Nebraska attorneys who have been wondering whether they can ethically accept Bitcoin from their clients received an answer this week from the state’s Lawyers Advisory Committee. In an opinion dated September 11, the eight-person ethics panel ruled that the state’s lawyers can accept Bitcoin and other cryptocurrencies without raising ethical concerns, if they take certain precautions.
According to the Nebraska Supreme Court website, the Lawyers Advisory Committee is charged with responding to attorney questions about ethical concerns related “anticipatory conduct on the part of the requesting attorney.” The Committee’s job is to interpret the Nebraska Rules of Professional Conduct and issue advisory opinions that provide ethical guidance to the state’s attorneys.
In this instance, the Committee considered three questions:
A. May an attorney receive digital currencies such as bitcoin as payment for legal services?
B. May an attorney receive digital currencies from third parties as payment for the benefit of a client's account?
C. May an attorney hold digital currencies in trust or escrow for clients?
The Committee answered each question affirmatively, but offered additional instructions to assist those lawyers in their efforts to comply with ethical standards.
On the first question, the panel concluded that lawyers can accept Bitcoin as payment. However, they must immediately convert the currency into U.S. dollars to ensure that they don’t end up “charging unreasonable fees” due to an unexpected increase in the cryptocurrency’s value.
For the second question, the Committee determined that lawyers can accept crypto payments from third parties. To prevent any interference in their client relationship, however, they must use “basic know-your-client ("KYC") procedures to identify any third-party payor prior to acceptance of payments made with digital currencies.”
Finally, the ethics board ruled that attorneys can hold a client’s digital currency in escrow or trust, but must ensure that those currencies are held “separate from the lawyer's property.” In addition, the attorney must ensure that those cryptocurrencies are properly safeguarded using multi-sig accounts or other “reasonable measures.” Lawyers must also maintain records of those account activities for a full five years after that client relationship ends.