North Carolina Attorneys Can Accept Cryptocurrency as Fiat Fee

The state of North Carolina, in a historic ethics opinion, said that attorneys could accept cryptocurrency as a flat fee for representing their clients. It has become the second state in the US after Nebraska to issue such an opinion on the use of digital currencies.

A new direction for attorneys

According to the ethics opinion by the North Carolina bar, attorneys can accept cryptocurrencies for representation. However, they should ensure that it is reasonable. Attorneys also need to ensure that they maintain ethics rules for entering into a transaction with the client. Earlier, Nebraska issued an advisory opinion on accepting digital currency payments. In July this year, the New York City Bar Association also issued an opinion about accepting digital currency payments.

Cryptocurrencies like Bitcoin and Ethereum could witness more adoption in the state with the bar’s opinion on their acceptance. These coins are alternative assets designed on top of a distributed ledger system. They can be bought on cryptocurrency exchanges and be traded for each other as well. It is important to note that the regulatory stance on digital currencies is still unclear. The assets are highly volatile and come with huge risks. However, law firms are now increasingly open to the idea of digital currency payments.

The caveat of digital payments

The bar said in its opinion that cryptocurrency could be accepted as payment but not as a form of currency. It will be classified as a property, which will be subject to rule 1.8 (a) of state ethics. This means that the rate of transfer should be reasonable and fair for the client. The attorney will advise the client in writing to seek advice from an independent third-party attorney. The client will also need to provide informed, explicit, and written consent to the transaction and its terms.

The bar acknowledged that the value of digital currencies fluctuates more rapidly than the average property. Therefore, the client and attorney must form an agreement on the value of the digital currency they will use for the transaction. The opinion further notes that lawyers can accept digital currency payments from a third party as a flat fee on behalf of the client. However, this should not interfere with their relationship with the client.

Attorneys cannot use cryptocurrency for retainer payments. They can also not accept crypto in trust for another party because it does not satisfy ethics rule 1.15(a) that demands a suitable place for safekeeping of the property.