Legal Schema ‘Universal Structured Data Format’ Project Goes Live

Legal Schema, a project to develop a ‘universal structured data format for the creation and interactivity of digital contracts’, has now formally launched. It’s the brainchild of Peter Hunn, the founder of smart contract pioneer Clause, which was recently acquired by DocuSign.

Artificial Lawyer first shared the news of the project back in March, but now it is formally being rolled out. The project is backed by Lawtech UK, the taxpayer-funded innovation group that operates via Tech Nation.

As Lawtech UK explained, the problem today is that ‘legal documents are typically written only in natural language text and stored as such or as photographic images (PDF etc.), without any supporting code that acts as a map or instructions enabling a computer to read it.’

This is the fundamental challenge Legal Schema is trying to solve. And, in addition, the project wants to create a standard approach that everyone can share – as if lots of different groups have their own digital legal schemas, then we’ll be in an even more messy situation. (Well, at least as far as the UK is concerned it’s universal….see more below.)

Moreover, as the idea of a document primarily existing as a physical entity, or at best a computer file that is ‘cut off’ from the rest of the digital world, continues to break down, then we’ll need a way to address this.

Clause, which seeks to connect a contract to the rest of the digital infrastructure of the world and enable self-executing elements, pioneered this work, (in part through its sister organisation the Accord Project), and has developed software for the digitisation of contracts.

The new project is taking this further and is also not necessarily for use just in ‘smart contracts’, but more generally across the entire field of digital contracting.

As part of the formal launch Hunn commented: ‘It became apparent through our work in the [Lawtech UK] Sandbox that …. there is a simple, universal, means to add structured data into contractual documents to transform them into digital agreements.

‘The Legal Schema project is the first step in this direction as outlined in the whitepaper (see link below). Owing to the success of the project in the Sandbox, the next steps will be developed in conjunction with LawtechUK and cross-sector collaborators. We welcome the involvement of interested stakeholders.’

The launch has been marked with the publication of a white paper – which can be downloaded here. Some choice morsels from the paper are below.

All in all, a great project, although there are a couple of flies in the digital soup. It would be sad if all this work ended up primarily focused on the field of cryptocurrencies – which the project clearly is interested in and alludes to several times. Perhaps it’s an unavoidable part of the financial landscape, but hopefully it remains just a part of this project and doesn’t subsume everyone’s efforts.

The other challenge – and perhaps this can be overcome with international co-operation – is the focus on this being a UK project, and for the benefit of one nation. It’s inevitable that a UK Government-backed project wants to help this country and sees outcomes in terms of ‘global competition’. Also, contracts and the law are locally specific. But, if this is going to overcome some of the key issues – such as creating a universal standard – then we need to think in global terms, not national terms. And if there are jurisdictional and local language challenges, then let’s work on ways to get over them.

Maybe this project needs to find a bigger and more international forum to operate from rather than a national one? It’s great that Lawtech UK has got this far and without them perhaps this project would not have happened at all, but this seems too important to get trapped in a jurisdictional cul-de-sac.

Some key passages from the whitepaper:

The Legal Schema is an open source initiative that provides a common language for creating and managing legal documents as data, much like does for webpages.

As we move towards a widespread digitisation of the contracting process (reflecting the digitisation of most aspects of society), the need for this common language is pressing. In the same way that schemas underpin and enable web development, the UKLS not only supports the development of individual digital contracts but, importantly, it enables them to interact with each other (and existing technologies). The result being that the emerging smart contract and digital asset industries in the UK can benefit from both strong legal and technical foundations.

Contracts are typically documented in word-processed formats. Even though represented in digital form they remain purely textual documents. By contrast, a digital contract represents an agreement, enforceable at law, in a data structured format.

The inclusion of structured data enables a contractual document to be transformed from a static textual document to a natively digital format that facilitates new forms of functionality for contractual agreements and documents by enabling “open access”8 to, and sharing of, contract data such as (i) search and analysis of data within contracts; (ii) integration of contract data with external systems for e.g. automated reporting and operations; and (iii) the creation of “smart legal contracts” and integration with cryptoasset systems.

The UKLS provides a generalised universal structured data format for the creation of digital contracts. At its core, the Legal Schema consists of a Legal Schema Language (LSL) that enables users to build an ontological structure into contracts and other legal documents. By doing so, documents are rendered machine-readable as well as human-readable. This means that the document, by way of its data structure, can be integrated with external software systems and indexed, queried, and analysed in a manner similar to web pages. Notably, machine-readable documents can be integrated with distributed ledger-based cryptoassets to provide a contractual basis for their usage.

Digital contracts will typically be constructed using markup languages and, increasingly, code components. The UKLS operates as the core foundation (or “narrow waist”) of a contract technology stack meaning that it functions as a minimal, universal, and implementation agnostic approach to representing data in contracts. The narrow waist widens to accommodate and support innovation at other levels of the contract technology stack, including by:

  • providing compatibility with current and future markup languages for digital contracts;
  • integrating with existing domain specific schema languages, such as Companies House and Crown Legislation Markup schemas (see p.19);
  • enabling contracts to be converted into other machine-readable structured data formats such as XML and JSON and human-readable formats such as PDF and DOCX; and
  • facilitating a standardised means of integration of contractual data across different distributed ledger technologies (e.g. Ethereum, Hyperledger Fabric, Corda), smart contracts, and cryptoassets.’

So, there you go, if you’d like to get in touch with the project, you can here.