we try it constantly in banking, for example.

Speaker A: Right.

Speaker C: You're not allowed to do this, you're not allowed to do that. But still collapses happen fairly regularly.

Speaker A: People lose their life savings.

Speaker C: Exactly. Or the government has to bail them out. Right. So what we need to do instead to prevent against those risks is not trying to come up with something specific for these long tail risks, but instead align the interests of the uh, creators and controllers of that technology with the public interest. It's a very simple way of doing this.

Speaker A: Right.

Speaker C: Um, and that's um.

Speaker A: So in effect it's a different type of string that they would pull.

Speaker C: Yes.

Speaker A: Rather than changing posture. Yeah, yeah.

Speaker C: You could prevent um, financial collapses by saying that if you are a banker who creates a systemic risk, we will put you in jail.

Speaker A: Right.

Speaker C: Not a fine, put you in jail.

Speaker A: Right.

Speaker C: It's really simple.

Speaker A: Yeah.

Speaker C: Um, it's um. And you should define systemic risks broadly. But it's not hard for someone to understand something that's widespread, distributed, that has, that impacts a lot of people.

Speaker A: Yes.

Speaker C: Instead of trying to get a whole bunch of totally disparate harmed people to sue in relation to something that is probably hugely complex and deep, like trying to understand CFDs, um, and exotic mortgage instruments and trying to work out that this has caused trillions of dollars of losses and therefore, uh, someone has the right to sue over a single individual.

Speaker A: Right? Yeah.

Speaker C: Yeah. Just say if you cause a systemic risk and um, uh, whatever that harm may be, because there's different types of harm, it might be um, uh, monetary. It could be something else. Could be the deficient functioning of the legal system.

Speaker A: Then could be physical fate. Yeah.

Speaker C: You will face criminal penalties. Right, Right. And it's a, um. Now I wish to say that I hope that that would be such a risk that I would look at and stare at as potentially applying to me.

Speaker A: Right.

Speaker C: That I'm successful enough to be able to create something that has that distributed risk. Because I could look at it and say, well, I want to make sure that I don't get, um, like do anything that harms the public in general.

Speaker A: Right. Um, and perhaps if it is something that um, by implication of design in your creative venture will impact a lot of people and therefore fall under that systemic risk, you may make very, very cautious and uh, calculated steps to involve more and more people in order to distribute that risk. In the sense that when I say involve more and more people, I mean you are now really, really having to deeply research and understand the social impact of what it is that you're about to do, um, for good and for bad. And on the balance of that, and you know what it essentially does is invite a conversation that uh, in another circumstance, without that limitation of that public interest, um, alignment, um, you may have just gone ahead and thrown it out into the system, thrown it out into the ecosystem and got it started. It really forces a more nuanced and balanced, uh, assessment.

Speaker C: What we're doing is stopping the game of heads, I win, tails you lose. Heads I win. The technology, whatever it is, the massively leveraged and interconnected, um, entity banking or new technology does really well. And I make, and I make a huge amount of money and nothing goes wrong. But tails, something goes wrong and you lose. M. That's not a fair game. It's not a fair game. Like I believe in market forces, but it's really important, um, to actually enable those market forces. If you look at the banking collapses, it was not a failure of market forces. It was a crony capitalist. Um, uh, what the market does was say you fail and you lose everything. Um, but if there's a government that could step in, you go, suddenly this isn't the market. And so therefore now you're either going to let things entirely fall over. And in fact that's a, that's um, generally a good thing, except in law. Um, you can't be.

Speaker A: The implications of that is going to

Speaker C: be far beyond, ah, let me give a more practical example. Um, what if there was a, um, practice, uh, management software that was widely used and integrated with the court system and someone screwed it up and suddenly 50% of the nation's legal cases were had, uh, all of the data in them destroyed irrevocably.

Speaker A: Right. Or even partially damaged where, you know, you don't have an exact record of, let's say, evidence, for instance, or transferred overseas.

Speaker C: Right, right, yes. I mean that can't happen with, you know, a single firm. You could have one firm start at lost. But if everyone's working on a similar interconnected system, totally is going to be massive, benefits be great, um, huge, uh, efficiencies. That's the heads I win, but there is still the tails. Someone loses. And so, so now, so you can't just say, well let's let the system fail and let capitalism do its place. It's because. No, because, uh, we're not really operating in a market here. That is to say, this is the administration of justice. That's not a market.

Speaker A: Which is not a market. It also underpins almost every other, you know, pillar of society that exists. It's the foundation.

