A commercial industrial property in Calne, Wiltshire, has become the first in Britain to be sold by an automated auctioneer in what its developer says is a binding transaction avoiding a legal ambiguity created by conventional public auctions.
According to online property platform Clicktopurchase, the property, which had a guide price of £400,000, went under the virtual hammer for £475,000 on 6 December. Online bids were handled by an artificial intelligence system named ’gAbi’ with the whole process recorded on a tamper-proof blockchain ledger.
Neil Singer, chief executive of Clicktopurchase, said the system would allow buyers to bid from anywhere in the world easily and without the intimidation of the auction room. 'With bidders still able to participate in competitive bidding but in the knowledge that it is totally secure and transparent, I have no doubt that the live ballroom auction will soon be a thing of the past.'
Singer claims that the system is more compliant with money-laundering regulations than conventional public auctions. 'Today, a public auction is the only place where it is possible to buy a property without a signature - that comes only after the contract is bound by the fall of the hammer. This creates a problem for know-your customer regulations which require purchasers to be cleared before the relationship begins.'
By contrast, participants in ’gAbi’ auctions are pre-verified. The sale creates a digital contract with an audit tail in a tamper-proof encrypted blockchain. This also provides proof that the know-your-client checks have been done.
Blockchain is among the innovations listed in an upbeat report on technology in legal services published by the Solicitors Regulation Authority today. The report notes that blockchain is a 'fast, auditable and verifiable system' for recording exchanges of contracts. 'The associated identification security also reduces the risk of certain forms of property fraud.'
The report also notes developments in artificial intelligence, which it says will be deployed mostly in back office functions, thus allowing solicitors 'to focus on more complex parts of a case or increase their capacity to engage with clients and potential clients'.
While legal work carried out by artificial intelligence is not 100% accurate 'it has never proven any less accurate than work carried out by humans', the report states. 'In some cases, it is more so. However, while in one test it took real-life lawyers 92 minutes to complete a task, AI finished the job in 26 seconds.'
Introducing the report, Paul Philip, the SRA's chief executive, said: 'There is no doubt that new technology has already improved the way legal services work. Latest surveys show that 30% of legal work is now delivered online and the business use of emails has sped up many tasks.'