AUTONOMOUS LAWYERING

a new model of nonrepresentational, incentive-aligned attorney engagement with blockchain communities

The blockchain-based systems we enjoy today were inspired by cypherpunk musings about the clash of law and technology at the dawn of the Digital Revolution. Bitcoin’s origin story is inextricably tied to the greatest regulatory and policy disaster of the late 20th century, and Bitcoin’s development principles were deeply informed by legalistic security holes associated with prior digital monies. Ethereum’s early marketing was dominated by the idea that “smart contracts” would replace “law” with “code,” business entities with DAOs and lawyers with coders. More recently, DeFi on Ethereum has come much closer to realizing this promise by creating smart-contract-based systems that achieve effects very similar to derivatives, futures, swaps, loans, options and other financial instruments that previously required extensive legal agreements.

Today, leveraging the open-source nature of permissionless software systems, blockchain developers , launch new protocols and iterate at lightning speed. Oceans of value surge in and out of smart contract systems like tidal waves. Boldly executed smart contract exploits make grayhat hackers overnight millionaires. Communities of enthusiasts, investors and technologies rise up around new systems and spontaneously self-organize like spores into rhizomatic colonies capable of inventing, deploying, marketing, maintaining and improving smart contract ecologies with a level of skill and creativity that puts many top-down corporate structures to shame. People have found new ways of working.

And yet: the problem of lawyers. Since the dawn of blockchain, this technology has been an object of burgeoning fascination for a growing cadre of lawyers. Many saw opportunities to build a lucrative niche practice. Or they were simply fascinated with the technology and the issues it raised.

But how do lawyers work, when they work on blockchain technology matters? Exactly like they always did. To work, they need a “client”. The client must be a legally cognizable person, such as a human being or a corporation. The lawyer’s advice to the client is given in private and based on information communicated to them by the client under a court- and guild-enforced type of secrecy known as attorney-client privilege.

If the client’s issues are particularly complex, the lawyer may contact regulatory agencies and have further secretive conversations with the staff in an attempt to gain clarification. The staff assiduously avoid all written communication and thus could be free to act inconsistently depending on which lawyer they are talking to—secretly providing more assistance to some than to others—and no one would be the wiser. Or, different staff members of the same agency may interpret the rules differently from each other, resulting in a “luck of the draw” effect. In the end, the lawyer prepares a memorandum crammed with qualifications, assumptions and risk disclaimers which, in effect, says to the client, on the relevant issue: “maybe”. The client files this memo away, never shows it to the community members who contribute their time, sweat and money to the system every day, and hopes it somehow protects them—like a magical talisman. At most, the memo might also be shown to an exchange, which we hope will misinterpret “maybe” in a more certain way and list a token for trading.

Over time, the lawyer will develop a rapport with and knowledge of the quirks, strengths, weaknesses and predilections of the regulatory agency’s staff, and will subtly market this closely guarded knowledge as a “good relationship with the staff” justifying premium fee rates. A kind of ‘access capitalism’ in the realm of legal services becomes more and more prevalent until such lawyers wield enormous un-checked power and influence that infests the creative process of those who hire them.

If another lawyer encounters a different client with a similar issue, the work the first lawyer did will be both unavailable to and (likely) unknown by the new lawyer. The new lawyer must start from scratch, charge the client a large amount of money to work on the issue from first principles with no prior art, approach regulators without knowledge of the prior discussions to build on, and so on. In effect, all the work done by the first lawyer is lost and numerous potential efficiencies are needlessly foregone—resulting in pure waste that makes lawyers a fixed, rent-extracting market inefficiency.

Due to this constrained style of working, as well as the high fees required to pay for lawyer time, the client will hire one and only one lawyer or law firm for a given issue and is not well positioned to “market-check” the lawyer’s advice and techniques against other lawyers’. The lawyer is also constrained by this situation. Due to confidentiality and attorney-client privilege issues, the lawyer is deprived of the opportunity to peer-test the lawyer’s views outside the firm.

In short: both the client and the lawyer (as well as the lawyer’s firm and malpractice insurer) incur excess costs and unnecessary risks. If free public collaboration or open-source-style auditing were possible, other lawyers could pitch in to make improvements and catch errors before the client detrimentally relies on flawed advice. By contrast, in the “traditional lawyering” model, over time each lawyer or law firm will tend to become a “school of thought of one” as they jealously guard their secret advantages and unwittingly remain stubbornly mired in their private misunderstandings.

