PTW3 042: Future of Legal Tech: Smart Contracts, NFTs, Crypto and AI with Matthew Fornaro and Donna Mitchell

Donna Mitchell

00:00:00 - 00:00:37

Thanks for checking in the pivoting to web three podcast. Go to pivoting to web three podcast.com to download and listen or web three game plan to check out the videos. Thank you. Good morning, good afternoon, good evening. Welcome, welcome, welcome, welcome to pivoting to web three podcast. And today we have Matthew Fornaro. And Matthew Fornaro is an attorney and I'm glad I have an attorney on the podcast in the web three space because right now, for me, as far as I can see, they're very far and few in between. Now, Matthew is in South Florida, including Coral Springs and Parkland since 2003.

Donna Mitchell

00:00:37 - 00:02:38

Before starting his law firm, he was an attorney at two prestigious and law 200 law firms focusing on civil litigation and Matthew practices complex commercial litigation, including contract disputes. He's also a member of the Florida Bar, District of Columbia bar and practices construction law, intellectual property, property law, homeowner and condominium association, representation and drafts and revises business documents, including the formation of business organizations. So for those of you out there in some of those areas and spaces, pay attention because Matthew has an awesome background. He also assists new business owners in choosing and drafting all legally required documents. He's involved in mentoring new attorneys and both a graduate and instructor of the Kaufman Foundation Nation's Fast Track new venture program presented by the Broward County Office of Economic and Small Business Development and the city of Hollywood, as well as a graduate and instructor for the Florida State University College of Business, Jim Moran Institute for Global Entrepreneurship Small Business Executive program. As a small business owner himself, Matthew is proud of his representation of businesses in our community and is also available to assist transactional and litigation needs. Now, Matthew, I am so glad that you are here because I've had very few attorneys come on the podcast, and I'm sure there's going to be some questions that I'm going to be getting in regards to web three litigation, how it impacts businesses, and what you have found in trends. But first, say hello to our audience and give us a quick update on how you decided to pay attention to blockchain smart contracts in the web three space.

Matthew Fornaro

00:02:38 - 00:03:25

So good afternoon, Donna. Thank you for having me. I'm glad we were able to connect today. You know, briefly as part of my lab that you read of me helping my business clients, I always have to try to keep one step ahead of trends and technology. And obviously the web three is here, and it may not be affecting businesses as much as it will be in the future, but at least I need to have a grasp and I need to be here to help my clients when they are addressed and when they have to confront with web three issues. So that's kind of how I'm here for my clients, web three. I mean, I learn about web three. You know, I try to do as much web three stuff as I can on my own and I'm here to assist.

Matthew Fornaro

00:03:25 - 00:03:36

So that's kind of my background on how in addition to my normal practice, I'm now doing web three law for microburst owner.

Donna Mitchell

00:03:36 - 00:03:52

So in web three law, what are some of the trends and what areas are you really seeing the focus or the main upkeep of the first level adoption at? Is it smart contracts, real estate, insurances, entertainment? Where are you seeing a lot of the movement in adoption?

Matthew Fornaro

00:03:53 - 00:05:14

Sure. I mean, obviously with web three there's key concepts. So I mean for first, like decentralization, there's businesses are trying to decentralize their networks and their information, not to be dependent on an outside cloud or rx cloud or something like that. So I have companies that are trying to build their own instead of web two, they're on web three. As far as coming up with secured methods for data transactions for blockchain, blockchain is now becoming more standardized and more commonplace than it was even just a year ago. Clients are coming up with new ways of getting the records, transactions with validity blockchain, and it goes towards the transparency and security of certain transactions, data transfers and things like that. Next thing would be smart contracts where there's self executing contracts that are written to the code and you can automate the process to reduce the need for intermediaries. That's something else I'm working on.

Matthew Fornaro

00:05:14 - 00:05:45

And then obviously it also got to deal with cryptocurrencies and tokens where now clients are starting to pay and get paid in cryptocurrency and also having to deal with identification of the tokens and dealing with tokens to make sure that theyre genuine, legitimate and from a true source. Its a little bit of everything. Its now starting to grow more and more that its dealing with the, dealing with my clients and dealing with web three issues like that.

