Grungo Colarulo's office in the metaverse. Co-founder Richard Grungo Jr.'s daughter constructed his office. Courtesy photo

Arent Fox made a big splash earlier this week by buying a large plot in the metaverse and announcing it will be offering services in the virtual world. But while it may have been the first Big Law firm to enter the matrix in its current form, others had gone before. In 2006, Hogan Lovells precursor Lovells descended into the ether by opening up shop in Second Life, a forerunner to today's metaverse. And late last year, a boutique personal injury firm built an office in the metaverse designed by the 11-year-old daughter of one of the partners. So, how are law firms taking advantage of the increasing popularity of virtual worlds, and what are the real-world business opportunities for lawyers to service clients that want to operate in the metaverse themselves? |

Going Where the Clients Go—Into the Ether

Fifteen years ago, Chris Hinze was head of corporate communications at London firm Lovells, which combined with Washington, D.C.'s Hogan & Hartson in 2010 to form Hogan Lovells. At the time, Second Life was the go-to destination for individuals and businesses alike to socialize in virtual reality.

Chris Hinze of Steptoe & Johnson. Courtesy photo

For Lovells, Hinze created a virtual exhibition of pro bono clients and work to mark the 10th anniversary of the firm's dedicated pro bono practice. Visitors could walk their avatars through virtual parkland, stopping at stations that highlighted various pro bono projects through featured images and write-ups. "You could walk around it as if you were touring a gallery or museum," said Hinze. It was the very early days of what has since become known as the metaverse, the collective name for the combined network of 3-D virtual worlds in which people work, play and socialize. Often described as the joining of the physical and the digital, well-known examples of these spaces include the Fortnite and Roblox games, as well as Second Life. Increasingly big businesses, including retail brands and even business services firms, are setting up shop in the most popular of virtual worlds, Sandbox and Decentraland, where Arent Fox is opening shop. But back in 2006, Hinze said firms such as Lovells created Second Life presences as a way of demonstrating that they "got it" in relation to virtual worlds. "You see the same sort of logic today with law firms issuing NFTs [nonfungible tokens]. Fifteen years ago, some firms set up their own virtual office in Second Life," he said, adding that in hindsight, he's not convinced that virtual offices were ever going to be the "make-or-break factor" in determining whether a firm would be hired. Of the experience, Hinze said it generated some good headlines for the firm, and was "fun to do." One Lovells intellectual property partner, who had clients with a presence in that space, found it helpful to "hang out" with them there, Hinze noted. While he says it was a "good project," Hinze thinks clients are less interested in whether a firm is "there or not," and more interested in whether their lawyers truly understand the issues and have the experience. "Think of it as a mechanism for demonstrating familiarity, rather than a 'must-have,'" he said. Even at the time, Lovells was less a first-mover than an early mover, Hinze recalls. In the U.K. at the time, Fieldfisher claimed to be the first British firm to go virtual. In the U.S., there was even a Second Life Bar Association, founded by then-Kirkland & Ellis attorney Benjamin Duranske. The bar association seems to have been dormant since 2018, and Duranske is now in charge of financial services compliance strategy at Apple. "Second Life was the first virtual world to go mainstream, and therefore a law firm presence there could make sense," Hinze said. "We now have a huge array of different virtual worlds for clients to consider being a part of, so having a deep understanding of the legal issues they are likely to face across that digital ecology is now much more important than having a presence in just one of those virtual worlds." |

Claiming First-Mover Advantage

Today, Arent Fox is the first-mover in the metaverse—at least in Big Law. The firm's new metaverse offices, which are currently being built, will be a place for lawyers and clients to meet for business or social occasions, and also a place to share information. Visitors can enter the office by walking down the street using their browser or virtual reality equipment and entering the offices through the front door. The firm is placing its virtual office in Decentraland's Fashion/Retail district "to be close to clients," said firm chair Anthony Lupo. When choosing a location for its new property, Arent Fox crypto chair James Williams said the firm was looking to the future. "You're trying to get in early," Williams said. "The idea, at a minimum, is to show clients that you're smart and familiar with the metaverse. We want to show our clients: We know this world; look, we bought in this world, and we can help them navigate this world." Another early mover is Richard Grungo Jr., one of the founding partners of New Jersey firm Grungo Colarulo, who opened an office in Decentraland in December. For him, there are two main reasons to be there. "It's about community and relationships. The metaverse is another community, so it's another opportunity to develop relationships in another world," Grungo said. Second, he said, is the metaverse's potential as a communication channel. "What we do as a law firm is we help people, so this is another opportunity to convey information and connect," said Grungo. "Somebody can come up right to our office and click on a YouTube link to watch a video about, for instance, discrimination in the workplace. Or they can reach out to set up an appointment. And that's just the beginning." For Grungo, the move into the metaverse has already been fruitful. "Everybody wants to talk about it. Everybody is curious about it. So, just from a relationship development perspective, it has been 100% worth it," said Grungo, adding that for lawyers and business professionals, "If the metaverse is not part of your strategic plan in 2022, you've got a blind spot." |

