Stephen D. Palley, counsel with Anderson Kill, in Washington, D.C.

While many of today's lawyers and law students are looking to prepare for a future where technology will play an ever-important role, there are those already made for this digital era.

Take for example Stephen Palley, of counsel at Anderson Kill. He may have a traditional lawyer background, but like a small number of today's attorneys, he already has the skills and knowledge to naturally fuse technology and the practice of law. A natural tech enthusiast, he was developing software and thinking of how to leverage blockchain technology long before days of e-discovery or artificial intelligence.

Legaltech News caught up with Palley on the heels of his appointment as head of Anderson Kill's Blockchain and Virtual Currency Group to discuss his technology background, what he believes are the biggest issues facing blockchain technology, and why he became interested in blockchain in the first place.

LTN: What's your experience with software design and development?

Palley: When I was a kid, I taught myself how to program on a computer that doesn't really exist anymore. Then I lost track. I went to college, and grad school and law school, and I played around at different points with different computers and programming languages, but never got back to it in the same way until about six years ago when I was trial lawyer. I had a dispute where I knew the case would settle for a particular amount, and the other lawyer knew it too. So I proposed with my opposing counsel that we give our bottom line numbers to a third party, a friend who was a mediator, and if the numbers match within 5 percent, he would disclose that.

And I thought wouldn't it be cool if there was software that did that. So I ended up building a software startup. I was a partner at a regional law firm at the time, and on the side I created a software company. My software startup didn't go anywhere—I didn't know the first thing about digital marketing or software sales, and I was trying to do all of it while practicing law. But I learned to code again. And I wouldn't say I'm the best programmer in the world, but I was OK after a couple of months.

In your opinion, what is the biggest mistake software developers make today?

Failing to realize that, just because they can create something that looks like magic, they don't know everything. There is more to software development than just putting stuff out in the world. You have to think about the [legal and security] consequences.

What got you interested in cryptocurrency and blockchain technology?

I ended up folding my software company in part because I was uncomfortable with security. I became uncomfortable with the notion that I was storing everything on someone else's services—I was using Amazon Web Services and using a centralized database we had access to.

I wondered how I could do this without having a centralized store of data and how I could create an automated payment system. And then I stumbled on to bitcoin and blockchain. That was 2013.

What do you hope to accomplish as head of Blockchain and Virtual Currency Group?

I hope to help builders build, innovators innovate and when people get in trouble, as happens in any business, to help them resolve their dispute in an efficient manner.

What are most challenging operational issues your clients face with blockchain technology?

One is that the technology allows you to do things internationally, across borders, across jurisdictions. So you can have your data stored everywhere in the world, theoretically. Cross-jurisdictional legal compliance is hard, and that's one of the big pictures issues form an operational standpoint

Another big problem is key management. One of the unique things about cryptocurrency in particular is that it is controllable using a private key that is not maintained necessarily by any centralized source. If you have it, you control the assets. So with blockchain, it's not like anyone can drill it open like a safe deposit box, and it's not like a court order [can open it] either.

What are the biggest threats facing blockchain technologies?

Cybersecurity and fraud are problems, but also its poor design and overestimation of what the technology can currently do. Remember, Ethereum is three years old. Bitcoin has only been around since 2009. One the biggest threats is trying to use these things in ways they are not ready to be used.

You can't get angry at a hammer for not being a screwdriver, and I think if people overestimate the ability to run sophisticated production applications on the blockchain, it's going to be problematic.