Speaker C: Yes. So even I would put myself on the sort of more small, literal side of things. Um, but I would say this isn't a market. You need regulation in the absence of this, and you need regulation to be able to stop that. What you would say in this situation is that if you're a software provider and you suddenly lose, or you say all you need to do is say if you cause a systemic risk, you will face criminal penalties. Right. Um, then however that risk comes out, they'll work it out and work out to prevent it. So if you're running a practice management system, um, that is integrated across all the courts and most of the practices in a jurisdiction, that's fantastic. You will be aware of the potential risk of everything falling over, and you will work very, very hard to make sure that it doesn't happen.

Speaker A: Yeah. And, uh, um, part of that is also not just, you know, oh, it's all up to you. As a creator, I think there is something to say about part of apportionment of that liability is involving the other stakeholders in the process. And it's not to, uh, you know, and I don't really feel comfortable speaking about it as, you know, let me apportion my liability against more and more people. But, but what I'm trying to say is that in order to do that, it shouldn't be also as black and white as if you create systemic risk, you're personally culpable. I think that standard generates a, uh, need for there to be discourse, and lots of it prior to something coming in, but not in the way. Not in the way that it would stifle the growth, perhaps. Right. But, but, but then. But also calls on the fact that, well, the judiciary, who wants to leverage this system that everyone else is on, also needs to understand those risks, also needs to take that into account, may need to, you know, balance that on the balance of law if something was to go wrong, you know, these are the questions that then become everyone's questions, not just the person who's created it. Right. Um, in our circumstance, I think, being a pillar of society. Right.

Speaker C: Let me, let me give it, um, let me give a different analogy.

Speaker A: Sure.

Speaker C: Um, if you let your kids play in the backyard, you say, not allowed to jump the fence.

Speaker A: Right.

Speaker C: Don't do that.

Speaker A: Right.

Speaker C: You can do anything that you want within the backyard, but if you jump the fence, that's the big thing, then you're outside the safe zone. Um, it's a really easy thing for kids to understand. And in fact generally you should put it in a more positive way. You should say, make sure you, you can do anything you want within this area.

Speaker A: Okay, cool. Yeah.

Speaker C: Um, if you said you can't go near the fence, you can't go within 1 meter of the fence, you can't, you know, you can't touch the fence, you can't do this, you start setting out a whole bunch of things, it's going to really stifle their play.

Speaker A: Yes, agreed.

Speaker C: Um, there, it's, it's going to be problematic. Instead you need to look at the harm and say, you can't do this harm now, however it is that you work out how to get over that fence, whether you catapult, climb, dig under it, you can't go outside that fence.

Speaker A: Right.

Speaker C: Um, you don't. As lawyers, we like to particularize everything.

Speaker A: Yes.

Speaker C: We like to say, you know, you must not do any digging, you must not do any touching of the fence, you must not do any catapulting over it. We're going to list everything out and

Speaker A: that generates, uh, uh, uh, uh, almost an. It invites a competitive way to find out how to bypass one rule that was, that wasn't laid out explicitly.

Speaker C: For instance, you were talking to a tax lawyer, you were linking to the converted.

Speaker A: But I understand what you're saying. You're saying link it to the harm that it would potentially cause and that it's outcome based rather than process based. That's it.

Speaker C: You just say however it is that you cause a systemic risk. Really unlikely that you're ever going to do this. Uh, 99.99% of the population, uh, will have nil risk of causing a systemic problem right now. And if you like, if you are in a position of making decisions that could cause some systemic risk, widespread risk, then you'll be aware of it. You'll be aware of your power and your influence. And um, and so then you, um, should make sure that you moderate your actions so that they're not done in a selfish manner.

Speaker A: Yes, and I think that's what I meant when I spoke about moderate. I think I was talking about moderating your actions, which is like that high standard on outcome basis. And creating that systemic risk really does invite anyone who does want to change the way things are done to truly involve multiple Stakeholders, as many parties as possible that would be affected and influenced by that, you know, um, that fundamental, you know, innovation or creation or change, and to ensure that everyone recognizes the, you know, not only the benefits that perhaps those changes bring, but also the, um, you know, the risks that then become part and parcel of, you know, the entire system wanting to avoid it. Right. Essentially, yes.

Speaker C: You could massively simplify Australian banking regulation by getting rid of almost all of it and saying that if you do something systemically wrong, we'll put the executives in jail. Right, right, right. You won't have any more storm financial collapses. You won't have any need, um, for government guarantees of deposits. You won't have any more, um. Uh, people, uh, abuse it. Yeah. Bailouts. You won't. You won't have, um. Uh, we've just been through a banking commission.

