The Crypto Industry Can’t Hire Enough Lawyers

The cryptocurrency industry is stepping up its efforts to recruit more legal talent as it faces increased regulatory pressure while seeking acceptance and becoming part of mainstream finance.

Crypto exchanges and companies are poaching lawyers left and right, both from law firms and other crypto companies, bringing them in-house to help navigate an evolving regulatory landscape while helping to reduce outside legal costs, industry participants said. Law firms, which sometimes lose their partners to internal positions, are also developing their crypto practices to retain this valuable expertise.

The increased demand for avocados also marks a turning point for crypto, whose early proponents have often expressed skepticism about regulation. The industry has grown rapidly in hopes of attracting more mainstream investment opportunities and many are taking the position that they want clearer regulation.

Although the SEC has not announced any major actions against major crypto exchanges, the commission has threatened to sue companies offering crypto loans. The WSJ’s Dion Rabouin explains why this part of the crypto market has received such a strong reaction. Photo: Mark Lennihan/Associated Press

“In [the crypto] space, the consensus is you need to get someone in-house early,” said John Wolf Konstant, senior consultant at technology-focused legal staffing firm Whistler Partners. “Especially since investors are going to demand it, you need to have someone to help oversee the process and to make sure everything is in place from the start.”

Competition is also driving up salaries in the crypto space at a faster rate than in the broader domestic legal market, especially for high-level positions, Konstant said. Total annual packages, including tokens and equity, can reach seven figures at the top of the market, he added.

Marco Santori, legal director of Kraken, tweeted in February that the San Francisco-based crypto exchange was looking to hire 30 attorneys over the next three months. He added that he would like to hire 60, “but honestly I don’t know how to achieve that”.

“Kraken legal is fully on track with its hiring goals since my comments in February,” Santori said in an email last week. “We attract top lawyers from traditional financial firms and white shoe firms. The brain drain is real and we couldn’t be happier about it. »

Jorge Pesok, legal director of the HBAR Foundation.

Photo:
Jorge Pesock

Attorney Jorge Pesok recently joined the crypto-based nonprofit HBAR Foundation, which provides project grants, as Chief Legal Officer after about 10 months as General Counsel and Chief Compliance Officer at Crypto Exchange. Tacen Inc. Prior to Tacen, he was with the law firm Crowell & Moring LLP.

“The market is hot,” Mr. Pesok said, adding that he had received four job offers before choosing HBAR, mainly because of its commitment to sustainability, and that he was not even looking for a new position. . “Everyone is looking for talent,” he said, adding that for HBAR, even the simple grants it gives need help given the nuances of cryptocurrency and regulatory scrutiny. Of the industry.

Recruiter Whistler Partners said about 10% to 15% of all recent placements have been in the crypto or fintech sectors, with companies hiring for both in-house counsel and law firm roles. lawyers, according to Mr. Konstant, who was himself a lawyer before. move into the field of recruitment. He said the company was working on six to 10 in-house legal jobs in the blockchain or fintech space in the past year at any given time.

More Risk and Compliance

Mr. Konstant said there is strong competition for all legal talent in all sectors, where candidates for internal positions may receive several offers. But “for the crypto space it’s more pronounced,” he said, adding that there’s a huge demand for those with specialist crypto knowledge and previous experience working in investment firms. lawyers who specialize in crypto or have built in-house crypto-focused teams. .

As with most other jobs, companies operating in the crypto industry would prefer to hire someone with relevant first-hand experience, but most expect to train new lawyers on the job as they go. discover the specific projects of each company.

Gregory Lisa, who was most recently a partner at the Washington, DC, law firm Hogan Lovells, joined decentralized finance-focused firm Element Finance as its first chief legal officer in December. Mr Lisa, who previously worked as a regulator at the Financial Crimes Enforcement Network, said his new position at the 25-person startup, which is building an open-source protocol for fixed- and variable-return tokens, offers him the opportunity to focus on growing a business, versus a portfolio of clients as an outside consultant. His responsibilities now include engaging with regulators and law enforcement and handling internal legal issues.

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Cathy Yoon, chief legal officer of crypto technology company MPCH.

Photo:
Lucas Hoeffel

“You really get the chance to write the script and engage with the companies at an early stage,” Mr Lisa said, adding that he also stayed on as a special adviser to Hogan Lovells to help with the transition. .

Cathy Yoon joined crypto tech firm MPCH in late March as chief legal officer after less than a year as general counsel at crypto exchange INX Ltd. could more easily support and integrate additional blockchain assets, which is currently not possible. So far, his day-to-day work includes managing the internal affairs of the company, such as structuring legal entities and intellectual property matters, and facilitating meetings with potential investors and clients.

The increasingly competitive job market also demands more “very business-like” lawyers, Ms. Yoon said, as crypto companies want to bring in lawyers early on to brainstorm with technical teams on the issues their businesses face. products are supposed to solve. “There has been a shift from lawyers seen as ‘keeping us out of trouble’, to becoming important members of the management team,” she said.

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Daniel Forester, partner at Orrick Herrington & Sutcliffe and leader of its fintech practice.

Photo:
Orrick Herrington & Sutcliffe LLP

Law firms, some of which are already struggling with talent shortages, are also beefing up their crypto departments, sometimes looking to acquire an entire team from other firms.

Orrick Herrington & Sutcliffe LLP seeks to create “a comprehensive offering” of services for blockchain companies, ranging from assistance with entity creation to advice on regulatory matters, according to Daniel Forester, partner in the firm and head. of his fintech practice. The law firm, which has its roots in the traditional technology sector, currently has around 20 partners leading its crypto-related work and is seeking to attract current regulators and candidates or teams from other firms. lawyers or internal positions, he said.

Faced with increasing competition for legal talent, Mr. Forester said Orrick continues to focus on retaining employees, including those at the associate level. “There are more positions than people,” he said of the legal industry as a whole. “The key to long-term success is retention.

Write to Mengqi Sun at mengqi.sun@wsj.com

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