Law firm clients are starting to demand blockchain expertise to guide them through a business, technology, and regulatory environment that is shifting in real time. Brian Burlant, with Major, Lindsey & Africa, explores the essential fields and practices that require blockchain expertise and gives tips on how to build your blockchain team.
Blockchain technology is a grand disruptor. It has the potential to fundamentally change the way business is transacted and sensitive information is shared. It provides the promise of greater security, faster speed, easier access and lower transaction costs in industries such as TMT, finance, insurance, healthcare, and logistics.
Eighty-three percent of surveyed executives in a Deloitte 2019 international survey believe there is a compelling business case for blockchain—and more than half say blockchain technology has become a critical priority for their organizations this year.
Facebook’s intention to launch its own cryptocurrency, Libra, only further emphasizes how leading corporations in virtually every corporate sector are investing significant sums into this technology. According to Reuters, venture capital investment in blockchain technology through the first quarter of 2019 alone totaled $850 million, on top of an overall corporate spend of $2.4 billion last year.
Law firm clients are already beginning to demand blockchain expertise to guide them through a business, technology, and regulatory environment that is shifting in real time. The most forward-looking law firms will develop and shape their practices to address this technology. That includes nurturing and recruiting talent with expertise in the blockchain industry and its underlying technology.
The recent hires by Latham of fintech notables Mitchell Rabinowitz and Jenny Cieplak and Linklaters’ hiring of prominent blockchain adviser and thought leader Joshua Ashley Klayman to lead its U.S. fintech practice are two very recent examples of this type of dynamic, strategic hiring.
These are the essential fields and practices that demand blockchain expertise:
Because blockchain technology first underpinned Bitcoin and is the foundation of cryptocurrencies, there is significant demand for talent from a securities regulatory background, whether from government or private practice.
As the SEC has taken the position that cryptocurrency offerings, or “ICOs,” may be viewed as offerings of securities under the Howey test, there is a demand for those attorneys steeped in securities offerings and capable of advising, as well as litigating, whether a cryptocurrency offering may comply with or otherwise be exempt from SEC regulation.
Financial institutions, sitting at the crossroads of banking and the trading and settlement in securities, derivatives, foreign exchange and various other commodities, have taken the lead in developing new products and trading systems based on blockchain technology. These clients need counsel with fintech, trading platform and broker-dealer regulatory expertise.
Privacy and Data Security
Whenever a company is sharing consumer or employee data on a blockchain-enabled network, critical issues of privacy must be considered—especially because information on a distributed ledger is by nature distributed and immutable.
Those dealing with healthcare as well as financial, payments and retail clients will need to bring a deep privacy expertise. Meanwhile, new means of data storage and sharing enabled by blockchain technology raise a host of new issues over data security and require a familiarity with the workings of this technology.
Firms and individuals representing emerging companies in the blockchain and cryptocurrency space, which often integrate cryptocurrency issues involving token offerings with the other corporate, fundraising, intellectual property, contracting and general corporate functions, must match corporate and finance expertise with expertise in underlying blockchain technology.
Finding Blockchain Talent
Firms should adapt a cross-functional approach to developing the right team of talent. Whether involving banking and payments, securities and commodities trading, healthcare services, insurance or supply chain, firms will need cross-functional teams to proactively guide their clients through development and adoption and through liability and disputes as well. Nobody has come out of law school as a certified blockchain specialist yet, so finding this talent takes a bit of detective work.
Because blockchain is still young, the lawyers practicing today were not trained in it either at the college or law school level. There’s no traditional route to acquire blockchain expertise, and no easy way for firms to identify top blockchain talent. So how do you find these lawyers and how should you structure your legal team to address these needs?
Firms may find it useful to seek candidates who have demonstrated a regulatory background, where they’ve actually begun to address some of the issues implicated by this technology. It is possible to find this background at the state and federal level, where agencies have recently started to address these developments.
Some of the best candidates with blockchain expertise may come from existing in-house positions at mature or emerging companies that have been at the forefront of blockchain adoption. This talent will have been the first to learn on the job and will have already thought about the issues confronting this technology and what it takes to launch a project and effectively manage risk.
Consider the length of a candidate’s involvement with this technology. It is all new, so someone bringing five or more years’ actual experience is considered a veteran.
Delve into where the candidate has served: what is their industry expertise? What is transferable to your client base? Consider the depth of their involvement and how advanced their work was in this space. On what specific issues did this candidate advise—was the focus broad or narrow? You will need to make sure you complement their specific expertise as you build a cross-functional team.
Also investigate whether the candidate has demonstrated thought leadership in the space. Consider those candidates who have been recognized by repeated panel invites or other participation in the most prominent conferences or invitation-only conferences, like Wharton Reg@Tech.
Blockchain is a nascent technology, but one that all indications show will be rapidly and broadly adapted. There is no single avenue to expertise. Building deep cross-functional teams by training up your current staff and aggressively recruiting select practitioners who have demonstrated actual expertise in this space will provide you the competitive advantage in attracting this business from new and existing clients.