Blockchain technology is shaking up the legal industry.
At least that’s according to prominent blockchain industry attorneys, Angela Angelovska-Wilson and Lewis Cohen, who revealed exclusively to CoinDesk Friday that they have started their own law practice focused on the nascent industry.
Called DLx Law LLP, the firm opened its doors this month, with offices in New York and Washington, D.C. Its founders, Angelovska-Wilson, previously general counsel and chief compliance officer at enterprise blockchain startup Digital Asset, and Cohen, a seasoned securities lawyer, aim to run the firm differently than the typical law practice, in a way that aligns better with the culture of the blockchain space.
For example, they eschew the term “partner,” because in their view it fosters a sense of possession over clients or cases. Instead, lawyers will assume responsibilities based on their skills, not seniority, Cohen told CoinDesk.
More concretely, and like a few other law firms with cryptocurrency clients, DLx accepts payment in bitcoin or ether. And down the road, it would like to rethink the age-old practice of charging by the hour and experiment with smart contracts and other unorthodox ways of being paid for legal services.
For now, though, the founders say an exclusive focus on blockchain technologies will help the new firm assess risk with surgical precision. Prospective clients include startups, exchanges and token issuers.
“Inherently, it was very clear to us the challenges in providing clients the kind of services that they need within a very large law firm,” Cohen said. “A week in blockchain time is like a month anywhere else.”
One such dramatic shift occurred this spring when the public conversation suddenly turned to the question of whether two of the top three cryptocurrencies by market capitalization, ether (ETH) and XRP, are securities under U.S. law.
The speculation was fueled in part by remarks made by former Commodity Futures Trading Commission (CFTC) chairman Gary Gensler, now an academic, but also by reports that Silicon Valley venture capitalists were lobbying regulators behind closed doors to give ether a safe harbor.
Cohen, who was most recently a partner at Hogan Lovells, said concerns about ether being retroactively designated a security four years after issuance are “somewhat overblown.”
“I’m aware of some of the arguments that can be made. But there are a variety of good legal reasons why ETH should not be considered a security at this time, not least of which is the hard fork that occurred following the DAO debacle,” he explained, adding:
The ETH that everyone trades today was not the ETH that was originally crowdfunded. It’s a fork of that chain.”
Cohen’s decades of experience navigating global capital markets complements Angelovska-Wilson’s technology focus. (She represented several early investors in the fintech startup Circle and first transacted with bitcoin in 2012.)
The duo plans to hire up to five additional lawyers by summertime, as more than 40 prospective clients – including Colleen Sullivan, the CEO of trading and financial services firm CMT Digital and general counsel of ethereum-focused startup ConsenSys, Matt Corva – have already requested immediate help.
“I’ve found, especially over the past six months, that lawyers sometimes don’t get the backing [from firms] we need,” Corva told CoinDesk, suggesting this issue is compounded by the opaque regulatory environment and conflicting interests related to other clients outside the blockchain industry. “That’s why I’m very excited that Lewis is opening up this firm that’s solely focused on blockchain.”
At the same time, DLx Law will cooperate with larger law firms as part of its collaborative ethos.
“We have forged what I’ll call informal alliances with a number of practitioners in the space that our clients can be referred to, and we can work collaboratively together on any of the issues that are facing our clients,” said Angelovska-Wilson, adding:
We do feel that the provision of legal services in the blockchain era will be different, and we want to be the thought leaders who develop new ways of practicing law.”
For example, Cohen said he could imagine the firm having developers on staff someday.
“We wanted the firm’s philosophy to be more aligned with our clients in terms of decentralization,” Cohen said. “Something we certainly have in our roadmap is working with developers to develop products for our community.”
Focus on smart contracts
In the meantime, the duo is particularly intrigued by the nascent OpenLaw project, an ethereum-based platform that turns regular legal contracts into software that can automatically execute an agreement such as trading shares or transferring real estate ownership.
Whatever form they may take, DLx wants to play a role in bringing smart contracts to life.
“Legal services could be provided much more efficiently in a lot of ways,” Cohen said. “Blockchain-based solutions for clients will be an important part of our development.”
Of course, such unconventional contracts will face unique challenges when made across jurisdictions, especially since prospective clients from China have already reached out to DLx.
As a long-term aspiration, Angelovska-Wilson said she would also like to use smart contracts to experiment with flexible pricing for legal services, based on supply and demand and on the unique requirements of projects. Here again, there are complications, since some states in the U.S. forbid payment in advance for legal services at a set price, but Cohen said DLx is looking for solutions to such obstacles.
Yet Angelovska-Wilson framed the idea as consistent with the ethos of the blockchain community, saying:
The billable hour undermines the value lawyers could really bring to the table with respect to these projects. It also hinders the ability of lawyers to be a part of the business process and the development of new products, services, ideas, things like that.”