Law firms hasten formation of specialized NFT groups
Law firms are establishing nonfungible token (NFT) groups or beefing up existing blockchain teams to address client needs on the rapidly growing technology.
Among law firm clients are musicians and visual artists who are now using tokens to protect their rights and enterprises such as the National Basketball Association who sell NFTs at online marketplaces.
Clients into NFTs could face legal issues from taxes and private equity to securities laws and intellectual property.
While blockchain services have been big for several years, expertise in NFT is becoming more in demand with clients exploring the intellectual property and securities questions related to the technology.
Andy Lee of Foley & Lardner cautioned against limiting a firm’s blockchain practice to NFTs as the latter is an area evolving on its own.
Lee, the former general counsel of the New York Jets, is part of Foley’s NFT task force.
Foley has worked on NFTs with NBA teams Milwaukee Bucks and Utah Jazz as well as musicians.
One issue that remains unsettled is whether NFTs qualify as securities and be covered by the sector's rules and regulations.
Classifying NFTs as securities would involve additional federal oversight and heightened reporting requirements for the largely unregulated industry.
Lawyers working on NFT-related contracts should also be mindful of future technologies that can shake up intellectual property the way NFTs have.
According to Devika Kornbacher, Vinson & Elkins’ head of technology transactions and cybersecurity and data privacy practice chair, IP rights exist in copyright, patent, trademark, and trade secrets, but they embody things that we won’t even know will exist.