Answering the question that was undoubtedly on the minds of every lawyer practicing in that state, the Lawyer’s Advisory Committee of the Nebraska Supreme Court issued Ethics Advisory Opinion for Lawyers No. 17-03 making clear that, yes, lawyers can accept payment from clients in the form of Bitcoin or other similar digital currencies.
I don’t exactly know what to make of this opinion. I’m not normally a list maker, but here’s a quick pros and cons lists to label my feelings.
- It offers a pretty good explanation of what Bitcoin is and how it works.
- If you are a Nebraska lawyer interested in the answer to the question it definitely gives you a definitive answer.
- It is well written.
- It demonstrates how adaptable ethics rules for lawyers are that they don’t have to be changed simply because new technology arises that didn’t exist when the rule was first created. (But see con #3.)
- Nebraska? Surely that wasn’t the state with a pressing need to be the first to issue an opinion on this topic.
- It incorrectly treats using property to pay an attorney fee differently than when the property involved isn’t Bitcoin.
- It entirely overlooks the most important aspect of lack of confidentiality in terms of impact on such a payment arrangement.
Since expanding on the “cons” is always a bit more fun as a writer, let me do that.
Who is the opinion for? Why would any lawyer today be willing to accept Bitcoin as a form of payment? Most answers to that question that I can come up with require the lawyer to be something of a believer in its use as a financial system. If the lawyer in question happens to practice in Nebraska, that seems a pretty solid bet. If that is true, then to some extent the opinion gives with one hand but takes away with the other by saying that a lawyer can accept payment in Bitcoin but then has to immediately convert the payment back into dollars. If a lawyer is willing to put his or her faith into the Bitcoin currency system (and obviously the client must already have faith in that system), then why require them to immediately convert that client’s payment to dollars?
The answer to that – according to the opinion — is that Bitcoin is classified as property under the law and not as a currency and has the potential for rapid fluctuation in value. But… shifting to the third con on the list… why should accepting this kind of property with fluctuating value as payment for services be treated so differently than other forms of property?
While we likely wouldn’t need a regulatory body to issue an ethics opinion on whether lawyers can accept payment in the form of gold or silver (of course they can), would we be comfortable with such an opinion declaring the lawyer has to immediately sell that property to turn it into cash? If gold and silver seem too unwieldy for the thought exercise, then how about shares of stock or stock options. (Let’s assume those would be otherwise done in compliance with restrictions such as Model Rule 1.8(a) and (i).) Stocks can certainly fluctuate significantly in value and always have the potential to do so very rapidly.
Would you agree with an opinion that says a lawyer would have to immediately trade shares of stock for dollars because of the risk of rapid increase in value or decrease in value? Why can’t two or more grown-ups negotiate an agreement for compensation in the form of property with a fluctuating value just because one or more of them is an attorney? Why wouldn’t the lawyer taking on the risk of decrease in value play a role in evaluating reasonableness of the fee?
And, finally, the opinion talks a bit about confidentiality issues involved in payment via Bitcoin from a third party rather than the client, but completely overlooks the fundamental risk to client confidentiality created by accepting payment in Bitcoin from a client. Such a transaction — necessarily because of the very architecture upon which Bitcoin is founded as the opinion does explain — is an open transaction for which confidentiality cannot be reasonably expected much less guaranteed.
Somehow the opinion doesn’t manage to advise lawyers to make sure the client understands that – unlike cash or checks or wire transfers or even credit card payments — the fact of the client’s payment of money to a particular lawyer and all of the implications that payment entails is available to anyone sophisticated enough to understand how to delve into the Bitcoin ledger system.
So, in the end, sure the opinion says that a lawyer can accept payment in Bitcoin, but under this framework why would anyone ever do so?