More large law firms are accepting bitcoin payments for their legal services, signaling the digital currency’s firmer foothold in corporate America.
Representatives from firms such as Steptoe & Johnson LLP, Frost Brown Todd LLC, and McLaughlin & Stern LLP told Bloomberg BNA that they started the new payment option to meet the demand of clients that deal with cryptocurrency assets. Accepting bitcoin may also help the firms attract new clients, they said.
It is “not surprising that law firms that counsel companies that handle cryptocurrency or are looking for advice on cryptocurrency-related issues would be accepting cryptocurrency themselves,” Alan Cohn, co-chair of Steptoe’s Blockchain and Digital Currency practice, told Bloomberg BNA.
“Law firms are ultimately going to follow the demands of their clients,” Cohn said. Steptoe started accepting bitcoin about a year ago.
Giving clients more ways to pay also “seems like an indisputably good business decision,” Jordan Rose, founder and president of Arizona-based Rose Law Group, told Bloomberg BNA in an email.
Technology and startup companies and those in the payments and intellectual property fields have been using bitcoin to pay generally smaller firms for legal services for years. Larger firms more recently have stepped into this space, and a wider variety of law firms are expected to accept bitcoin as clients become more comfortable using the currency, attorneys contacted by Bloomberg BNA said.
The number of law firms accepting the currency “has continually increased each year,” Ashkaan Hassan, founder and lead attorney at Beverly Hills, Calif.-based boutique firm NuLegal, told Bloomberg BNA in an email.
NuLegal has been accepting bitcoin payments since 2012. Hassan said he is hopeful that bitcoin “will become the dominant payment form in the future.”
Frost Brown Todd, a law firm with more than 500 lawyers spread across eight states, announced its acceptance of bitcoin payments Aug. 28.
Clients who work with cryptocurrency generally “have more cryptocurrency-based assets than they do fiat currency,” and clients had asked about paying in bitcoin to avoid converting the currency to cash, said John Wagster, a Nashville, Tenn.-based member of FBT who specializes in blockchain and digital currency, and electronic payments.
Between one and two dozen FBT clients have expressed interest in making bitcoin payments since the firm’s announcement, Wagster said. “We expect that to increase dramatically.”
Other firms that accept bitcoin, like FBT, are only receiving the currency from a small number of clients. Only about 1 to 3 percent of Rose Law Group’s clients pay with bitcoin at any given time, Rose said.
Nat Wasserstein estimated that about 15 percent of clients at his firm, New York-based NS Wasserstein & Associates PLLC, pay in bitcoin.
It isn’t surprising how long it took for bitcoin to be accepted by larger firms, Wasserstein said. Small entities are the usual “early adopters of any sort of disruptive technology.” He added that his firm is also considering the acceptance of other cryptocurrencies—litecoin and ethereum—to further promote convenience.
Rise in Value
Bitcoin has surged in value since its 2009 creation by an individual using the alias “Satoshi Nakamoto.” The mounting attention on the currency has piqued regulators’ interest.
The Consumer Financial Protection Bureau, for example, is reviewing an increase in customer complaints against Coinbase Inc., the most popular online exchange for trading digital currencies. The CFPB has received at least 293 complaints about Coinbase this year, compared to about six complaints for all of 2016, according to data reviewed by Bloomberg.
The Securities and Exchange Commission for its part is taking a cautious approach. In March, the agency rejected an application for an exchange-traded fund that would trade shares based on bitcoin. The agency cited a lack of surveillance-sharing agreements with regulated markets that traded the commodity.
Not surprisingly, law firms also are stepping carefully with respect to the cryptocurrency.
Know Your Client
FBT is cautious about the clients from whom it accepts bitcoin, Wagster said. The firm undertakes a “deep due-diligence process” to ensure it knows the true identities of the clients and that they are meeting standards, he said. The firm also conducts other verification processes for offshore clients such those required by the U.S. Treasury’s Office of Foreign Assets Control.
“We aren’t just walking blindly,” Wagster said. “We are very careful about that.”
There is no reason for a firm not to accept bitcoin payments if the staff understands how the technology works, Rose said. Importantly, bitcoin should be cashed immediately so the firm isn’t invested in the cryptocurrency, he said.
The biggest risk is the chance of disruption in the liquidity of the digital currency, which firms can mitigate by converting the bitcoin to cash after a customer pays for a service, Wasserstein similarly said. The risk of accepting bitcoin is no different from that of accepting foreign currencies, he said.
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