In a New York nanosecond

New technology can have unforeseen effects. The Law in particular can sometimes struggle to keep up, but for the IT savvy lawyer that can mean opportunity. For example, one bunch of lawyers realised that the way money moves round the world electronically could give their clients the edge. Nanoseconds are all it takes. As a result, a bunch of New York nanoseconds gave Judges in the Southern district court of the city a real headache.

Image by Gerd Altmann from Pixabay 

Different countries have different laws. That means lawyers will go out of their way to apply the law for their clients in the right country. It can make all the difference. Unlike some other countries US maritime law allows a person to freeze a person’s assets, even before a decision has been reached, when there is a maritime claim against them. For example, if a merchant hasn’t been paid for a shipload of cargo, or if a shipyard hasn’t been paid for ship repairs, then they can use this rule to freeze the defaulter’s money. Otherwise a win, when it comes, could be rather hollow, with the money long placed out of reach. The only trouble for the lawyers is that the money has to be in the US for the US law to apply.

Frozen money

That is where the technology comes in. Bankers don’t ship physical money from country to country, it’s all done electronically now… A consequence of the way the banking system was set up is that dollar transactions had to pass through the US banking centre in Manhattan as the money has to move from place to place. That’s an easy thing to require data to do in the age of the Internet. It only spends a fraction of a second in New York before it jumps on somewhere else. The law, of course, makes no distinction over shrinking timescales in which computers make things happen. A prepared lawyer can have the money frozen in that instant as just at that moment it is in the US.

That was great for people wanting to hold up money. It was a nightmare for the New York judges, though. Once the lawyers caught on about those nanoseconds the work started stacking up for the judges. All those fractions of a second added up to hours of the Judges’ time granting permission for the money to be seized. Every day the poor New York judges had to process hundreds and hundreds of requests, just in case some disputed money happened to pass through that day. To seize the money, it wasn’t enough just to put in a request and wait, ready to pounce when the money lands in Manhattan. Instead, just like a Spider re-spinning its web every morning, the trap had to be renewed daily. To do that the lawyers had to serve the bank daily with notice that if any money passed through that day it had to be stopped in its high speed tracks.

New technology constantly brings up new problems like this, when old laws or procedures are found to be wanting when technology changes the way things are done: changes things far beyond the imagination of those who drafted the laws. Just as technology never stands still, neither does the law…or the IT savvy lawyer.

Paul Curzon, Queen Mary University of London, Summer 2017, updated Spring 2021