Donna Mitchell

00:05:46 - 00:06:08

So when you're dealing with web three issues like that, with the different tokens and the decentralization, the smart contracts and everything is very new. Does that have an impact on your regular traditional contractual law? Are these hybrids, are they separate? Can you paint a picture on what that's looking like right now in say you've had.

Matthew Fornaro

00:06:08 - 00:07:23

Sure. I mean, you know, traditional, you know, contracts are contracts. Integrating technology and contracts is what's different now because in contrast, when you have, you know, whether you're selling the product or you're selling a service or you're selling software or something like that, you know, you have delivery, well, deliverance mean physically delivering it or getting whatever. Now you pals, you know, like going through web three, going through like blockchain and things like that. So now if you're the receiver, you have to be ready to not just get something in your mail or get something in your email on salon, just be ready to receive blockchain and the code to deal with it. That would, that kind of thing is something that's got to be specialized and put into a contract. Otherwise, if it's silent, it's kind of confusing because did you really deliver the product or the information and did they really have the capacity to receive it? So if youre going to deal with blockchain or other kinds of things like that, thats got to be in the contract now and then. The same thing with smart contracts, theyre essentially self executing.

Matthew Fornaro

00:07:23 - 00:07:43

So the terms have to be written into the code itself that the contract self executing and it takes place upon, you know, click or enter, you know, I mean, your automated process and releases the need for having intermediaries look at stuff or whatever, but you got to set up their own system clinically.

Donna Mitchell

00:07:44 - 00:08:20

So since you're in the legal field, I want to ask you a question because I know I have some listeners that are not really sure what's going on or what that means in a smart contract self executing. Can you give us an example of a situation and a contract before blockchain or web three and that same situation? Maybe paint the picture as it is now with that smart contract. So they have an idea is that when the house is sold or the deed or where have you seen it used what it used to be? And you can give us an example of what it's turning into, be sure.

Matthew Fornaro

00:08:20 - 00:09:20

I mean, smart contracts, you know, now it's a self executing soundtrack where the terms are directly written to the code itself and the process, like I said, is automated and uses less intermediaries. So for example, I mean like a traditional contract or whatever before you, before, let's just say pen and paper. So there'd be a written contract, you review it, you'd sign it, and the contract would be entered into based on the signature of the party. That's either of the parties that are part of the contract. With a smart contract, the contract is executed once it's created. So it reduces having to go back and forth as far as having it send it to your attorney. Your attorney sends it to you. You reviewed your center back, now it's all automatically done.

Matthew Fornaro

00:09:21 - 00:10:30

So it reduces like administrative overhead like that. And also it enhances trust because since it's totally, it can only be you, the person who's intended to sign the contract, who receives the smart contract. It's, there's no way that it's not genuine and, you know, it's 100% accurate and 100% effective. So, you know, some of the uses that I see upcoming for smart contracts are like invoicing, payroll and escrow services is so that, those are things that are kind of, you know, I don't want to say monotonous, but those are things that are, you know, routine ish. So it's easier to do with like automated invoicing. If I just send you an invoice and automatically everything lines up and it's done, that's a lot easier than having to mail or email it to you. And then it goes to whatever department it gets routed to and then it goes to payment department, whatever. Instead it's automatically through, it's all verified.

Matthew Fornaro

00:10:30 - 00:11:11

It's all done. The same thing with payroll or D. Payroll, it's the same exact concept as invoicing. And then for escrow services, the whole money and trust, you know, that's probably the most important thing an attorney can do. One of the most important things an attorney can do is hold money in trust. So this way with smart contracts, there is a 100% guarantee that the money is going to be properly held, nesterone properly distributed to the person or the entity that it's supposed to be distributed to. So it tops down on, for all the cuts down on, you know, again, administrative costs and things like that.

