As demand grows for legal services in cryptocurrency and nonfungible tokens (NFTs), law firms are bolstering their expertise across the U.S.
That includes Atlanta, where several law firms are seeing growing business opportunities tied to NFTs, which are digital certificates registered on a blockchain to show ownership of an asset. The economic growth of NFTs has law firms vying to become a market leader in the space, as it encompasses a host of practice areas, such as data security, intellectual property, public policy and a number of others.
The increase in NFT-related work in Atlanta is largely driven by client demand, attorneys say. Wab Kadaba, the chair of Kilpatrick Townsend’s intellectual property practice in Atlanta, added that clients are looking for a more “holistic representation” around issues related to NFTs.
“Our clients are particularly interested in what the ramifications of generating and investing in NFTs are,” Kadaba said, noting the business decisions are associated with the publication of NFTs through different forms of social media or the Metaverse.
Kadaba pointed to the Atlanta Braves winning the 2021 World Series as an event that led to significant growth in NFT-related work in the city. “There was a proliferation of NFT-related activity around that in terms of all the artistic renditions of various aspects of that World Series run,” he said.
Keith Barnett, a partner in Troutman Pepper’s Atlanta office, represents clients using cryptocurrencies or other currencies to purchase NFTs. Barnett said with the rise in prominence of NFTs and the Metaverse, he has seen a major increase in NFT-related work.
“It’s gone from practically nothing two years ago to about 30 to 40% of my practice today,” Barnett said.
Justin Daniels, a shareholder in Baker Donelson’s Atlanta office, works to create NFT exchanges through the creation and iteration of business models that address regulations. He said he could see a “full 100%” increase in NFT-related work over the next two years, depending on how the technology evolves. He said he anticipates more regulation in the space ahead.
“The question with NFTs will be, what will be some of the guardrails that come up that make for harder barriers to entry that might limit who is minting them? That will be more of a macroeconomic regulatory factor that impacts the growth of NFT’s,” Daniels said.
Lawyers in this space often have prior experience with cryptocurrency and blockchain—but they also need to teach themselves NFT intricacies, as the technology and regulation rapidly evolve.
Daniels, who has been counseling clients in the crypto-mining space since 2017, said he has spent hours learning the business, law and technology involved with NFTs, even taking a course at MIT online.
“The blockchains are just getting more complicated when you start to combine minting of NFTs with earning cryptocurrency and decentralized finance,” Daniels said. “It’s just grown in its complexity rapidly.”
Daniels said lawyers in this space, in order to be successful, will have to be able to “spot issues across multiple state and federal regulatory regimes” as several issues persist surrounding federal securities laws, the Commodity Futures Trading Commission and money transmitter laws.
“You could cut across a swath of different people to help bring an integrated perspective on how to navigate all these issues as you’re creating a business model for how you go to market with NFTs,” he said.
With the rapid growth in complexity, law firm consultant Kent Zimmermann said that one of the biggest challenges for law firms will be finding the right attorneys to meet this demand, especially due to the “limited pool of excellent lawyers, especially in an emerging area like this one.”
“Because it’s so new, there aren’t that many people out there that have a deep track record of excellence and great results,” he said. “Because there’s such a limited supply of that talent for firms that want to be known in this area, there’s going to be a lot of competition for those people. “
Zimmermann said many law firms are not prioritizing the growth of this area the way they are better-known areas, “but some firms have made a splash in this area.” If firms find and retain the right talent, they stand to gain more business as the NFT space grows.
“The opportunity to break through and be a market leader, if the firm chooses to, is a big opportunity,” Zimmermann said, noting “there’s not an established pecking order among law firms, at least not a pecking order that’s impossible to break through compared to some other areas that are much more well-established where the pecking order is clear.”