Unless you’ve been living under a rock, you’ve no doubt heard a lot of buzz about Bitcoin and Blockchain in recent months. But more likely than not, if you’re like most people, you don’t fully understand what Bitcoin and Blockchain are.
If that’s the case, and you’re a lawyer, that needs to change. It’s important for you to understand these concepts because they’re not going away and will likely affect your law practice in a multitude of ways in the near future.
So let’s dive right into the concepts and then we’ll discuss whether you should accept cryptocurrencies as payments and how Bitcoin and Blockchain may otherwise impact your firm down the road.
What is Bitcoin and Blockchain?
First, what is Bitcoin? Simply put, as I shared in an earlier blog post, here’s a working definition of Bitcoin:
Bitcoin is a digital currency (also called crypto-currency) that is not backed by any country’s central bank or government. Bitcoins can be traded for goods or services with vendors who accept Bitcoins as payment.
And here’s an explanation of Blockchain:
A blockchain is a public ledger of all cryptocurrency transactions that have ever been executed. It is constantly growing as ‘completed’ blocks are added to it with a new set of recordings.
There’s been a lot of discussion in recent months about whether lawyers can – or should – accept Bitcoin as payment for legal services. Some suggest that because of its volatility, doing so would be unwise. Still others contend that accepting Bitcoin may trigger ethical issues.
Is it ethical to accept Bitcoin payments from legal clients?
All signs point to the fact that the latter concern may soon be moot, if a recent ethics opinion out of Nebraska is any indication. In Nebraska Ethics Advisory Opinion for Lawyers No. 17-03, the ethics committee concluded that attorneys “may receive and accept digital currencies such as bitcoin as payment for legal services.”
The committee acknowledged that Bitcoin cryptocurrency can be somewhat volatile, and thus explained that because lawyers are prohibited from charging unreasonable fees for legal services, lawyers should take the following actions to mitigate the risk of volatility and possible unconscionable overpayment for services:
1) Notify…the client that the attorney will not retain the digital currency
units but instead will convert them into U.S. dollars immediately upon receipt; (2) Convert…the digital currencies into U.S. dollars at objective market rates immediately upon receipt through the use of a payment processor; and (3) crediting the client’s account accordingly at the time of payment.
In other words, accepting Bitcoin as payment for legal services isn’t unethical, as long as you take steps to protect your clients and reign in its potential volatility.
How else might Bitcoin and Blockchain affect your practice?
Legal payments aside, how else might Bitcoin and Blockchain affect your law firm? For starters, it may make your law firm more marketable to potential clients. After all, since accepting debit and credit cards online makes you more appealing to your current and potential clients, so too will accepting other forms of payment, including cryptocurrencies.
Likewise, Bitcoin may soon affect your client’s cases, depending on your practice areas. For example, as explained in a recent Above the Law post, lawyers who handle securities law or financial litigation matters may find that their practices are increasingly impacted by Bitcoin. Or, if you’re a litigation attorney, as Bob Ambrogi explains, in the near future, Blockchain may serve a verification of service of process.
So, ready or not, Bitcoin and Blockchain are here, and their impact on your law practice may occur sooner than you might think. Learn as much about them as you can, so that when their impact is felt, you’ll be ready to make informed decisions about using cryptocurrencies in your law practice.