Donna Mitchell

00:11:11 - 00:11:25

So then it has to be really executed or the code really has to be complete. Verified is what people want because you, can you change, I heard you can't really change any of that stuff. Once it's done, it's done.

Matthew Fornaro

00:11:25 - 00:11:49

Yeah, once it's done, it's done. So you want to make sure that it's done correctly and then you implement it. So it's, you know, it's another level of speaking due diligence anyways, but it's another level of due diligence. So once it's done and approved and everyone agrees on it and then it's in place, it should be error approved at that point.

Donna Mitchell

00:11:50 - 00:11:52

Have you ever had one that wasn't error approved?

Matthew Fornaro

00:11:53 - 00:11:59

No. In the actual real smart contracts that I've had at the bill bin 100% on point.

Donna Mitchell

00:11:59 - 00:12:13

Everybody's done what they were supposed to do, and it's really read, write, trust, verify, and everybody's happy. So far, I've heard great things. Yeah, I mean, I'm really for it. That's why I'm doing the podcast. I think everybody need to know what's happening.

Matthew Fornaro

00:12:13 - 00:12:41

Yeah, no, I agree. I mean, when it's, you know, you do your due diligence and you do everything collectively and implement everything correctly, and then it's fine. I mean, it's a lot, you know, I haven't personally seen any errors or emission like that, but I mean, I can tell you how just doing that, it's going to cut down on errors and emission, particularly with what ours is talking about with escrow services. I mean, there's, you know, not to burst too much off the subject, but there's a lot of bubble.

Donna Mitchell

00:12:41 - 00:12:42

Yeah, go ahead.

Matthew Fornaro

00:12:42 - 00:13:44

Attorneys doing like, let's say, real estate transactions, transactions where they hold escrow money. And, you know, you have your contract, everything's in place, whatever. People who then spoof the parties, who then contact the escrow services to then change the contract and send the money someplace else, or to change terms to pay out this person instead of that person or whatever. So that's an evolving issue with practice. The law is that email is not really secure anymore. As you know, you can spoof emails and do whatever, smart contracts eliminate that. So that's probably, I would say the biggest thing for, like, escrow services is that smart contracts will totally eliminate the whole problem with being smooth and getting, you know, collect information. So not even an issue with smart contracts, there's no possibility that that could happen.

Donna Mitchell

00:13:45 - 00:14:20

That's pretty cool. So when you look at the intellectual properties or the intellectual, intellectual lore and all the intangibles that we have today, when you transition into the decentralized space in the web three and the smart contracts and NFTs, can you help us understand how that's even still more of a benefit with NFTs and everything that you're seeing right now, are you seeing a lot of that in Florida, it with some of your clients as well? Yeah.

Matthew Fornaro

00:14:20 - 00:15:21

Nfts are coming up as web three develops and becomes mobilized. But nfts are obviously one of the backgrounds of web three. So, I mean, there has, I mean, they're unique digital assets verified using blockchain. So, I mean, it adds a level of security to your non, you know, you want to call it intellectual property, tangible property, whatever you want to call an NFT. I mean, because technically, it could be tangible property. And at this income is also intellectual property. So it's adding a level of security because you need the blockchain to verify it. And if you know the blockchain is verified, it's not going to be transferred or it's not inauthentic if it doesn't match up to the blockchain, you know, nfts now we see probably in non commercial things and you see looking digital collectibles, people selling one offs and stuff like that.

Matthew Fornaro

00:15:21 - 00:16:04

You're probably going to see it expand into other areas of intellectual property and then probably is a business or something. You'll probably see nfts as part of, if you're a retailer or something, probably in a loyalty program. So that's a good use of nfts because the customer would have a blockchain code and then the NFT with tung funnel and the retailer or the service provider. Yeah, it's something that's coming up more and more. It's not too prevalent yet, but you can see that the signs are pointing that there's going to be nfts popping up everywhere and everyone's mapped to nfts for all kinds of different stuff.

