Washington DC lawyers may accept payments in crypto
The District of Columbia Bar is in favour of lawyers accepting crypto as payment for legal services — as long as the agreement is fair and that the lawyer can safeguard the currency
According to the District of Columbia Bar, lawyers based in Washington DC can choose to accept cryptocurrency as payment for legal services; provided the fee agreement is fair, reasonable and that the lawyer is capable of safeguarding the virtual property.
The bar’s legal ethics committee stated that “attorneys cannot hold back the tides of change even if they would like to, and cryptocurrency is increasingly accepted as a payment method be vendors and service providers, including lawyers.”
The committee also acknowledges the volatile nature of virtual currencies and adds that the fairness of such fee arrangements between the client and the lawyer should be judged at the time that they are made.
It is noted that the IRS treats cryptocurrency as property rather than a form of currency for tax purposes. It agreed that the payment of fees in cryptocurrency “is more akin to payment in property than payment in fiat currency.”
It appears that there has been an increase in law firms accepting cryptocurrency as a form of payment, despite crypto markets being known for increased risk and volatility. Nebraska, North Carolina and New York City bars have given advisory opinions in favour of accepting digital currencies as payment.
The DC bar opinion explained that while the rules of ethics require lawyers’ fees to be reasonable, they do not preclude accepting “potentially volatile assets” as payment. The opinion points to shares of corporate stock, property and cryptocurrency as examples of such payments.
Lawyers who agree to an advanced retainer in cryptocurrency must be mindful of ethics rule 1.8(a), which stipulates that there must be a reasonable agreement with terms that have been laid out in writing and that it is fair to the client.
The opinion states that this rule does not apply to payment for fees that are already earned.
When volatile assets such as cryptocurrency are involved, there is an additional emphasis on the fairness of the agreement to the client. The agreement’s fairness should be judged at the time of signing and no ethical breach occurs if future events that happened beyond a lawyer’s control cause the fee to appear unreasonable.
Lawyers who are planning to accept payment in cryptocurrency for future work must understand how the technology works to protect the client’s virtual property. They must know how to work with, and safeguard against, the numerous ways in which cryptocurrency can be stolen or lost.