Lawyers may accept digital currencies in payment for legal services, according to a new ethics opinion.
The Nebraska ethics opinion is the first by a state ethics body, according to the ABA Journal. The Lawyers Advisory Committee issued the opinion in response to a growing use of the technology in the area, where bitcoin ATMs are already in use.
There are conditions, however, such as the requirement that lawyers immediately convert digital currencies into cash. It highlights an issue and suggests the need for at least a second opinion.
The ethics opinion says lawyers may receive digital payments, provided they:
These steps address issues that may arise with the volatile nature of digital currency. For example, the price of bitcoin spiked from $7 to $1,200 in 2013.
Immediate conversion reduces the possible unconscionable over-payment of legal fees, the ethics opinion says. Moreover, the Securities and Exchange Commission has signaled that securities laws may apply to digital coins.
The Nebraska committee says lawyers may hold digital currencies in trust for clients after advising them that it won't be converted to dollars. The currency must be held separately from the lawyer's property and be safeguarded because, among other reasons, banks do not insure against hacked bitcoin.
Bitcoin cannot be deposited into a client trust account, however. It must first be converted into cash, the ethics opinion says. If it is paid as a retainer, it must be converted into dollars.
Attorneys who accept virtual currency, the opinion says, "must be careful to see that this property they accept as payment is not contraband, does not reveal client secrets, and is not used in a money-laundering or tax avoidance scheme; because convertible virtual currencies can be associated with such mischief."
Regulators and prosecutors have taken legal action against bitcoin operators for a variety of alleged wrongs, including trading for illicit drugs on the dark web.