Donna Mitchell

00:16:06 - 00:16:37

I think that's a great thing. I think it's a benefit for everybody, the art and everybody involved. So when you're in the technical space with web three, I'm sure there's some business owners out there that are wondering what do they need to be look, what do they need to look out for? What do they need to know about the structure or how should they be planning for a decentralized space? Can you give anybody a heads up or a couple of ideas on the, on how they should be planning and strategizing as we transition from web two to web three?

Matthew Fornaro

00:16:38 - 00:17:31

Yeah, I mean, obviously, you always have to be looking ahead. Most, you know, the majority of my clients are small and medium sized businesses, so they're not like Fortune 500 companies or, you know, Nasdaq type companies. But those companies are already looking ahead at blood free. They've already got everything in place. Where did you go? It's the smaller businesses, like the ones that I deal with, that have to understand that Web three is a thing that's happening, and it's not. Maybe it's going to happen. It is going to happen because you can see that we're moving towards, even though we're always going to have certain things in Web two, Web three is going to take over a lot of things that Web two used to do. And then you used to do in the real world and to have material possessions to do things for now until they get moved to web three.

Matthew Fornaro

00:17:31 - 00:18:47

So I think that for my clients, one of the issues is obviously adoption and integration of web three into their existing systems. And the most important thing that I can tell my clients is that education about web three is probably the most important thing. And training your staff is also incredibly important regarding web three. So I recommend if my clients are beginning to start to see this pop up in their business, like people are trying to use non fungible tokens and blockchain and stuff like that. I tell them to make sure you educate yourself if phone reliable solutions on that ad about web three and how you can see this is going to be integrated into your business plan or something in it and how you're going to use it going forward and take baby steps. Don't throw out all the computers and supplements, say I'm wep three to the next. You have to take baby steps and incrementally put in your web three psychologists so you can decentralize. I don't want you to throw out the modem and call it a day and say I'm my own network now.

Matthew Fornaro

00:18:47 - 00:19:32

I mean, I want you to gradually transition by starting your own independent network or whatever it is you want to do, but still do product web two while you're changing over to web three, and the same thing with the use of non fungible tokens and blockchain and everything. Make sure you're still connected to web two while you're transitioning over to web three because you're always going to need web two. You can't just totally call one two. What? You can't ignore web three, so you have to find the balancing point of slowly bringing it on or you're in an industry that's moving in a faster clip or faster pace. Bring it on more rapidly and then use it with your web two technology and just be careful and be diligent with what you do.

Donna Mitchell

00:19:34 - 00:20:40

Thanks. That's a lot of great advice. Thank you for that. With the United States and all the states, are there some states that are moving faster than others in this space and are all the regulations the same or do we have regulations in the United States? And the reason I'm asking this question with some of my guests and some of the reading I've done, it seems like the governance piece is already moving forward in Europe and other places and spaces, and we're kind of lagging behind on the legalities and governance and just all the issues that we may have have in the US on what is and isn't. Can you speak to any of the trends that you see or any concerns or any heads up you can give us in regards to? You go into the web three space and you're thinking life is going to be lovely. What are some of the challenges, obstacles that end up happening? When you're dealing with either different states, spaces or countries, what trends do you see from the legal side?

Matthew Fornaro

00:20:42 - 00:22:05

Sure. You know, it's interesting because technology always moves faster than the law. So the law, since back in the days of when you first memorialized, you know, modern day common law, whatever, in England, moved it over to United States or whatever, they've always labored to keep pace with technology. And that was normally through the IP space with patents, trademarks, copyrights, trade secrets, and always slow, the laws always slow to keep up with them. So now that we're moving faster and faster and faster, the law is still very slow to keep up. And so with web three technology, there is involving regulatory environment for cryptocurrencies and blockchain technology that is probably better situated and handled right now, like Asia and Europe, than it is here in the United States. The us government el that is actually working is starting to put together some stuff to deal with lead free technologies. And then there's a lot of local state governments that are dealing with web three things.

