Driving from his Chicago home to Cornell Law School to teach a course in the burgeoning field of crypto and digital assets, Patrick Daugherty ’81 had to make an important detour into history.
It had been six decades since he had been at Thirty Mile Point Lighthouse in Niagara County where his father was stationed in the 1950s by the U.S. Coast Guard. The Lighthouse is on the National Register of Historic Places. Though he was a baby when he lived there, Daugherty felt connected to its history.
Days later, when he stepped into the classroom at Cornell to teach his class, Daugherty once again felt connected to history. He was teaching in the very same room where he had studied securities regulation forty years earlier. He was about to teach a class (Crypto Assets and Web3) in a subject that didn’t exist back then.
Daugherty’s appreciation for the past and his ability to bring historical perspective to futuristic trends in finance, securities, and investments is what sets him apart from others and makes him a sought after thought leader in the innovative field of digital assets. Early in his career, after basic training on Wall Street, he worked for the Securities and Exchange Commission (SEC) in Washington, D.C., and describes himself simply as a securities lawyer. Today he is a partner at Foley & Lardner, directing a corporate, mergers and acquisition, finance, financial regulatory, and fintech practice devoted to capital formation, innovation, and return of and on investment.
“Throughout my career I have tried to be on the cutting edge of financial and technological development,” says Daugherty. “Not only is this more interesting than doing the same thing repeatedly, it also can lengthen one’s career. An example in my career is asset securitization, which was novel in the ’80s but was routine twenty years later and might fairly be characterized as a commodity service today. Another is exchange-traded funds, which I helped to invent fifteen years ago, when only a few Wall Street traders were thinking about them, but which today are owned by virtually all investors.”
Sometimes described as a “wizened old graybeard,” his deep domain expertise has enabled clients to break through barriers and enter new markets. Jeffrey A. Carter, former director of the Chicago Board of Trade and current general partner of West Loop Ventures, describes Daugherty as “the best crypto currency securities lawyer around.” Carter worked with Daugherty when his firm launched “the first security token exchange to make it through the regulatory thicket” and get approval from the SEC to trade security tokens. “We could not have done it without Pat. A lot of lawyers have come into this space, but Pat has proven through his work that he knows what he’s doing.”
Beyond the regulatory and structural complexities, Daugherty also understands the psychological and emotional barriers to progress and innovation. “People who have done very well in the status quo tend to resist change,” he says. “Bankers and government employees whose careers and fortunes flourished before blockchain technology was invented are not eager to see that new technology thrive and possibly threaten their livelihood.”
He offers historical examples of laws and regulations that were passed that hindered technological advances: Thanks to intense lobbying from horse-drawn carriage operators and the public railway industry, the Red Flag Act in Britain limited automobile production for decades because it stipulated that any self-propelled road vehicle had to be preceded by a person walking at least sixty yards ahead, carrying a red flag.
“A modern example might be the way that taxicab companies united against Uber, Lyft, and other ride-share services as the disruptors sought to establish themselves in the U.S. economy,” says Daugherty. “The incumbents pulled out all the stops to block the disruptors, using their influence with municipal governments and waging public-relations campaigns, claiming all the while that they were concerned only about the public and not themselves. Never mind that the public was demanding more ride-share service, not less.”
Daugherty says digital assets are revolutionizing the finance world and he is determined to help the innovators—those with “intelligence, industry, and integrity.” He says he started reading about digital assets in 2017 and never stopped. Now, he lectures throughout the country on the subject, consults with businesses, mentors attorneys, and teaches law students. He sees his work as a natural extension of his mastery of securities regulation, which began at Cornell where he won the Peter Belfer Memorial Prize given annually to the law student demonstrating the greatest proficiency and insight into securities regulation.
“I felt that a Cornell Law School education was an opportunity to be seized for all that it was worth,” says Daugherty. “When I graduated from Cornell, the personal computer had only very recently been invented. There were no digital assets. No blockchain technology. So, nothing that I learned at Cornell was directly relevant to my digital-asset law practice today. Only by reading and thinking hard, decades into my law practice, was I able to develop this part of my practice. Habits of mind—like critical analysis and close
reading—that I learned in college (Northwestern) and developed at Cornell have enabled me to continue life-long education productively.”
Colleagues and clients speak of Daugherty’s vast wealth of knowledge, deeply held values, and ability to bring together diverse perspectives and meld them into successful strategies. Tim Flanigan, chief legal officer at International Capital Investment Company, has known Daugherty professionally for more than forty years. “With crypto, you’ve got traditionalists on one side and Young Turks on the other. Pat’s the guy who can stand between those groups and say ‘I understand the revolution and there’s lots of good to be done here, but I also understand the past and the traditional need to regulate financial markets. So, here’s what we can do to not kill the crypto baby, have regulators do what they need to do, and ensure there is some measure of appropriate
regulation. He’s brilliant.”
His students will also learn that beyond all the regulations and statutes and codes, there’s a human impact to the practice of law that must be honored, understood, and protected. He says the best M&A attorneys help their clients “monetize billions of dollars in sweat equity” by enabling hard work, passion, and persistence to deliver on a vision that can improve lives.
Daugherty’s ability to humanize the law, straddle two worlds, bridge generational divides, and find common ground in differing perspectives is what makes him both an effective lawyer and outstanding mentor.
Year after year for more than a decade, his peers have named him among The Best Lawyers in America in the fields of corporate governance law (2012–2023), corporate la (2010–2023), securities/capital markets Law (2007, 2012–2023), securities regulation (2011–2023), corporate governance and compliance law (2010–2011), and securities law (2010–2011).
But he treasures most the accolades from the young lawyers he has mentored. He’s been named “Mentor of the Year” at three different law firms. “I consider that law, like other learned professions, depends upon the transmission of wisdom and core values down through the generations. In this way, law is a type of priesthood or rabbinate,” says Daugherty. He has a reverence for both the law and for those who mentored him, naming retired SEC Commissioner Edward H. Fleischman in particular. “I try my best to train my juniors the way my seniors trained me. To work all day trying to solve client problems only to find the answers at midnight. To be not only good, but excellent. To be lawyers in the best sense.”
~ EILEEN KOREY
