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?
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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.
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