Matthew Fornaro

00:22:05 - 00:22:27

So my advice would be to just encourage businesses to stay informally compliant with regulations as they pop up, which they're starting to pop up more and more now that as time goes on and web three is more prevalent. But yeah, it's a slow process, but make sure you just keep up with what's going on.

Donna Mitchell

00:22:29 - 00:23:30

Okay. So are there anything that you would look at differently after having the experience that you've had with some of your clients and the knowledge that you have, is there anything that may have taken place that when you look back, you wish you had thought about some areas of that transaction a little bit differently, or wish the parties involved had did more legwork or research? I guess I'm really asking, what do people really need to know when trying to dot the I's and cross the t's as they come into that web three space? So there's main three things, or five things they really need to pay attention to. As everyone transitions, everyone's got a lot of fear, they're nervous, they're not sure everything is AI, AI, AI. If you had to really capsulize it or summarize it, what are the main areas you think people need to focus on so they can have a smooth transition.

Matthew Fornaro

00:23:31 - 00:24:43

A state should obviously be diligent in what you do and just what I was talking about where you can't just jump shit from web two to web three today. You have to slowly bring about the implementation of changes and slowly bring it on. You can't just go cold turkey the web three. So I would tell businesses, be ready to circulate what three issues, you know, if they're not dealing with it now, because you need to be an online retailer or something and someone comes to you and says in cryptocurrency, what if you don't have the capacity to do that? You're going to lose out on a sale because you don't have the capacity to do that. Someone's going to be dealing with AI and you've never dealt with AI, so you don't know what's going on. Someone's going to have a decentralized network that you're not going to have any access to, that you're not going to have any idea what's going on. My advice again would be to take it slow and steady, but understand that you're going towards web three. And I mean, there's a lot of examples of future trends that are coming up out there that businesses and being people in general need to be on the lookout for like decentralized autonomous organizations.

Matthew Fornaro

00:24:43 - 00:25:26

Web three based marketing, which is totally the fact that web two based marketing and then decentralized marketplaces, which I mean totally different than having like an Amazon or eBay, where you would have like a totally decentralized kind of sales processor system that will just be main date from what you're used to. So just keep an open mind and make sure that you're diligent going forward and make sure that, you know, web three is here and you have to get ready for web three again, not talk web two, web things can still be or not, but I make sure you're ready for let three with all the different things that are coming out with it.

Donna Mitchell

00:25:27 - 00:25:53

So what do you think it's going to take for some of the attorneys to really start taking it more seriously? How does that happen? Because they seem to be almost like nonprofit organizations in some way. They're not going to jump on some things too quickly. They're going to take their time methodically look at it. What do you think really has to take place in the marketplace or in different industries for the attorneys to really start paying attention to?

Matthew Fornaro

00:25:54 - 00:27:08

Well, for attorneys, they have to get hit with web three issues all the time to come out of their shell and figure out what web three is all about. If you're a business law, attorney, whatever, if you're a business law attorney or whatever commercial litigation attorney or whatever talent are you are, you don't see web three issues and you're not going to let web three issues and you're not going to deal with web three issues. And it's a little bit proactive on the part of the attorney that if they're not seeing that all the time, they need to learn about it. But with the attorney circuit hit with these web three issues, they're going to learn about it real quick because otherwise someone's going to take their basic software to someone who understands log three. So this web three becomes more and more prevalent just every day. There's less small businesses to large businesses. You'll see attorneys finally jump on board and understand what WEII is all about and they'll see the law catch up and come in and start regulating. Let three governor, it's gonna take, it's gonna take, you know, the average petunia in your day to get hit with lead free issues to then be ready to deal with lead three issues.

Donna Mitchell

00:27:08 - 00:27:35

So in the interim, and the reason I ask, because there's people looking for attorneys and they can't find any, can someone in New York contact you for web three business or does it still have to be a New York resident with a New York attorney or depending on what the issue is in the contract, is it still pretty much the same as it was? Or do you have more freedom in web three decentralization to go to whatever attorney you'd like to handle your business?

