Ethics Corner Article
Dear Ethics Committee:
I recently completed some work for a client and sent my client my final invoice. The client wants to pay that invoice using cryptocurrency. Is that permissible?
Answer: Yes, but accepting payment from the client in the form of cryptocurrencies is not the same as being paid in “real” currencies. As a result, the transaction is likely subject to N.H. R. Prof. Conduct 1.8(a) and you should ensure that: (1) the transaction and terms are fully disclosed and transmitted in writing in a manner that can be reasonably understood by the client; (2) the client is advised in writing of the desirability of seeking and is given an opportunity to seek the advice of independent legal counsel about the transaction; and (3) the client gives informed consent, in a writing signed by the client, to the essential terms of the transaction and the lawyer’s role in the transaction, including whether the lawyer is representing the client in the transaction.
Cryptocurrencies are not like traditional currencies and an attorney should not treat them as if they are. The IRS treats “virtual currency,” i.e. cryptocurrencies, as property. IRS Notice 2014-21. As a result, even though people may treat cryptocurrencies as if they were a real currency, an attorney may not. This complicates accepting cryptocurrencies in exchange for completed legal services.
Normally, an “ordinary fee arrangement,” where the client pays the attorney in traditional currency, is governed by N.H. R. Prof. Conduct 1.5. See 2004 ABA Model Rule cmt. 1to N.H. R. Prof. Conduct 1.8. But, “when the lawyer accepts… nonmonetary property as payment of all or part of a fee” N.H. R. Prof. Conduct 1.8 applies. Id.
N.H. R. Prof. Conduct 1.8 “does not apply to standard commercial transactions between the lawyer and the client for products or services that the client generally markets to others, for example, banking or brokerage services…” Id. A “standard commercial transaction” is a transaction “regularly entered into between the client and the general public, typically in which the terms and conditions are the same for all customers.” Restat 3d of the Law Governing Lawyers, §126, cmt. C. But, when the transaction involves the rendering of legal services, it does not qualify as a “standard commercial transaction.” Restat 3d of the Law Governing Lawyers, §126; Providing Legal Services in Exchange for a Client’s Goods and Services, New Hampshire Bar Association, Ethics Committee Advisory Opinion #2017-18/01.
Here, as the transaction seeks to have the client pay for completed legal services with cryptocurrency, it does not qualify as a “standard commercial transaction.” This means that you cannot accept the cryptocurrency as payment for your completed legal services unless:
- the transaction and terms are fair and reasonable to the client, are fully disclosed, and transmitted in writing in a manner that can be reasonably understood by the client;
- the client is advised in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent legal counsel on the transaction; and
- the client gives informed consent, in a writing signed by the client, to the essential terms of the transaction and your role in the transaction, including whether you are representing the client in the transaction.
See N.H. R. Prof. Conduct 1.8(a).
Due to cryptocurrency’s volatility, you should include a number of terms when drafting the writing required by N.H. R. Prof. Conduct 1.8(a). Among other things, the writing should identify the specific cryptocurrency that is being exchanged, how the cryptocurrency will be valued, the exchange(s) being used, the date and time of the valuation, how the cryptocurrency will be exchanged, and which party is responsible for any fees related to the transaction.
So while you can accept payment for completed legal services in the form of cryptocurrency, you should document and discuss the transaction with the client consistent with the requirements of N.H. R. Prof. Conduct 1.8(a). One way to avoid these additional requirements is to have the client convert the cryptocurrency to traditional currency and simply accept the traditional currency as payment. But, it may be that the client wishes to avoid converting the cryptocurrency into traditional currency for any number of a variety of reasons. In such a circumstance, a prudent lawyer should ensure compliance with the requirements of N.H. R. Prof. Conduct 1.8(a) when entering into such a transaction with a client.
This Ethics Corner Article was submitted for publication review to the NHBA Board of Governors at its June 22, 2023 Meeting. The Ethics Committee provides general guidance on the New Hampshire Rules of Professional Conduct and publishes brief commentaries in the Bar News and other NHBA media outlets. New Hampshire lawyers may contact the Committee for confidential and informal guidance on their own prospective conduct or to suggest topics for Ethics Corner commentaries by emailing the Ethics Committee Staff Liaison.
 At least one jurisdiction has found that such a transaction is “an ordinary one where the lawyer is simply agreeing as a convenience to accept a different method of payment, but the client is not limited to paying in cryptocurrency if it is not beneficial to do so.” NYCBA, Comm’n on Prof’l Ethics, Formal Op. 2019-5.