Accepting credit-card payments? Mind your trust-account Ps and Qs
More clients prefer to pay fees by credit card these days, and more lawyers are accommodating them, a practice that is typically good for client and lawyer alike. But credit-card transactions raise a few special ethics issues, one of which - payment for retainer fees - is the subject of ISBA Ethics Opinion 14-01, issued earlier this year.
As the opinion notes, lawyers must take care that the agreement they sign with the credit card processing company doesn't conflict with various ethical obligations to clients, notably the duty under Rule of Professional Conduct 1.15 to "hold property of clients or third persons that is in a lawyer's possession in connection with a representation separate from the lawyer's own property" - i.e., to avoid commingling.
Commingling isn't an issue when the payment is for services already performed. That money belongs to the lawyer, not the client. But when the client pays a security retainer fee "to secure payment for future services and expenses," he or she is paying for services that haven't yet been rendered. Those payments are the property of the client until the work is done, and as such must be deposited in the lawyer's trust account, not the lawyer's business account. Find out more in the September Illinois Bar Journal.
Member Comments (3)
Can we make it any tougher on attorneys to practice law? What if rather than leaving these old archaic rules in place, the rules were updated to help facilitate the processing of credit card payments? Seems like this would be a good initiative for the ISBA to undertake on behalf of its members - perhaps professional conduct or ARDC committees could look at proposing a rule that helps practitioners in the practice of law?
Clearly the current rules are very difficult to understand in conjunction with credit card payments and as the opinion had several items that went beyond the scope of the opinion, we still don't have a complete answer in one place (e.g. what about charging service fees) . Seems like a new rule should be created that just simplifies everything so we don't need a complicated 4 page opinion to address what should be a simple issue.
Markus,
As the attorney who actually submitted the hypothetical question due to contrary interpretations at numerous CLEs, the opinion actually makes it easier to practice law. Moreover the rules don't make it harder, but the misunderstanding by the public as to how credit cards work and the risks involved with them. The actual complexity was created by the companies not the ISBA or the ARDC. While the ISBA is helpful (as in this case), we in fact control our own destinies.
Perhaps a better way to go is one of involved advocacy. While I asked for the ISBA to for an independent opinion before we acted that unfortunately confirmed my interpretation of a specific situation, there is no reason why we can't think of a general solution that meets both the ethical and profitability needs of our businesses, and individually run them through the ISBA as a mock test. This is preferable than talking to the ARDC after a violation. We obviously need guidance, and the ISBA graciously has answered one of my questions and I plan to ask more.
Similarly, we can try to encourage competition among credit card processors. vendors and banks for actually responsive to our needs service and products.
Perhaps we can get a substantive conversation going via one of the discussion groups, and/or act to fix the complexity of this situation. Any takers?
William Love
Partner,
Love and Yeggy
Markus May is right.
We are suffocating lawyers with increasingly complex and numerous rules on the minutia of everything.
And it does make practicing law more difficult. Anytime you are subject to increasing conditions on an activity it is by definition more difficult. This is especially true for solos and small firms.
I second Mr. May's call for a new rule that protects the client while simplifying the process and that is more in line with modern marketplace realities.