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Does Your Firm Take Bitcoin?

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Better check your state's ethics rules.

Does your law practice accept fee payments by Bitcoin or other forms of cryptocurrency?

Has a client asked you to hold, manage or transfer cryptocurrency assets on their behalf?

If so, you’d better make sure you know what if anything your state Supreme Court, attorney general, and State Bar have to say on the matter.

In Ohio, for example, the Ohio Board of Professional Conduct on August 5 issued an ethics opinion that says a lawyer may hold cryptocurrency in escrow for a client provided certain conditions are met to protect against losses.

“A lawyer may accept and hold cryptocurrency in escrow when related to the representation of a client or for a third party through a law-related business,” says Ohio Board of Professional Conduct Opinion 2022-07. “A lawyer must maintain the requisite technological competence and employ appropriate safeguards against property loss when holding cryptocurrency in escrow.”

Underlying the ethics concerns is the volatility of cryptocurrency’s value. This means a client could grossly overpay or underpay for legal services depending on market fluctuations.

To address this problem, the Nebraska State Bar said lawyers may accept cryptocurrency provided they immediately convert any cryptocurrency they receive as payment for services to another form of currency.

What about your state or jurisdiction? What are the rules regarding cryptocurrency and your law practice?

Alta Pro Insurance Services keeps you informed on cutting-edge issues that affect your practice. Every week the Pro Practice Blog posts timely and topical dispatches from the risk management front lines. We spot looming risks – like the possibilities and potential perils of cryptocurrency – and give you advance warning. We identify promising trends – like Micro Self-Care, Cybersecurity Ethics, and the One-Page Business Plan – and give you the inside scoop. We bring you live CLE webinars on topics you request, most recently “Managing a Law Practice in Uncertain Times.” Please let us know how we can help your professional practice minimize risk and maximize reward. We’re here for you.

Cryptocurrency and the Law Firm

Cryptocurrency, which has been around for decades but has boomed of late, utilizes “cryptography,” essentially a series of computer codes. The complexity of these codes reduces or eliminates the risk of counterfeiting and provides security equivalent to online banking, according to industry proponents.

The most successful companies like Bitcoin have created complex trading networks that make it easy for consumers to find, purchase and exchange the currency. But even industry giant Bitcoin has seen wild fluctuations in value over its approximately 13-year existence. Not to mention ongoing questions about privacy and security.

Is There a Reputational Cost?

Can your law brand be tainted by accepting crypto currency payments? Online commenters note that the first law firms to accept Bitcoin payments were mostly criminal defense practices and firms that represented crypto companies. Some consumers and colleagues may hold a negative view.

If you are considering accepting cryptocurrency in your practice, research your state’s laws, rules and regulations. Also: conduct market due diligence. There are tens of thousands of cryptocurrencies. Many have been worthless from day one. Others have soared in value, only to quickly crash.

Read “Accepting Cryptocurrency for Legal Services” in Attorney at Work here.

Do you practice in Wisconsin, Texas, Minnesota, Ohio, Illinois, Indiana or Michigan? Is your professional liability coverage managed through Alta Pro? If so, you’re automatically a member of the Alta Pro Risk Purchasing Group (RPG), which offers a wealth of benefits for your practice: free, cutting-edge CLE webinars featuring top experts tackling timely topics; the Pro Practice Playbook; the Pro Practice Blog; Reminger’s ProLink risk management assistance; Reminger’s Claim Repair Hotline; discounts on CLIO practice management software; tax savings on health insurance; and access to the Risk Pro, who can help keep your firm safe and successful. Register here and start enjoying your Alta Pro RPG benefits.

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In an age of consolidation where increasingly impersonal transactions have made customer service an oxymoron, we bring together independent agents, insurance companies, and other industry specific service providers to develop and deliver insurance products and risk management solutions that benefit our insurance customers.

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