Two Big Law veterans who launched a boutique this month dedicated solely to blockchain technology said they’ve already signed on at least one recruit to the new venture.
Angela Angelovska-Wilson, a former Reed Smith partner, and Lewis Cohen, most recently a partner at Hogan Lovells, opened the doors on DLx Law earlier in May. They said Wednesday that they are bringing aboard securities expert Greg Strong, the director of the Investor Protection Unit at the Delaware Department of Justice, as the first of as many as six additions planned for the next month.
The pair say that their firm will be able to respond to developments in the rapidly changing blockchain world more nimbly than the large firms where they built their careers.
“I have nothing but the utmost respect for the biggest firms,” said Cohen, a longtime securities lawyer based in New York who spent over 20 years at Clifford Chance before moving to Hogan Lovells in 2014. But he said that the speed at which blockchain technology is affecting a wide range of industries creates opportunities for a firm that can move just as fast.
The legal industry itself is affected, and DLx Law is poised to start rolling out blockchain and smart contracts technology as clients seek them.
“We’ve had discussions with various clients about developing products, and from a decision-making point of view, we’re able to move very quickly to decide what works, what doesn’t, where we want to make investments and not make investments,” he said. “[We] don’t have to go through long, long processes in order to do that.”
Cohen met Washington, D.C.-based Angelovska-Wilson while she was working as general counsel and chief compliance officer at fintech company Digital Asset, as part of his goal of getting to know a number of key players in the nascent blockchain space. Before Angelovska-Wilson joined Digital Asset in 2014, she had briefly been a partner at Reed Smith after rising through the ranks at Latham & Watkins.
She noted that while many large firms had launched blockchain practices, bringing in lawyers who work in IP or financial markets, among other practices, DLx’s model was unique.
“I don’t know of any boutique or specialty firm like us that has both the experience or focus on blockchain,” she said.
The pair said that for their first addition to the team, they were targeting an enforcement expert in the securities field, especially with someone with experience at the state level.
“We think people don’t give enough weight to concerns under state law,” Cohen said, adding Strong’s position in Delaware gives him extensive relationships with others in the wider state enforcement community. (Strong will split his time between Delaware and New York.)
Cohen identified regulation as the chief legal issue facing the blockchain world, while cautioning that it’s not helpful to think of blockchain itself as an industry.
“People sometimes think of token sales as the blockchain thing, which takes up a lot of the airspace in the dialogue, but really blockchain is just simply a new and very powerful set of tools that lets us create new legal relationships in a wide variety of settings,” he said. “In that respect, while regulation is very, very important, it’s not that you can regulate blockchain—that answer almost doesn’t compute. ”
Instead, he explains, the solutions that blockchain tools provide can be subject to regulation. Examples include the sale of tokens, which may fall under the umbrella of securities that can be regulated, or payment systems that effectively become money transmission businesses that are subject to regulation.
Businesses in these areas—exchange operators, payment system providers—are expected to be the firm’s core clients, as are blockchain software technology companies like ConsenSys.
Cohen said he and Angelovska-Wilson are also fielding inquiries from more conventional large-scale companies that are looking to make investments in blockchain or simply to understand the technology better.
The pair also has relationships with multilateral development banks, which have an interest in helping different countries and organizations implement blockchain technologies, and government entities have their own potential uses for blockchain.
Farther down the line, both lawyers would like to resume past work they’ve done for large financial institutions.
“We also recognize that large financial institutions in particular often have panel processes that don’t necessarily accommodate new firms,” Cohen said. “We’re happy to work with those processes, but we recognize it takes a bit of time to go though and jump through those hoops.”
Cohen and Angelovska-Wilson say they’re striving to build DLx on a non-hierarchical fashion that reflects the unique dynamics of the blockchain world.
“I believe law firms should reflect the community that we are serving and in this case the community is highly decentralized,” Cohen said. “We don’t want to grow into a typical, hierarchical, big-firm junior type of thing.”
This includes moving away from the traditional model of law firm hierarchy, and not “placing partnership as the bright-line distinction between the haves and the have-nots in an organization,” Cohen said. At DLx Law, there are no partners and no associates, just lawyers.
“What we’re saying is that we’re all lawyers with different sorts of capabilities, experience levels and leadership attributes, and we’re going to look at it with a much flatter structure,” Cohen said. “What that may mean is that as people grow and develop, they may spin out new businesses alongside us, rather than necessarily having to recreate the large firm structure of other law firms.”