Then there are situations in which the opposite problem occurs: no lawyers are involved and the project launches with almost no serious legal input. In many cases cryptodevs will “go YOLO”, which puts them and their users and investors at risk. This scenario is apt to occur when one or more of the following factors is/are present:

• the project is “fair-launched” or otherwise not heavily venture-capital-backed and therefore funding is nonexistent or very limited;

•  all or some of the cryptodevs are developing, marketing and launching the project on an anonymous or pseudonymous basis;

• instead of pursuing “progressive decentralization,” those involved with the project wish for it to be as decentralized as possible from genesis, meaning that there is no business entity or other person ‘in control’ of the project that would be appropriate to serve as a lawyer’s client;

• the cryptodevs are ‘blockchain native’ and highly unfamiliar with norms of managing the relationship among technology, business and law; or

• the cryptodevs belong to a low- or light-regulation nation and wrongly believe the laws of more heavily regulated jurisdictions do not apply.

In effect, the most ‘cypherpunk’ projects—which may also be the most challenging to the status quo and existing laws—are the least likely to receive appropriate advance attention from lawyers. Instead, cryptolawyers learn about them long after launch—usually when there has been a hack, bug or other disaster that leads many to start throwing around allegations of liability against the project developers. On the other hand, the more traditionally structured projects have a different problem—they can pay a lawyer so handsomely that the lawyer may be pressured to fit the law to the facts, and the client does not have good access to lawyers who might provide a less biased view because they lack that same financial incentive.

Surely there must be a better way. Surely there must be a way that “cryptolawyers” can work like “cryptodevs”—permissionlessly, freely, generously, not caring who the “client” is, but pushing for visions they personally believe in. Surely there must be a way that lawyers can make progress by building on each other’s work in public, and, yes, refuting each other’s work in public, instead of letting all that hard work die, untested and forgotten, time after time, in the bottom of a drawer or the dark depths of an archaic law firm file management system. Surely there must be a way that lawyers can, like developers, simply do things the way they think is right in rough social consensus with the people whose opinions and interests they value, driving toward socially optimal outcomes, rather than acting on client instructions and being, in effect, consiglieres zealously asserting their clients’ parochial interests without regard for truth, justice or “negative externalities.”

Enter autonomous lawyering.

AUTONOMOUS LAWYERING

Autonomous lawyering occurs when a lawyer takes himself as a client or acts non-representationally, but in the context of belonging to a community of incentive-aligned supporters of a decentralized technology system Autonomous lawyering is analogous to being a volunteer software developer or activist token investor in such a project. Autonomous lawyering has the following unique intended features:

• Because decentralized systems are public commons, the autonomous lawyer’s work occurs publicly or (in semi-private working groups, messaging channels or forums) semi- publicly.

• Because the attorney-client relationship is between the attorney and himself and the work occurs publicly or semi-publicly:

  1. the attorney should not owe fiduciary duties to other members of the community;

  2. community members should assume that the attorney does not owe them any duty confidentiality or loyalty and that no attorney-client privilege applies to their communications with the attorney; and

  3. no legal malpractice insurance will be available for the community to cover mistakes by the attorney.

• To fill the trust-gap created by removing fiduciary duties from the equation, the members of the community who are not lawyers but may be taking the lawyer’s views into account during their community participation should evaluate the lawyer’s trustworthiness in other ways, e.g.:

  1. Nonlawyer community members may look to objective badges of honesty, competence and incentive alignment to evaluate the lawyer’s community work—e.g., the prima facie quality, consistency and persuasiveness of the lawyer’s reasoning, the lawyer’s past experience and reputation with peers and past clients from more traditional lawyering context and the lawyer’s level of incentive-alignment with the community based on facts voluntarily disclosed to the community by the lawyer (such as token ownership)

  1. Nonlawyer community members may rely on the lawyer’s professional duties which apply outside the attorney-client relationship, such as the lawyer’s general duties to “conform to the requirements of the law” and “demonstrate respect for the legal system,” as well as more specific duties that might apply to autonomous lawyering, such as the lawyer’s duty when serving “as a third-party neutral” to inform unrepresented parties that the lawyer is not representing them and the lawyer’s duty when engaged in legal reform advocacy to disclose when the interests of a client may be materially benefitted.

