Guest post by Isabel Davies, an associate in the interactive entertainment team at Cheltenham and London law firm Wiggin

Davies: Legal sector preparing to take action in the metaverse

We are experiencing a huge transformation in the dynamics of global society and it’s no surprise that technological advancements are at the heart of this.

The concept of the metaverse (a digital space consisting of interactive, interoperable virtual worlds) has been catapulted into mainstream consciousness since Mark Zuckerberg announced Meta’s plans to move into the space in November 2021. It will have significant implications in the legal space too.

Several high-profile celebrities, brands and entertainment companies were quick off the mark in immersing themselves in these virtual worlds with various creative initiatives. This number is only increasing as they bid to get ahead of the curve and ensure their presence in the promise of a hybridised future.

For example, we recently saw the Formula 1 team, Williams Racing, and comedian Kevin Hart collaborate with Virtua to help them with their strategy to enter the metaverse.

The way the world is shaping up, it will be no surprise if society ends up running synonymously on both the physical and virtual plains. As this new phenomenon grows in its utility and popularity, other enterprises such as financial institutions, real estate firms, non-governmental organisations and retailers are all pressing ahead to carve out their respective pathways of entry.

It seems now the legal sector is also preparing to take action, with Singapore’s Second Minister for Law, Edwin Tong, recently acknowledging at the TechLaw Fest 2022 that the likes of marriages, dispute resolution and government services are likely to be offered in the metaverse.

What the rise of the metaverse means for the legal sector

The legal sector has had to evolve and adapt to the meteoric rise of social media and gaming platforms over the past two decades.

Back in 2019, the ‘Twibel’ case between Sally Bercow and Lord McAlpine demonstrated social media’s capability in triggering legal cases of a vast proportion, with Mrs Bercow ordered to pay large damages for a defamatory tweet.

It is now standard practice for legislation to include extensive stipulations around the admissibility of social media materials as evidence in court, with issues such as proof of content, authenticity and authorship often core components of both the prosecution and defence’s cases.

In an era of digitisation, areas such as consumer protection issues, intellectual property rights and financial regulation cases can often be top of the pile.

Whilst there won’t necessarily be any new, unique issues that arise in the metaverse, those areas will be all the more intense and heightened in this deeply immersive environment and we can be sure to expect a notable increase in metaverse-related cases filtering through.

Law firms should thus be on their toes, at least considering or preparing strategies to understand or even enter these virtual worlds if they haven’t already started to activate them.

The main issues that law firms can expect to address

Brands will no doubt need more advice and guidance on intellectual property rights. The obvious considerations include whether their existing trade marks cover metaverse activities and provide protection in the context of infringing third-party use in the metaverse, and whether any new rights should be obtained.

User-generated content will also take on a new dynamic: where we might see derogatory comments under brand’s posts on social media, we could start to imagine cases such as avatars graffitiing subversive messages over their virtual stores or offices.

The prominence of crypto-assets in the metaverse will also lead to heightened demand for consumer protection and financial regulation, together with the more widespread use of decentralised organisations and communities structured as DAOs (decentralised autonomous organisations) using token-based governance.

It will be important that consumers are aware of and understand what they’re investing in and can tell the difference between promotional and organic content. The Advertising Standards Authority is increasingly scrutinising this area.

The rise of the metaverse as a dual track alongside GDPR and other data protection laws placing child safety as a regulatory priority is also timely. Metaverse companies will surely be thinking about what tools they can provide in terms of parental controls, reporting processes and chat filters to assist with new legal procedures.

These are all still grey areas that need attention. The very notion upon which many believe the metaverse is being built – decentralisation – naturally breeds uncertainty around governance: how will laws and regulations be decided and enforced if there is no central authority or legally responsible entities? How do you determine which jurisdiction will apply?

This is something that each metaverse developer will be working on solutions and answers to this, but it may well be that input from the legal sector is needed. Law firms must be aware of these issues so that they can tailor and align their advice and services.

Potential benefits and utilities of the metaverse for law firms

Aside from considerations around the uncertainties and anticipation of different legal issues, law firms should also be looking toward the impact that blockchain technology could have on the way they operate.

Leveraging blockchain in their work could have many benefits, such as enabling lawyers to streamline their transactional work and permanently store legal agreements on a shared ledger that is accessible to all parties.

Lawyers will increasingly need to work together with – or even become – software developers writing smart contracts into blockchain solutions deployed by clients. Lawyers can deploy off-chain contract automation solutions to make certain parts of their business more efficient (e.g. replacing manual contract creation or procedures with pre-determined processes).

Another simple benefit of entering the metaverse is that firms that offer their services predominantly to individuals could have the opportunity to offer their services to those who might otherwise be unable to reach them in the physical world.

Those who struggle physically, mentally or socially, or are geographically restricted, can find themselves impaired or discouraged from seeking legal advice. Having already had to adjust to serving remote clients, the ability to provide ‘walk-in’ consultations in the metaverse to those who need it could allow law firms to attract and retain more clients.

That said, it’s important to remember that it won’t just be metaverse-related cases that law firms will be dealing with. Clients who seek counsel over sensitive issues may come to the metaverse for legal advice purely for the fact that they’d prefer to interact under the shield that an avatar can provide – this also raises potential issues around client due diligence.

How firms should react – from early exploration to people and skills

It is not often that the legal sector catches on early when technological advancements occur across a global scale. With the metaverse, there is a chance for law firms to get ahead of the curve and play a pivotal part in shaping the evolving landscape and connecting with clients in a new way.

As major brands and enterprises take steps to stamp their mark, purchasing digital land and building virtual offices to market their products and services to customers, law firms should be exploring the same.

By transferring their relevant expertise on issues within the social media and video gaming spaces, they have an opportunity to expand their knowledge and services and consolidate the relevance of their industry at a potentially transformative period of societal progression.

Combining their critical thinking with conscious efforts to embrace novel modes of creative communication could open up refreshing new possibilities.

If you’d like to hear more, I recently discussed legal issues in the metaverse on Virtua Talks Metaverse.