Legal expert recommends following Alberta Law Society’s lead on rules for bartering

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After receiving questions and feedback in response to its 2016 ban on bartering for legal services, the Alberta Law Society has changed its position. The business decision on whether to use bartering tools in transactions is now up to each individual member, so long as the barter agreement is “reasonable and fair.” A partner at a firm that has enjoyed the benefits of bartering for legal services encourages other law societies and legal organizations to follow Alberta’s lead on setting up flexible rules for bartering.

Legal expert recommends following Alberta Law Society’s lead on rules for bartering

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(February 20, 2018, 9:20 AM EST) — The Law Society of Alberta has released a guideline that sets out rules by which lawyers in the province can engage in bartering for legal services, and a lawyer whose firm recently announced it would accept cryptocurrency for payment says other law societies would be advised to take a similar step because of a major evolution in how people pay for things.

When the issue of bartering for legal services first arose in 2016, the law society took the approach that prohibited the provision of legal services through institutions like Tradebank, which offer online trade in services. This position was outlined in a communication from the law society in September 2016.

But the law society changed its position in January, saying the business decision on whether to use bartering tools rested with each individual member. It said any bartering arrangement must be “reasonable and fair,” and the value of the legal service and the value of the service received must be commensurate, with no credit remaining. Retainers are prohibited under barter arrangements, and a lawyer can only take possession of the goods or credits once work was completed.

Chioma Ufodike, manager of trust safety for the Law Society of Alberta, said the number of lawyers wishing to use the bartering system in the province was small, but the society felt it needed to be clear as to what rules and guidelines are involved in using the system.

“Lawyers should be aware that while they may want to accept payment for legal services rendered in a barter credit or arrangement, they cannot accept pre-payment of legal services or any other trust funds into a Tradebank or other barter arrangement,” she said.

Ufodike said the Law Society of Alberta has conducted additional research into bartering after receiving questions and feedback regarding the ban in the 2016, which led to the change in its position.

“As well, we reviewed best practices across various jurisdictions and countries, and sought the advice of counsel,” she said. “In order to facilitate access to justice and based on the work we’ve done over the past 12 months our position on this matter changed.”

Geoff Cher is a partner at Wildeboer Dellelce LLP, which recently announced it was accepting cryptocurrency as payment for some legal services. He said he didn’t initially consider cryptocurrency as a form of barter until a tax partner at his firm pointed out things like bitcoin were akin to the Hudson Bay Company and the fur trade.

“[Bartering is] a representation of today’s shared economy that draws on an age-old method of transaction,” he said. “There’s so much happening in terms of the evolution of the delivery of legal services as being platform-oriented where you need to have different ways to engage with the platform, and it’s not always going to be fee-for-service.”

Cher said he has seen limited examples of bartering for legal services in the past.

“We’ve had clients who have said do you mind donating an hour of your time and we’ll kick in some marketing collateral or they’ll give us a free consult on something they would normally charge a fee for,” he said. “You get that from time to time, but that’s stuff that’s really around the margins and wouldn’t be something that is negotiated up front as part of a retainer agreement.”

Susan Tonkin, communications adviser with the Law Society of Ontario, said the LSO did not have a specific rule or policy on bartering legal services.

“There is nothing in our lawyer or paralegal rules that expressly prohibits bartering legal services — only that fees must be fair and reasonable,” she said. “In fact, the term ‘fee’ is not defined, and does not appear to be restricted to a monetary fee.”

Tonkin said any bartering agreement should be detailed in writing and, regardless of the method of payment, the lawyer or paralegal would need to adhere to all of their professional obligations, including books and record-keeping requirements — as well as acting with integrity and competency.

Jason Kuzminski, director of communications and public affairs for the Law Society of British Columbia (LSBC), said bartering for legal services has not been an issue in the province, but guidance on payment for legal services is provided by the society’s Code of Professional Conduct.

Law societies and other legal organizations should be looking at setting up rules for barter as Alberta has done, said Cher. But he did note bartering could be perceived as lawyers being in business with their clients, so necessary safeguards need to be implemented.

“I haven’t dealt with Tradebank myself, but I think conceptually it makes a lot of sense,” he said. “Do I think a lot of people will do it? Maybe, maybe not. At the end of the day, cash is still king.”

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