The District of Columbia Bar Supports Lawyers Accepting Cryptocurrency for Legal Fees—Provided the Agreement Is Fair and the Attorney Can Protect the Currency
According to the District of Columbia Bar, attorneys who practice in Washington, D.C. may accept cryptocurrencies as payment for legal services so long as the fee arrangements are fair and reasonable and the lawyer is able to safeguard the virtual assets.
The Bar’s legal ethics committee stated that “lawyers cannot stop the tide of change, even if they wished to, and cryptocurrency is increasingly accepted as a form of payment by merchants and service providers, including lawyers.”
The committee acknowledged the volatile nature of virtual currencies and emphasized that the fairness of such fee agreements between client and lawyer must be evaluated at the time the agreement is made.
Notably, the IRS treats cryptocurrency as property rather than as currency for tax purposes. The opinion observes that paying fees in cryptocurrency “is more akin to payment in property than payment in fiat currency.”
There appears to be a growing number of law firms accepting cryptocurrencies as a form of payment, despite the known increased risk and volatility in the crypto market. Bars in Nebraska, North Carolina, and New York have issued advisory opinions endorsing acceptance of cryptocurrency as payment.
The DC Bar opinion explains that while ethical rules require lawyer fees to be reasonable, they do not preclude accepting “potentially volatile assets” as payment. The opinion cites corporate stock, real estate, and cryptocurrencies as examples of such payments.
Attorneys who accept a retainer in cryptocurrency must take into account Rule 1.8(a) of the ethics rules, which requires a reasonable agreement with terms set out in writing and that the arrangement be fair to the client.
The opinion clarifies that this rule does not apply to fees that have already been earned.
For volatile assets like cryptocurrencies, the focus is on the fairness of the agreement for the client. Fairness should be assessed at the time the agreement is executed, and an ethical violation does not occur if subsequent events beyond the lawyer’s control make the fee appear unreasonable.
Lawyers considering accepting cryptocurrency for future work should understand how the underlying technology operates in order to protect the client’s virtual property. They must know how to handle and safeguard assets against the many ways cryptocurrency can be stolen or lost.
Translated by Carolane de Palmas