We interview Casey Kuhlman, CEO of Monax and discuss the deployment of smart, legally-binding contracts on the blockchain.
Monax is an application that can be used by legal professionals across industries to create legally-binding smart contracts. Earlier this year, Monax co-founded the Agreements Network, a decentralized blockchain-powered contract management platform for small and medium enterprises. Based on the Agreements Network, Monax is migrating it’s business onto the blockchain-based Monax Platform, transforming the ways its clients operate.
Monax Industries launched in 2014 with free, open source online creation of smart contracts for all. Does that part of the business still survive?
The software platform has largely retained the same ethos since then: to provide a free and open-sourced platform on which anyone can construct their own low-cost, run-anywhere applications using blockchain and smart-contract technology. Our delivery of this platform has drastically evolved since that time, however. We have steadily moved “up the stack” ever closer to users while continually evolving our core open source platform.
Agreements Network does not seem to talk of pricing, is this a free service to people who create legal documents using smart contracts on platforms like Monax?
We identify those who create legal documents as template ‘Producers’ on the Agreements Network. People who make money by using the network to create and make their legal templates available are required to have a stake in the health of the ecosystem in order to earn. We do this via a token system – Producers must acquire tokens and place them into a bond. This ensures that participants have ‘skin in the game’ when they seek to make money from the network. It also provides a necessary protection against misuse i.e spammers.
As with other public blockchain systems, the Network is built upon a transactional pricing model. ‘Consumers’ of the templates uploaded by ‘Producers’ pay a one-time fee upon creation of their Active Agreements which includes the necessary ‘network fee’ paid to the operators of the network along with the fee (if any) which has been set by the ‘Producer’ to utilize the template. The network fee is a function of the complexity of the legal process which is bound to the legal prose template for a given Active Agreement. Where the process contains, for example, 12 steps that Active Agreement will have a network fee of approximately 12 times another Active Agreement which only has 1 step in is legal process.
Will other smart contract systems be allowed to upload smart contracts into the Agreements Network?
A developer can develop further features unique to the Agreements Network, extend the network of capabilities on top of the Network protocol. The Network leverages a governance mechanism where new code can be proposed to get added to the ecosystem by any participant. The code then goes through a quality assurance step in which the Network’s secretariat will provide to the Network’s validators (the operators of the network) an opinion regarding the quality of the code. This proposal will then be affirmatively voted on by the Network’s validators and if approved will be added to the Network and the new functionality will be immediately exposed to the Network.
Is it possible for somebody with Word skills at the law firm to be able to add a smart contract to the Agreements Network?
Yes and no. The Network is incapable of taking a bog standard Word document and turning that into machine readable code. However, the Network is built to enable the marriage of legal processes which are defined in graphical modelers (such as bpmn.io) alongside legal prose templates which can be drafted in any software.
The Network is built and designed to be a ‘no-code’ solution for lawyers seeking to modernise their practice. One of the main points about the system is that it will not require a high level of expertise and can be used by a lawyer with low-to no coding skills. However, it will require more advanced skills than simply drafting a document in Word if the ‘Producer’ would like to have machine readable processes which control the formation and execution logic of the contract those will have to be built in graphical modelers and cannot simply be extracted from the prose template.
What are the benefits to using a system like the Agreements Network instead of creating online templates with form fields for their clients to capture and complete?
The basic difference is the output of the form filing process. The Monax system elevates the previous ‘form-filling’ practise by allowing for real-time execution of contracts, permanent storage on the blockchain and constant insight over the contract’s life-cycle. This stands in distinction to the traditional form-filling plus templates process which results in a PDF that the parties sign, put in a drawer, and forget about. The Monax system built on top of the Agreements Network allows for Active Agreements that can be integrated into other business systems to drive risk visibility and efficiencies.
Is it possible to keep a copy of the contract on a local system in the law firm?
There is no barrier to storing a copy of Agreements initialized on the Agreements Network in any system. The Agreements Network stores a fingerprint of a digital file in the blockchain ecosystem as well as the legal processes that drive the formation and execution process logic for a given Active Agreement. The storage of the template files is an application maker’s responsibility rather than a network responsibility.
South Africa Law insists that the law firm host and manage the client’s information, although this is changing, how would Monax manage this curved ball?
I’m not sure the confines of the law and if it requires that the law firm **exclusively** retain the information. However, if there is no requirement of exclusivity then a law firm running a node on the Agreements Network should — theoretically — satisfy such a requirement as all the client information that was available within the context of the Network would be available to the law firm itself.
How many law firms are currently using the Agreements Network?
The key early law firm participants in the Agreements Network ecosystem include BakerHostetler, Erdos IP Law and Legal Bono – with more to be announced shortly.
Are there any other costs that the lawyers will need to pay to use the Agreements Network?
No, the Agreements Network attracts no other associated costs other than the token protocol described above.
Thanks to Casey for agreeing to the interview, Smart Contracts are a hot topic at the moment and it is a privaledge to speak to somebody with such experience and knowledge. May Monax continue it’s succesful growth going forward.
Monax Industries was co-founded in 2014 by Casey Kuhlman. The firm built a market-leading, free and open-source universal blockchain platform on which anyone can construct their own secure, low-cost, run-anywhere applications using blockchain and smart contract technology. In April 2018, Monax became one of the founding companies behind the Agreements Network, a decentralized blockchain-powered contract management platform for small and medium enterprises. The Network allows anyone to develop, customize, sell and reproduce legal products. Monax is headquartered in London and has offices in Edinburgh and New York. For more information, visit: https://monax.io.