On 7 September 2020, the Tech London Advocates’ (TLA) Blockchain Legal and Regulatory Group and the Law Society of England and Wales published a new joint report which sets out key issues for legal practitioners to be aware of when advising on distributed ledger technologies (DLT).
Launched to coincide with the start of London Tech Week 2020, the new guidance explores a range of topics and provides a list of key recommendations on aspects relating to DLT, including:
- commercial applications
- data governance
- intellectual property
- data protection
- dispute resolution
In his foreword to the report, the Rt Hon Sir Geoffrey Vos, Chancellor of the English High Court recognises that when it comes to technology, “Lawyers face a steep learning curve. They will need to become familiar with DLT, smart legal contracts and cryptoassets – conceptually and functionally. This Guidance is an important step on that path.”
Baker McKenzie were delighted to contribute a section to the report focused on blockchain consortia.
Over recent years, a large number of blockchain consortia have been formed globally across a range of industry sectors, including financial services, healthcare, energy and retail. But these multi-party models bring their own complexities. Given the range of consortia members with their own interests, setting up an effective governance framework is not easy and if not handled well can derail the entire project. Therefore, setting up good governance is one of the most important considerations for organisations to focus on when forming a blockchain consortium and an area where legal advisers can provide a critical role.
In the section, we explain what a consortium is, the types of consortia in existence, and the advantages and disadvantages of the various contracting models, as well as to provide an overview of some of the key legal risks to be considered when advising clients on blockchain consortia projects.
We focus on a range of issues organisations may need to consider at an early stage, including in terms of establishing a clear shared mission and objectives, roadmap and business case, identifying members’ roles and responsibilities (including in terms of investment and other contributions), decision making and voting rights, on-boarding, exit, risk apportionment and liability, IP rights, anti-trust considerations, compliance and tax.
Sue McLean, Dan Relton and Ben Thatcher of Baker McKenzie’s Data and Technology team led the project, with valuable contributions from colleagues in Baker McKenzie’s financial services regulatory, corporate, competition, trade and tax teams.
With thanks also to Gary Chu, General Counsel at Fnality International who contributed his insights to the report.