  2. Nonlawyer community members may encourage community participation by many lawyers, rather than only one or a few, and thus may rely on their joint efforts to quality-control the emergent legal views through debate, peer review and group refinement of legal reasoning.

• Like other community contributors, the autonomous lawyer can be compensated for this work in various ways, e.g.:

  1. on an activist investor basis, if the lawyer acquires the community’s token and seeks to grow the value of that investment over time by weighing in on legal issues;

  2. on a grant basis, if there is a community treasury and the lawyer applies for grants to undertake specific nonrepresentational work of interest to the community;

  3. on a bounties basis, if the community establishes the legal equivalent of a ‘bug-bounty’ for lawyers who discover legal vulnerabilities regarding the legal issues associated with the community or a relevant decentralized system; or

  4. on a (loosely speaking) ‘salaried’ or pay-for-services basis, if there is a community treasury and the community wishes to ‘hire’ the lawyer over a longer period to perform some well-defined set of duties (note, in this context, it may be appropriate for the lawyer to have an identified client separate from himself).

Autonomous lawyering may also be seen as a domain-specific application of the #LeXpunK ethos. Note, however, that some of the intended features of autonomous lawyering might not be honored by bar associations, courts or judges—more on this below under ”Risks & Limitations”.

AUTONOMOUS VS. TRADITIONAL LAWYERING

Autonomous lawyering is not meant to replace or displace traditional lawyering. It is meant to supplement it, providing an optional, partial alternative that appropriately increases access to justice in the specific contexts for which it is suitable. In the ideal case, by serving a currently under-served market, autonomous lawyering would grow the aggregate volume of lawyering that occurs rather than shifting a part of the market from traditional lawyers to autonomous lawyers.

A lawyer may act as an autonomous lawyer in some contexts while working as a traditional lawyer in others. Autonomous lawyering should be clearly flagged—for instance, by adding *ACTING AS AUTONOMOUS ATTORNEY* with a link to a relevant disclosure statement. In his capacity as an autonomous lawyer, a lawyer should seek to embody the principles of openness, forthrightness and working for just outcomes within a broad community. The autonomous lawyer should combine objective legal scholarship with innovative legal reform proposals based on clearly disclosed policy goals.

In contrast, lawyers in traditional roles work for their clients (pushing their clients’ selfish interests, even potentially at the expense of the common good), operate in secret, use effective but potentially aggressive tactics, will tend to favor tried-and-true solutions over experimental and uncertain ones and will describe the law tendentiously to persuade their audience that current law already favors their clients’ interests, even if that interpretation of the law is worse for society at large[1]. This is not a criticism—this is part of the lawyers’ socially approved job as a “zealous advocate” for their clients. It is clearly very different from “autonomous lawyering”.

Indeed, the default rules applicable to traditional lawyering are an integral part of the webwork of civil rights available to citizens of advanced democracies. Examples of situations in which autonomous lawyering alone would be inappropriate or ineffectual, and thus where traditional lawyering is necessary, include:

• defending at-risk persons against pending or threatened private or governmental litigation;

• responding to governmental investigations as a result of which at-risk persons may have civil or criminal liability;

• advising at-risk individuals regarding their decision-making based on non-public information held by such individuals, especially if the results of the decision-making may lead to liability on the part of the individuals; and

• simultaneously advising both sides of a potential contentious fork of the community or decentralized system (unless acting as a “third party neutral” under the Model Rules (see below under “Risks and Limitation”).

Of course, in all these situations, if an autonomous lawyer is otherwise already involved in an affected community, the autonomous lawyer may provide public input into the situation and may prove to be a useful collaborator and coordinator for lawyers who have been engaged to handle the crisis on a traditional basis. But in such situations the traditional lawyers should firmly take the lead, working with at-risk individuals on a confidential, privileged and non-public basis against the backdrop of traditional attorney-client rules such as the duties of zealous advocacy, loyalty and confidentiality and traditional protections such as attorney-client privilege and malpractice insurance.

