Proposed ethics opinion would let attorneys accept Bitcoin.

Byline: David Donovan

A new proposed ethics opinion would let attorneys accept Bitcoin and other cryptocurrencies as a flat-fee payment for legal servicesbut only under some tight restrictions that will likely ensure that few clients are reaching into their virtual wallets to pay their legal bills.

Proposed 2019 Formal Ethics Opinion 5, "Receipt of Virtual Currency in Law Practice," published by the North Carolina State Bar's ethics committee at its most recent meeting on July 18, would allow lawyers to accept payment in any of the hundreds of cryptocurrencies available for trade over the internet.

But because the IRS treats Bitcoin and its imitators as property rather than actual currency, any agreements to let clients pay their bill in cryptocurrency would be subject to the same ethical rules as agreements to enter into business relationships with them. That means that attorneys would need to ensure that the terms of the deal are fair and reasonable to the client, advise the client in writing of the desirability of seeking independent legal counsel on the transaction, and obtain the client's written and informed consent.

As the opinion notes, the ethics of accepting cryptocurrency as payment are unusually complicated for several reasons. For one thing, their values tend to fluctuate vertiginously, as anyone who has ever speculated on them can confirm. Consequently, the written agreement between the attorney and client would need to specify the value of the cryptocurrency (in boring old regular dollars) at the time of the deal, lest the lawyer receive an unearned windfall due to price movements.

Second, because Bitcoin is not legal tender, attorneys can't deposit it into their trust accounts. As a result, lawyers who charge an hourly rate will still be prohibited from accepting cryptocurrency as an advance payment and billing against it. Existing ethical rules require attorneys to place a client's non-currency property in a "suitable place of safekeeping," but the proposed opinion notes that the virtual wallets in which cryptocurrencies are kept have thus far not been sufficiently safe to meet this standard.

"Any virtual currency received from a client by a lawyerincluding lawyers who are experienced in handling and exchanging virtual currencyis subject to being...