"As a result, practitioners must be mindful that online crowdfunding platforms can potentially be used to conceal the origins and purposes of financial transactions, by providing a veneer of legitimacy to money laundering or other criminal activity. Crowdfunding also carries a significant risk of fraud."

Arthur Moses, SC says lawyers need to be wary when engaging in crowdfunding activities. Louise Kennerley

Further, Law Council president Arthur Moses, SC, cautioned crowdfunding can encourage unethical behaviour, such as misleading or exaggerating a legal action's chances of success to elicit donations

"Crowdfunding is not inherently unethical. The crowdfunding of legal expenses has developed as a means to provide access to the courts and legal redress, particularly as the public funding of legal aid has been restricted by successive governments," Mr Moses said.

"However, like anything, the crowdfunding of legal expenses needs to be managed so that it is not misused. This involves striking a balance. Regulation that is too restrictive could have a dampening effect on access to justice."

The guidance also said lawyers needed to ensure their conduct around crowdfunding did not appear to prioritise their interests in getting paid, or even getting overpaid, over clients' interests.

It warned that lawyers could be motivated to continue with a case even if settlement was a better option if significant funds had been raised.

The risk of breaching ethical and professional obligations was heightened for lawyers who were hosting or running a crowdfunding campaign themselves.

These activities could also fall outside of their professional indemnity insurance, the note warned, leaving lawyers vulnerable to having to foot costly insurance claims themselves.

Finally, the note said lawyers needed to discuss with clients the use of the funds and any surpluses, what happens if insufficient funds are raised, and the possibility and effect of adverse cost orders.

It warned that a failure to consider or discuss these issues could potentially amount to professional negligence.