The crypto industry cannot hire enough lawyers

The cryptocurrency industry is stepping up its efforts to recruit more legal talent as it faces increased regulatory pressure as it seeks to be accepted by and become part of mainstream finance.

Crypto exchanges and companies are crawling lawyers left and right, from both law firms and other crypto firms, bringing them in internally to help navigate a regulatory landscape while helping curb external legal costs, industry participants said. Law firms, which sometimes lose their partners to internal positions, are also building up their crypto practices to maintain the valuable expertise.

The increased demand for lawyers also marks a turning point for crypto, whose early supporters often expressed skepticism about regulation. The industry has expanded rapidly with the hope of attracting more ordinary investment opportunities, and many are embracing the view that they want clarity in legislation.

While the SEC has not announced major actions against major crypto exchanges, the commission has threatened to sue companies offering crypto lending. WSJ’s Dion Rabouin explains why this one part of the crypto market has provoked such strong reactions. Photo: Mark Lennihan / Associated Press

“IN [the crypto] space, the consensus is that you need to have someone in the house early, ”said John Wolf Konstant, a senior consultant at technology-focused legal recruitment firm Whistler Partners. “Especially since investors are going to demand it, you need to have someone there to help chaperone the process and to make sure everything is buttoned up from the start.”

Competition is also driving up wages in the crypto area at a faster pace than in the larger internal legal market, especially for senior positions, said Mr. Constant. Total annual packages, including tokens and equity, could run into seven figures at the top of the market, he added.

Marco Santori, Chief Legal Officer in Kraken, tweeted in February that the San Francisco-based crypto exchange sought to hire 30 attorneys over the next three months. He added that he would like to hire 60, “but honestly I do not know how to get it done.”

“Kraken Legal is fully on track with his employment goals since my comments in February,” said Mr. Santori last week in an email. “We attract the best lawyers from both traditional finance and white shoe companies. The brain drain is real and we could not be happier with it. “

Jorge Pesok, Legal Director of the HBAR Foundation.


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Jorge Pesok

Attorney Jorge Pesok recently joined the crypto-based nonprofit HBAR Foundation, which awards grants to projects by its chief legal officer after about 10 months as general counsel and chief compliance officer at the crypto exchange Tacen Inc. Prior to Tacen, he worked for the law firm Crowell & Moring LLP.

“The market is hot,” said Mr. Pesok, adding that he received four job offers before choosing HBAR, primarily because of its commitment to sustainability, and 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 provides require help, given the nuances of cryptocurrency and the regulatory control surrounding the industry.

Recruiter Whistler Partners said about 10% to 15% of all recent placements have been in the crypto or financial technology sector, where firms have hired both in-house advisers and law firm positions, according to Mr. Constant, who himself was a lawyer before moving to the recruitment area. He said the firm worked on six to 10 internal legal jobs in the blockchain or fintech area over the past year at any given time.

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Mr. Constantly said that there is a lot of competition for all legal talents across sectors where candidates for internal roles can receive more offers. But “for the crypto field, it’s more pronounced,” he said, adding that there is a huge demand for those with specialized knowledge in crypto and previous experience working for law firms that specialize in crypto or have built internal crypto-focused teams. .

As with most other jobs, companies operating in the crypto sector will prefer to hire someone with some relevant direct experience, but most expect to train new legal staff on the job as they learn about the specific projects that each company performs.

Gregory Lisa, most recently a partner at law firm Hogan Lovells in Washington, DC, joined decentralized, funded-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 builds open source protocol for fixed and variable return tokens, gives him the chance to focus on growth in one company, versus a portfolio of clients as an external consultant. His responsibilities now include engaging with regulators and law enforcement and managing internal legal issues.

Cathy Yoon, Legal Director of the Cryptotechnology Company MPCH.


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Lucas Hoeffel

“You really get a chance to write the script and get involved with companies at an early stage,” said Mr. Lisa and added that he has also become a special adviser to Hogan Lovells to help with the transition.

Cathy Yoon joined the crypto-technology company MPCH in late March as its legal chief after less than a year as attorney general of the crypto exchange INX Ltd. She said she did not intend to move jobs, but was interested in helping build blockchain infrastructure that could more easily support and integrate additional blockchain assets, which is not currently possible. So far, her day-to-day work includes managing internal corporate relationships, such as structuring legal entities and intellectual property rights, and facilitating meetings with potential investors and clients.

The increasingly competitive job market also requires more lawyers who are “highly commercial,” Ms. Yoon said, as crypto companies want to hire lawyers early to brainstorm with tech teams about what issues their products are meant to solve. “There has been a shift from lawyers being seen as ‘keeping us out of trouble’ to becoming key members of the management team,” she said.

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


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Orrick Herrington & Sutcliffe LLP

Law firms, some already struggling with a lack of talent, are also strengthening their crypto services, sometimes looking to acquire an entire team from other firms.

The Orrick Herrington & Sutcliffe LLP seeks to build “a complete range” of services for blockchain companies, from helping entity formation to advising on regulatory issues, according to Daniel Forester, a partner in the firm and head of its fintech practices. The law firm, with roots in the traditional technology sector, currently has about 20 partners leading its crypto-related work and seeking to lure current regulators and graduates or teams from other law firms or internal positions, he said.

Faced with increasing competition for legal talent, Mr. Forester that 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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