The below table presents a side-by-side comparison of the most material features of traditional lawyering and autonomous lawyering:

RISKS & CHALLENGES

Rules of Professional Conduct

The extent to which autonomous lawyering complies with rules and regulations applicable to attorneys could be unclear. Accordingly, engaging in autonomous lawyering involves a degree of risk for the lawyer.

Lawyers run a risk that their published legal analysis or advocacy in favor of a particular course of action rendered pursuant to autonomous lawyering could be wrong. Third parties (community members or other persons) could rely on the legal analysis to their detriment and the lawyer could be sued for professional malpractice. In non-adversarial lawyering contexts, most U.S. states recognize that there are circumstances in which a lawyer can owe a professional duty of care to a third party, even if such third party is neither a client nor an intended beneficiary of the attorney-client relationship.[4] Currently, there is not a perfect solution to this problem, but we hope that the following combination of practices should be respected by courts as preventing third-party malpractice claims arising from autonomous lawyering: (1) the lawyer providing clear disclosure about the nature and intent of their autonomous lawyering, including disclosure that the lawyer is only representing himself or is acting in a nonrepresentational role and makes no guarantee or assurance regarding the results; (2) the lawyer retaining copyright in any formal written legal analysis and only licensing it for specific intended uses (e.g., as an aid to third parties’ own independent legal research, conditional upon their deemed agreement not to rely on it or to assert any attorney-client or other duty of care owed by the lawyer); and (3) the use of prominent disclaimers regarding the limitations and narrow purposes of the legal analysis.

Lawyers also run the risk that autonomous lawyering could violate rules of professional conduct. Such rules vary by jurisdiction, but, as an example, the American Bar Association’s Model Rules of Professional Conduct include some potentially relevant rules: The Model Rules recognize that lawyers may engage in “[non-]representational functions [such as] a third-party neutral, a nonrepresentational role helping the parties to resolve a dispute or other matter.” Model Rules potentially applying to lawyers acting in a nonrepresentational capacity include Rules 2.4 (Lawyer Serving as Third-Party Neutral), Rule 4 (Transactions with Persons Other than Clients), 8.4 (Misconduct). If the autonomous lawyer is acting with himself as the client, then certain other rules such as Rule 2.3 (Evaluation for Use by Third Persons) could apply. The rules about an attorney’s role in representing himself as part of an incentive-aligned community are not clear and could be applied to autonomous lawyering unpredictably. The main way of dealing with this issue is for the lawyer to remain aware of all potentially relevant rules and strive to act ethically at all times.

Compensation

The market rates for lawyer time can be relatively high, especially if the lawyer is based in the United States or Europe and has extensive experience or commands a rare or in-demand domain-specific expertise. By contrast, software developer compensation can be relatively suppressed, with many types of software development work being highly commodified or driven into lower brackets due to global labor market arbitrage. Accordingly, we anticipate a “sticker shock” effect between the level of compensation lawyers may expect to receive from a community where they engage in autonomous lawyering and the level of compensation that the rest of the community—which often will consist predominantly of software developers—considers fair.

There is no perfect solution to this. In general, due to a variety of factors—including bar association efforts to maintain a low market supply of lawyers and maintain premium fee rates—lawyers are relatively overpaid on a per-hour basis, but such overpayment is “market” and thus may be difficult for lawyers to sacrifice. A possible solution would be to encourage a mix of “junior” or less experienced attorneys and “senior” or more experienced attorneys within each decentralized community. The experienced attorneys—whose time is generally more valuable—can spend small amounts of time at a higher per-hour cost remaining informed and issue-spotting, while the more junior attorneys—whose time is generally less valuable and who might benefit from informal training/oversight by the senior attorneys to enhance their career prospects—could spend greater amounts of time at a lower per-hour cost drafting analyses, massaging announcements, negotiating transactions, and so on.

An alternative solution may arise from to-be-determined market trends. It is my observation that developers in blockchain-oriented communities have gotten comfortable ‘just pitching in’ with a rough expectation that they might eventually receive some payment, and not knowing what that payment will be. In many cases, this may result in underpayments, but in other cases this can result in more generous compensation than would have been received by the developer on arm’s-length market terms if the work were negotiated as a standard independent contractor arrangement. The use of Gitcoin Grants, bounties and similar compensation mechanisms that are now common in technical fields but almost completely untapped by lawyers could also be adopted (or lawyer-specific variants could be created and adopted). These could even result in more generous compensation to autonomous attorneys than they would typically receive for the same work when undertaken pursuant to standard engagements.