Matthew Fornaro

00:27:36 - 00:28:17

It's a combination of both. I mean, obviously most of the web three stock is going to be transactional depending on which states laws apply. Yet have a Florida attorney like me handle a New York business or vice versa? It just depends on what the smart contract is going to be all about or what the web three issue is going to be about. So yeah, I can go across state lines for certain things, and then obviously, just like web two issues or the real world issues, there are certain things that have to be state specific state. So it's subjective. It depends on what the issue is. But yeah, attorneys from other states can handle certain issues.

Donna Mitchell

00:28:18 - 00:28:37

So before we talk about how people can reach you and your law practice and what you're doing, I'm curious to know, is there anything on your wish list or anything that you wish would happen, anything there that you'd like to share with us or any projects or something you'd like to share that's going on that you'd like to give some insight on.

Matthew Fornaro

00:28:38 - 00:29:34Exclude

One of the things, you know, one of the things is I'm heavily into using AI in my practice, which is kind of a little web three issue, but it's not super web three, but it's kind of web three. So, you know, my message is that AI is revolutionary. I don't have to say that AI can help you cut down your workload, can help you increase your productivity, can do what others. The only thing with AI is that AI is dangerous because you can't let it overtake the quality control and the human review factor. So from my practice, I use AI, but I always supervise the AI that I use. I always check the AI that I use. I always look at everything that comes out to me on it and revise it myself and do it up. I don't totally rely on the AI to do everything and just say, oh, that's great, send it out or whatever.

Matthew Fornaro

00:29:34 - 00:29:58

So my advice, or my wish would be when people start using AI or other technologies, is to understand that it's a tool. It's not the method itself. It's a tool that's part of your toolbox to be able to do things. It's not going to take over everything. You do it by itself. You have to use it in conjunction with your own talent, skills and abilities in order to make what you want to happen happen.

Donna Mitchell

00:30:00 - 00:30:37

So at the end of the day, sounds like you have a thumbs up on the AI as long as you manage it, monitor it, adjust, and pay attention to what the output is versus just taking it and running with it as it is. That's awesome, because some people really feel like, no, they're a little bit nervous about the AI and what's going to happen. But the majority of people I'm really seeing move forward, adjust what's taking place, use it in the toolbox, and really have fun with it. And it really just enhances who you already are, what you're thinking, or what you're doing in your skillset. So how can people reach you?

Matthew Fornaro

00:30:38 - 00:31:16

Sure. So I'm on all social media and everything, but the easiest way to find me is to go to my website, which is cornelagal.com, which is fornaroleg@aol.com, and that way you can find all my stuff on my website. I have lots of podcasts, videos, white papers, all kinds of things that explain all different laws and concepts and theories like that. And then you have links to all my social media, like my YouTube page, my Instagram, my Twitter, all that stuff. The best way, reach me on my website, and that's my phone number. So all that good stuff.

Donna Mitchell

00:31:17 - 00:31:36

Okay, Matthew, so check this out. You got a lot going on. What else you want to share while we on the podcast here? What else you got going on that we want to know about that I didn't think to ask you about? You got a book, you got a lot of white papers. You got a lot going on there. Tell me some more. You know, anything else? I feel like I'm leaving something out. Am I leaving anything out?

Matthew Fornaro

00:31:36 - 00:31:42

No, I'm just excited about AI until, you know, responsible AI use, I'm very excited about.

Donna Mitchell

00:31:43 - 00:32:04

Okay. I'm really glad to have you, Matthew Frenero. We're going to be good friends. I really like the way you rock and roll and you being an attorney down in Florida and everyone, thank you for listening to pivoting the web three podcast, and we're shaping tomorrow together. Thank you. Thank you. Thank you. Have a nice day, and we look forward to serving you again.

Donna Mitchell

00:32:07 - 00:32:16

Thanks for checking in the pivoting the web three podcast. Go to pivotingtweb threepodcast.com to download and listen, or web three game plan to check out the videos. Thank you.

PTW3 042 MAtthew Fornaro.mp4
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