Attorneys within the nation’s capital can settle for cryptocurrency as fee for authorized providers so long as the charge settlement is truthful and affordable and the lawyer can safeguard the digital property, the District of Columbia Bar mentioned in an ethics opinion.
Attorneys “can not maintain again the tides of change even when they wish to, and cryptocurrency is more and more accepted as a fee technique by distributors and repair suppliers, together with attorneys,” the June opinion from the bar’s authorized ethics committee mentioned.
However, acknowledging the generally unstable nature of digital currencies, the committee added that the equity to the consumer of such charge preparations needs to be judged on the time they’re made, not after they turn into improvident.
Cryptocurrency is a digital foreign money the place transactions are recorded on a public digital ledger referred to as a blockchain and commerce on exchanges that function like inventory exchanges. Widespread types of cryptocurrency embrace Bitcoin and Ethereum.
The opinion famous that the IRS treats cryptocurrency as property reasonably than foreign money for tax functions, and it agreed that “fee of charges in cryptocurrency is extra akin to fee in property than fee in fiat foreign money.”
Regulation corporations, together with Large Regulation gamers, seem like accepting cryptocurrency as fee for providers more and more,regardless of the danger and volatility related to cryptocurrency markets. The North Carolina, Nebraska, and New York Metropolis bars have issued advisory opinions in favor of accepting digital foreign money as fee.
Ethics guidelines require attorneys’ charges to be affordable, the D.C. Bar opinion mentioned, however they don’t preclude accepting “doubtlessly unstable belongings” as fee. Examples of such fee embrace shares of company inventory, property, and cryptocurrency, in keeping with the opinion.
Attorneys who settle for an advance retainer in cryptocurrency are topic to ethics rule 1.8(a), which requires an inexpensive settlement with phrases which were defined in writing and that’s truthful to the consumer, it mentioned.
Relating to agreements for these funds, the opinion mentioned, phrases could embrace:
- a transparent clarification of how the consumer shall be billed;
- whether or not market will increase and reduces within the worth of the cryptocurrency triggers obligations by both celebration; and
- whether or not the lawyer or the consumer shall be liable for cryptocurrency switch charges.
The consumer additionally has to have an opportunity to talk to outdoors counsel on the deal, it mentioned, and attorneys must have written, knowledgeable consent to the settlement from purchasers.
The rule doesn’t apply to fee for charges already earned, in keeping with the opinion.
Equity to the consumer is especially essential for unstable belongings like cryptocurrency for future work, the opinion mentioned. And an settlement’s equity needs to be judged on the time of signing, it mentioned. There’s no moral breach if future occasions out of a lawyer’s management trigger the charge to seem unreasonable, the opinion mentioned.
Attorneys who settle for fee in cryptocurrency for future work have to be competent within the know-how to guard the consumer’s digital property because the lawyer would defend all advance charges, which on this case “requires attorneys to grasp and safeguard in opposition to the various methods cryptocurrency will be stolen or misplaced,” the opinion mentioned.
“Cryptocurrency is, in the end, merely a comparatively new technique of transferring financial worth, and the Guidelines are versatile sufficient to supply for the safety of purchasers’ pursuits and property with out rejecting advances in applied sciences,” it concluded.
The opinion is District of Columbia Bar Authorized Ethics Comm., Op. 378, 6/20.