As more clients express a preference for paying for legal services with credit cards, many attorneys are adding credit and debit cards to their accepted payment options. The Bar Association has no objections to credit card payments. Still, certain considerations apply to the legal profession that does not exist for retail or other service providers.
The American Bar Association Rules of Professional Conduct require lawyers to adhere to certain ethical and fiduciary duties. In addition to the ABA, each state has its’ own code of professional ethics. Whether you are currently accepting credit card payments or if your firm is considering adding a merchant processor to streamline account receivables, how your processor allows you to allocate funds can make a difference in compliance with the Rules of Professional Conduct.
The Rules of Professional Conduct relating to credit card payments and the legal profession are specific in many areas. For example, some credit card processors insist on the right to access the depository account in the event the cardholder disputes a charge. On the surface, this may violate your firm’s ethics. As an example, this issue was reviewed in the ¹Missouri Informal Ethics Opinion 2014-0 5. While these rules and opinions relate to Missouri, the outcomes would likely be similar to other jurisdictions because of the similarity of the Rules of Professional Conduct from state-to-state.
- How to follow the guidelines set out in the Missouri Opinion depends on the type of credit card payments your law firm receives and whether or not the credit card processing company will permit deposits and debits out of more than one account.
- Further, suppose the law firm charges advance payments for fees and/or expenses onto the client’s credit card. In that case, the firm may not have these payments deposited directly into the operating account pursuant to Rule 4-1.15(a) and (c) unless the payment is a flat advance fee that does not exceed $2,000.
- However, if you are taking payments after the work has been performed or expenses have been incurred, you may place these payments directly into the firm’s operating account. If there is a chargeback, it must not come from the firm’s trust account.
To restate, our example comes from the state of Missouri, but regardless of origin, all states require that you comply with certain rules and regulations governing credit card payments. That means who you choose as your credit card processing company is not as simple as if you were in a retail business or provided a non-legal service. For example, Rule 4-1.15(f) and corresponding Comments  –  in the Missouri Informal Ethics Opinion stipulates certain obligations for trust accounting between the processing company and the law firm: “The credit card processing service shall provide you with all necessary information, and the firm has a process in place to retain that information as necessary to comply with your duties to maintain trust accounting records pursuant to the trust accounting record-keeping requirements.”
While many generic merchant processing companies are available to choose from, not all are designed to comply with the rules and regulations that govern how the legal profession can accept credit card payments, ensuring your firm remains compliant. While there are few designed for the legal industry, LexActum is one example that is. LexActum provides dependable credit card processing solutions with features that ensure compliance, such as guaranteed separation of trust and operating accounts.
With LexActum, set up time is quick and easy. Merchant account applications are processed immediately, and your law practice is ready to process credit card sales within 24 to 48 hours. For a free statement audit, or to get started, Call LexActum at 321-972-9838.
Source: ¹ Missouri Supreme Court Advisory Committee & Legal Ethics Counsel – Missouri Informal Advisory Opinions: 2011-2014