CASE STUDIES

I will provide some case studies of autonomous lawyering I have undertaken in the Yearn and Metacartel Ventures DAO communities. Of course, it took me a long time to understand that what I was doing was “autonomous lawyering” and I survived several spells of paranoia regarding the nature of my role. However, with the model articulated here, I think autonomous lawyering can be undertaken fairly comfortably—albeit that many traditional lawyers would never be willing to experiment in this manner without total clarity.

SAMPLE AUTONOMOUS LAW DISCLOSURE STATEMENT

I have posted a sample autonomous lawyer disclosure statement (about myself) here.

ENDNOTES / SOURCES

[1]See e.g., the following, all cited in McMorrow, Judith A., Civil Disobedience and the Lawyer's Obligation to the Law. Available at SSRN: https://ssrn.com/abstract=751924 :   Freedman, Legal Ethics and the Suffering Client, 36 CATH. U.L. Rha. 331, 333 (1987) (arguing that after lawyer agrees to represent client, lawyer's autonomy is significantly limited "because the lawyer's principal function is to serve the client's autonomy"); Fried, The Lawyer as Friend: The Moral Foundations of the Lawyer-Client Relationship, 85 YALE L.J. 1060, 1066 (1976) (stating that it is "morally right that a lawyer adopt as his dominant purpose the furthering of [the] client's interests-that it is right that a professional put the interests of his client above some idea, however valid, of the collective interest"); Pepper, The Lawyer's Amoral Ethical Role: A Defense, A Problem, and Some Possibilities, 1986 AM. B. FoUND. RES. J. 613, ,614 (1986) (stating that "[o]nce a lawyer has entered into the professional relationship with a client, the notion is that conduct by the lawyer in service to the client is judged by a different moral standard than the same conduct by a layperson").

[2] For fascinating discussions of these issues, see two excellent articles suggested by Drew Hinkes: McMorrow, Judith A., Civil Disobedience and the Lawyer's Obligation to the Law. Available at SSRN: https://ssrn.com/abstract=751924 and William H. Simon, Should Lawyers Obey the Law?, 38 Wm. & Mary L. Rev. 217 (1996), https://scholarship.law.wm.edu/wmlr/vol38/iss1/12

[3]Civil Disobedience and the Lawyer's Obligation to the Law (op. cit.):   As the person who has the legal problem and who will suffer any legal consequences, the client's wishes and views must be respected. Consequently, legal scholars and codes regulating lawyer conduct recognize that the client is entitled to make all significant decisions in the legal representation. Wherever we draw the dividing line between the lawyer's and the client's responsibilities, we can confidently state that the decision whether or not to engage in an act of civil disobedience is uniquely a personal decision solely for the client. Not only is the client's decision uniquely personal, but the lawyer's role in implementing that decision usually is limited to giving the client information sufficient to allow the client to make the difficult choice of whether to break the law or not. Consequently, the lawyer as counselor does not play an instrumental role in the act of civil disobedience. This personal decision is not to be lightly made by any concerned citizen and requires thoughtful introspection. A lawyer would no more "tell" a client to engage in civil disobedience than a lawyer would "tell" a client to get a divorce. Consequently, a lawyer may not "counsel" in the narrow sense of the word. […] Consequently, to "counsel" a client who is considering whether to engage in civil disobedience does not mean the words "civil disobedience" may never be uttered in a lawyer's office. In order to assist the client in making an informed decision, the lawyer must conduct a meaningful dialogue with the client involving legal, social, moral, and political factors. To fulfill his or her role, a lawyer must "counsel" the client when counseling is used in its richest sense. A lawyer who respects the client's autonomy also will recognize that in some cases the lawyer holds a position of power and persuasiveness that can interfere with the client's autonomy. Consequently, even if the lawyer personally is persuaded that the client would do the right thing by engaging in civil disobedience, the lawyer must be careful not to pressure the client.  

[4]See e.g. Biakanja v. Irving, 320 P.2d 16 (Cal. 1958).