Exploring the New Frontier

Like Lupo and Williams at Arent Fox, Grungo has eyes on the future. Young gamers on Fortnite and other online worlds are growing into young adults and professionals, said Grungo, and they are more than happy to adopt something new such as the metaverse or cryptocurrency.

Richard Grungo Jr., a founding partner of Grungo Colarulo. Courtesy photo

"It's like being a pioneer on the frontier and having an opportunity to explore," Grungo said. "The sooner you get boots on the ground, the sooner you can understand what's going on there." Hinze said the Second Life platform was relatively easy to use. Ahead of Lovells' entrance, he actually rented some land and built his own house to see what the environment was like to operate in. "It did suffer from lag, though, which made avatars appear very jerky," said Hinze, adding that inevitably for lawyers to communicate with clients, it was easier to just pick up the telephone and talk. "The huge difference between now and then is the enormous amount of bandwidth available, which creates a much smoother and reliable environment." Grungo said setting up shop in the metaverse was a "cumbersome process" because of the lack of uniformity between worlds and the use of cryptocurrencies. But once his firm was there, building the office was child's play—literally. While there is a growing number of virtual construction vendors and architects, Grungo's architect and builder was his 11-year-old daughter. "All I had to do was turn to my daughter, who's been on [online game platform] Roblox," said Grungo. "When she came home from school one day I asked her to build us an office, and she went at it." |

Meeting Current Client Demand

Hinze has since moved on from Hogan Lovells, joining Washington, D.C.-based Steptoe & Johnson last year, where he is chief marketing officer. His new firm, Hinze said, has handled a number of projects for clients operating across virtual worlds, "and has done so without the need for a virtual presence." "The number of different platforms may multiply, but the issues tend to remain the same: intellectual property rights and ownership of other assets; data protection; retail advice if there are sales; financial services and cryptocurrency advice if someone wants to create a virtual currency or simply handle real-world currency transactions in the virtual world; dispute management," he said. "Nearly everything that applies in the real world applies in the virtual one." Other lawyers have a firm foothold in the metaverse too. To highlight its already deep expertise in the metaverse, last May, Reed Smith produced a 76-page guide, covering everything clients need to know about entering and managing a virtual presence. The guide covered legal issues such as intellectual property, data protection and privacy, ownership, antitrust and contract licensing. It dealt with concepts such as NFTs, cryptocurrencies, deep fakes and the blockchain, and provided business analysis for industries such as advertising, gaming and music.

Gregor Pryor of Reed Smith. Courtesy photo

London-based Reed Smith partner Gregor Pryor said he has "no doubt" that from a business perspective, the metaverse is now a "critically important" consideration. People exist there and there is money to be had, Pryor wrote in his introduction to Reed Smith's guide. "Deciphering the law pertaining to these new online environments and being able to guide, advise, and support companies and individuals who operate in them will require both a strong handle on centuries of legal precedent and a mind that is open to adapting and learning new legal skill sets," Pryor wrote. Pryor said Reed Smith's Metaverse White Paper has been the most downloaded and viewed marketing document in the firm's history. "We have been inundated with metaverse, gaming and NFT work over the past two years," said Pryor, adding that examples of the type of work the firm is doing include buying land in the metaverse, working for NFT clubs and leaders in token art, advising rights holders on their presence in the metaverse, and working with brands to protect their interests and IP in virtual environments. "We have a dedicated global crypto 'SWAT team' of 25 lawyers that can act on blockchain projects with advice that includes compliance, regulatory and financial regulation, media and content, trading of crypto, exchanges and new drops," said Pryor. "This is one of the fastest-growing areas of business within Reed Smith."