Piper Alderman has become Australia's first law firm to execute a blockchain-based payment guarantee in a commercial contract using Lygon’s distributed ledger technology platform.
Created by Big Four banks CBA, Westpac and ANZ, as well as Scentre Group and IBM, the Lygon platform can modernise how payment guarantees are documented, reducing fraud and errors.
A payment guarantee acts as a financial security measure for the buyer, should the seller fail to make promised payments.
In this instance, Piper Alderman and Lygon executed a payment guarantee by using it in place of money that would have been transferred and kept in trust.
Lygon CEO Justin Amos described the transaction as "a watershed moment for the legal services industry”.
“In February this year, Lygon created the first digital bank guarantee in the world, and it was also the first time blockchain had been used in the Australian banking sector in a live, real-world application,” he said.
“Today, in partnership with Piper Alderman, we have executed the first payment guarantee to be used commercially in the legal services industry, and it is also the first time blockchain has been used commercially by this industry too.
Amos said the legal industry is only just beginning to explore how blockchain technology can digitise paperwork and improve security efficiencies.
“By its very nature, the legal profession is responsible for generating and stockpiling more physical, paper documents than perhaps any other industry, causing significant costs, risks and delays for all parties involved.
“Lygon’s digital instruments have exactly the same legal holding as former paper-based guarantees, but are paperless, transparent, accessible, and standardised, removing the inefficiencies, costs, and risks associated with a paper-based system.”
Piper Alderman partner Michael Bacina said the “transformative nature” of the technology “is only just the beginning”.
“Paper based payment guarantees have always suffered from inefficiency and risk and the Lygon platform, with the support of major banks and IBM blockchain technology should help Piper Alderman and our client’s enjoy greater efficiency and security over guarantees.”
Lygon created the first digital bank guarantee this past February during a live launch with ANZ acting as the issuer of the guarantee and Scentre Group the beneficiary.
Since launching the February this year, Lygon has been expanding its reach and services to new sectors, including signing up new participants to the platform.