Speaker A: Yes. Um, malpractice. You won't have that. Systemic malpractice, essentially. Right, yes.

Speaker C: And now it's one thing, it's very easy to, um, prosecute one person. Sure. And that's when it comes down to if there is a financial planner within a bank, you can easily create rules to govern what they do. Um, but what we've seen has been systemic malfeasance in the banking industry, and we'll see it in law.

Speaker A: Ish.

Speaker C: If it doesn't happen already, if we're not already subject to these risks. And like I said, it's very difficult to know them. One of my problems is that when people ask me for examples of this, I say I only know my own technology. I don't know someone else's. There's lots of other things out there.

Speaker A: Yes.

Speaker C: Um, and so the hypotheticals I give are difficult. Giving, um, the hypothetical of the blockchain. There's been plenty of failures there.

Speaker A: Yes.

Speaker C: It's clear that there could be a failure of the entire chain falling over and everyone losing their money, or they're being, um, some systemic fraud in there. Um, so that's the example that I would leave with. Right.

Speaker A: No, that's fantastic. Um, Adrian, thank you so much for exploring this with me and bringing your expertise at the table. And your thoughts. Um, essentially, um, I think we. Without boiling it down too simply, it was a various sequence of ideas. One was, um, the idea of law and law issue, distinguishing between what actually falls within the regulator's jurisdiction of what might fall outside of it. The idea of, um, us, uh, uh, then if we bought technology being emergent, something that, you know, if it's happening anyway, whether it's happening here. It'll happen. If it doesn't happen here, it'll happen somewhere else. And so the, you know, the interesting or important question, which is if lawyers aren't involved with what the future of law is going to look like because they're not allowed to play, then someone else may come up with it in their stead and we may not like the result. And then on to perhaps the last section we just covered, which was what, perhaps regulators, then what posture, position do they play? How can we perhaps look at some of those, um, uh, practical steps forward, um, that regulators or posture or position the regulator can have and things that obviously lawyers who want to be innovative can keep in mind as well about. Uh, you know, the reality is the idea you're putting forward, I think regardless of whether it was actually implemented or not, I think is a very healthy idea for anyone in law who wants to innovate, to keep back off front of mind, you know, this idea of perhaps similar to the ethical obligations that I've learned so well in being admitted that you have and I have, um, I should also maintain this idea, uh, of am I, uh, establishing or creating a systemic risk by, you know, innovating in the way that I am. And regardless of whether the regulators are required or not, I think, you know, it is a healthy posture to have. Um, but yeah, look, it does, it does. It is important, as you mentioned, that the regulator provides certainty about what is and is not allowed. And then also us, for us as lawyers to recognize what actually falls within the purview of legal services and what falls outside of them. So thank you so much for, you know, making sense of that, I guess, quite obscure idea if it hasn't been really thought through.

Speaker C: My, my pleasure. To my knowledge, I'm the only legal technologist who is proposing new regulations and in particular, um, potential criminal penalties in the era in the area of um, legal tech. So uh, that's um, uh, perhaps might take the shine off my uh, small L. Liberal credentials. But I think that um, but this isn't something that's served by the market. We can't just leave it. Um, if we try and pull the existing, you know, lawn mower regulations over to terrorism, it simply, it won't work. Um, it will simply drive things away elsewhere. Uh, and we do need supervision and we do need someone, we need a different type of supervision, a supervision that isn't there, um, at present.

Speaker A: Yeah. And it's important, I think above all, uh, that we've recognized that law is very specific and unique in its position because it actually sits how you want to think about it, underneath or above everything else, even. Even the very examples that you've given in terms of other markets. You know, law sits as a foundation of society, so. So it is still something that, you know, needs to be well thought through. But, uh, thank you for sharing everything. Um, I hope the listeners really enjoy this. I'm sure they will, and I hope actually it sparks. Maybe there are others who have, you know. So, as you say, to your knowledge. So if it's happening elsewhere, hopefully through this platform, we'll start to hear about it elsewhere.

Speaker C: All right, Adrian, thank you so much.

Speaker A: Thank you very much, guys. No worries.

Speaker C: Have a great day.

Speaker A: See you, mate. See you.

Speaker C: Bye.

Speaker B: Thank you for joining us. If this episode resonates with you, we'd love for you to subscribe to this podcast and share it with your colleagues and friends. Follow and leave your feedback on Twitter. And like us on, um, Facebook.

Speaker A: You can connect with Tessa and myself on LinkedIn, Twitter, and you can also visit our websites futurelab, legal, and legalcreatives.com.