Will Bartering For Chickens Come Back In Vogue?

(UPDATE: 9/11 – Two years later and the economy is in a much different place.  Is bartering increasing even more?  There are potentially more goods and services available [sweat equity] then cash. Are you considering bartering in your law practice?)

UPDATE: 9/09) I recently had a phone call from a reporter asking about the viability of bartering for legal services in this economy.  She referenced my post from 10/31/08 discussing this very topic, long before the legal market imploded.  It was a viable option for me when I started out and it remains a viable option today for those just starting out.  Here is the original post with additional commentary on the bottom.

Will Bartering For Chickens Come Back in Vogue?

I’ve gotten to seriously thinking about this.  Will bartering for legal services come back or simply become more prevalent given economic times are going to get more and more challenging?

The first people didn’t buy goods from other people with money. They used barter. Barter is the exchange of personal possessions of value for other goods
that you want. This kind of exchange started at the beginning of humankind and is still used today. From 9,000-6,000 B.C., livestock was often used as a unit of exchange. Later, as agriculture developed, people used crops for barter. For example, I could ask another farmer to trade a pound of apples for a pound of bananas.

(The History of Money)

Unemployment is expected to increase dramatically. But the number we don’t hear about very often is the rate of ‘under’ employment…meaning six figure hedge fund managers asking if you’d ‘like a shake with those fries?” Credit is drying up.  People and small businesses still need legal services but may not have access to traditional currency as payment.  What they do have are possessions or services of value.

When we first opened our law office we bartered our legal services for other services (and declared the value for tax purposes!).  Got carpeting, painting, construction services because we didn’t have ready cash as a start up.  But now the tables have turned.  People will need legal services but won’t have the cash.

For instance, many bankruptcy lawyers are saying bankruptcy will be good…. for a while. But there will come a point when the clients who need bankruptcy the most won’t be able to afford the fees as their credit is ruined and they won’t have access to credit or ready cash and are unemployed or underemployed.  Home equity lines will have been closed by the lenders and borrowing against a 401k won’t be possible because of the diminished value.

If you really think about it will lawyers have to consider bartering service for services or goods, again? Doing an accountant’s divorce in exchange for a decade of accounting services? Or free daycare from a newly created day care center in exchange for a small business incorporation and periodic legal advice. It’s quite possible situations (or opportunities) like these could arise out of necessity.

I’m just writing about it because it wouldn’t hurt to investigate the IRS rules and Rules of Professional Conduct on bartering for legal services because there may be (many) moments in the future you will have to consider this as an option.

In follow-up commentary to this post one commenter offered up the following:

Barter exchanges enable their members to trade with each other and assist with marketing the products and services of members to all of the other members. You can typically expect an increase of 10% to 15% in new business referred by a barter exchange, which will all be from new clients that you normally would never have had.

A law firm would charge their standard billing rate, get paid in barter dollars and then use those barter dollars to offset cash expenses.

I have worked with over 15 law firms and other professional services companies over the years and there never seemed to be any issue with a law firm or sole practitioner participating in a barter exchange.

There are typically several local exchanges in every city and there are numerous online exchanges such as www.barterpro.vbarter.com. And, there’s software available to start a barter exchange.

Perhaps there should be an exchange for the legal community. Anyone looking to start a new business? Take a look at www.virtualbarter.net!

“There are barter groups where you pay a fee to belong and they assist in assessing the value of services, recording the tax implications, and even allowing a round robin:  I do your will, but don’t need plumbing services.  So I earn “credits” to use for landscaping services from a third member.  That seems to address the “valuation” issue, as well as the tax consequences, if the organization is trustworthy.  I think it’s a great way to network and start a new business, or supplement cash paying clients.”

If anyone knows of these barter groups as described by Margaret Keavney, please let us know in the comments section.


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6 comments on “Will Bartering For Chickens Come Back In Vogue?

  • Susan, the place I drive by on my way to work is called BarterPays. According to their webpage http://www.barterpays.com, you trade in FMV of the goods and services and pay taxes in cash at POS. They send you a 1099B so you can document deductible business expenses. They call it a marketing tool with no tax advantages. Interesting. I may try it.

  • Really funny that you posted this (actually not – just another one of those weird coincidences). Anyway, just yesterday, I was catching up with a solo colleague here in Maryland, the dad of one of my daughter’s friends. We were discussing plans for our girls for the summer and he shared that he’s sending his daughter to a terrific 2 week sleep away camp that he couldn’t otherwise afford, courtesy of his participation in http://www.bartersys.com, out of Kensington Maryland. What is neat about this service is that it allows for multi-directional trades, rather than just one on one exchanges (e.g., babysitting in exchange for a lease agreement). This guy prepared a complex lease for a Bartersystems member, which in turn gave him $5000 “barter bucks” to spend. As the previous commenter notes, this group is very legitimate and does issue 1099s, which after a certain point will diminish the value of the service traded (e.g., consider the tax on $40,000 worth of legal services provided at no cost!) The company will also help you locate services – so, if you want to barter in exchange for a personal trainer, it will help identify services in your area.

    Initially, I thought that the economy and other financial issues had lead my colleague to BarterSystems, but apparently he has been using it for years – even financing the caterer, flowers and photographer for his wedding 10 years ago.

    My colleague said that general legal services like wills, leases and small business matters tend to be most in demand. He also said that he limits his participation to $10,000 a year or less due to the tax consequences.

  • My father has been bartering services since I can remember, and I plan to do it as well. I would definitely recommend joing a barter club or network for several reasons. First, being in a barter network will bring you barter business. Second, as Susan mentioned, you can build up “barter dollars” in your account to spend whenever you want. Many clubs now have account cards that you can carry around and present at participating members locations. Plus, you are not required to only trasact through the club, if you find someone who will straight barter with you, you are free to do so.

    The downside is that barter clubs will charge you a percentage when you bill out barter services and again when you spend barter dollars. Fo example, lets say I barter out a Will through the club for $1000. The club would charge me say 7.5% when I bill the barter ($75). Then let’s say I find a dentist in the club (dentists LOVE to barter) and get a fancy laser whitening for $1000. The club will charge me another 7.5% when I spend my barter dollars. So at the end of the month my barter club invoice will have my monthly membership fee and the tansaction fees (75+75).

    Members that offer services rather than products can get around this by artificially inflating their fees when they are bartering.

    Two clubs that I have experience with are:
    http://www.businessnetworkinc.com/
    http://www.imsbarter.com/

  • >Will Bartering For Chickens Come Back in Vogue?

    Jct: Chickens are a lousy numeraire to carry around. Better an IOU. Who needs the chickenshit in your pocket?

    >I’ve gotten to seriously thinking about this. Will bartering for legal services come back or simply become more prevalent given economic times are going to get more and more challenging?

    Jct: Of course, any services can be bartered. The question is what to use as the numeraire, chickens, gold, or an Hour of time?
    When local currencies are pegged to the Time Standard of Money (how many dollars/hour child labor) Hours earned locally can be intertraded with other timebanks globally!
    In 1999, I paid for 39/40 nights in Europe with an IOU for a night back in Canada worth 5 Hours.
    U.N. Millennium Declaration UNILETS Resolution C6 to governments is for a time-based currency to restructure the global financial architecture.
    See my kingofthepaupers youtube channel

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