Chain Reaction

• Author: Angela Morris
• Pages: 32-33

The cryptoc urrency and blockchain

technology industr y is already crowded

with fi rms eag er to nab high-tech startups

as clients or help legacy client s navigate a

brave new world.

But some BigLaw fi rms have gone furt her. Over the

past 2∏ years, severa l of the largest fi rms in the world

have joined legal working groups a imed at bringing crypto

and blockchain attor neys together to share informat ion,

learn from one another, and help craf t best practices.

“We can achieve more together by sh aring and by grap-

pling with these quest ions together as a group, hearing eac h

person out, than we ca n wrestling with thi ngs alone,” says

Joshua Ashley Klay man, formerly with Morrison & Foerster

in New York City, who in late June launched her own fi rm

and a blockchain consult ancy business, Infl ection Point

Blockchain Advisors.

Blockchain technolog y stores records on multiple “ nodes”

in a network of computers that commu nicate and capture

changes in sync . Blockchain data is more secure beca use

rather than tamper ing with one record on one computer, a

hacker would have to change th at record on every single

node—in the process burni ng computer power to solve a

math equation posed by the blockc hain’s algorithm—which

would be nearly impossible.

PART NER PE RKS

Klayman ch airs the Wall Street Blockchain A lliance

Legal Industr y Working Group, whic h formed in 2016 and

was one of the earliest on the sc ene. It’s like a community,

says Klayma n, who leads biweekly, in-person meetings of

lawyers from BigLaw fi r ms such as Debevoise & Plimpton,

McDermott Will & Emer y and Polsinelli. “Some have been

able to develop relationships that have led to t eaming on

deals, led to us w riting things together—whether art icles or

thought pieces—and led to bett er advice,” she says.

Discussions cover blockcha in tech in general and don’t

favor one blockchain over another. Referral s for paid legal

representation are common a mong the lawyers in the group,

and membership is open and free , Klayman says.

Also popping up in 2016 was the Digit al Currency &

Ledger Defense Coa lition, whose members include Am Law

fi rms like K&L G ates and Sidley Austin. It provides pro

bono representation to cr ypto and blockchain defendants

and fi les amicus brie fs in cases that could set precedent .

“We’ve raised issues that other wise wouldn’t be raised

with court s in some of the most important decisions in the

country,” says Brian Klein , the coalition’s founder and board

chairman a nd a partner at Baker Marquart i n Los Angeles.

For example, the coalition fi led an a micus brief in Flori da

v. Espinoza in January, which involves a defendant who sold

bitcoins in 2014 to undercover agents who indic ated they

planned to buy stolen credit- card numbers with the bitcoins .

But the 11th Judicial Circuit of Florida fou nd in 2016 that

bitcoins didn’t count as money under Florid a law and dis-

missed defendant Michell E spinoza’s charges of money

laundering and illega l money transmission. The state has

appealed in Florida’s 3rd Distric t Court of Appeal, and the

Digital Cur rency & Ledger Defense Coalition a rgues the

appellate court should a  r m the trial court’s ruling.

32 || ABA JOURNAL AUGUST 2018

Business of Law

||

SPECIAL EDITION

Technology

PHOTO COURTESY OF CARDOZO SCHOOL OF LAW; FOXAON1987/SHUTTERSTOCK.COM

is a costly endeavor and can e asily add up to hundreds

of thousands of dollars. Thus, in-house c ounsels should

demand that outside law fi rms have a dequate cyber liability

insurance to help cover bre ach notifi cation costs, as well

as qualifi ed legal a nd forensic vendors who specialize in

responding to breach i ncidents negotiated into the policy.

Furthermore, new A BA ethics opinions emphasize that

to be competent, law yers must understand technology and

maintain the se curity of clients’ electronic confi dentia l

information . These developments are forc ing in-house coun-

sels and their outside law fi rms t o be cognizant of the very

real and signifi ca nt risks they face in the 21st centu ry and to

acquire the tech nology su cient to keep abreast of their

clients’ cybersec urity needs. Q

Read more about how to avoid fal ling victim to soc ial

engineering c yberattacks at A BAJournal.com.

Karen Painter Randall is a partner and certi ed civil trial

attorney in the Roseland, New Jersey, of ce of Connell Foley,

where she’s chair of the  rm’s cybersecurity and data privacy

practice group. Steven Kroll is a partner at the  rm and works

with businesses regarding the ever-evolving issues related to

cybersecurity and data protection. He provides awareness

training for employees on issues related to cybersecurity.

Chain Reaction

BigLaw fi rms are working together

with the goal of infl uencing how

blockchain technolog y and smart

contracts will operate in the future

By Angela Morris

“The technology has

the potential to make

a dent and improve

people’s lives, and the

only way that’s going

to happen is if we have

these conversations.”

– Aaron Wright