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The Lawyer's Lawyer

Lawyers Helping Lawyers Avoid the Perils of Professional Discipline

What's In Your Wallet?

Q. Unable to take payments in person these days, I may let clients use apps like Paypal and Venmo to pay fees and retainers online. Are such payments allowed?

A. Using these apps to pay fees that you have already earned doesn't trouble me. But taking retainers through Paypal, Venmo or an ordinary credit card does.

Rather than place unearned fees into your attorney trust account, services like Paypal and Venmo transfer the funds to your personal or business account with that vendor and take a small percentage to cover processing. This is no different than placing unearned fees directly into a personal or business bank account. Bypassing regulations designed to protect client deposits, you are commingling your own funds with those you have yet to earn.

The Rules of Professional Conduct require that you protect all client funds by placing them in an attorney trust account. There is no exception for Paypal, Venmo or any other online service. Nor is there any grace period provided to those who would subsequently transfer funds into escrow. Once funds are placed in your name, and not in an attorney trust account, you will be held in breach of your ethical duty to safeguard client funds.

Even if you have funds deposited directly into your trust account, you will undoubtedly encounter difficulty with Paypal, Venmo or ordinary credit cards. All of these services deduct processing fees from the client's payment, as well as fees for any rescinded transactions or "chargebacks." As these are business expenses which your firm should pay, you mustn't take them from client funds in your trust account.

Some would say that you could leave funds of your own in the trust account to cover these fees. I wouldn't. Although there are rules that may let an attorney deposit funds to cover certain banking fees, service charges, or minimum balance requirements, they might not extend to third party processing fees. Even if they did, depositing extra money in your trust account may make it difficult to reconcile, leave you prone to overdrafts, and cause you to lose control of the account. This gray area may also prompt accusations that you are improperly commingling your funds with those of your clients.

To prevent these violations, you should use a service like LawPay or LexCharge. Specifically geared toward lawyers, these services will deposit the full amount of a client's retainer into escrow, but will take transaction fees from the attorney's operating account. This eliminates any commingling of funds, ensures that retainers go directly into escrow, and prevents your clients from paying fees that should be borne by your firm.

If you don't have enough business to justify the setup or maintenance fees for one of these services, you should only use the more popular payment apps to receive fees which you have already earned.

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Attorney Grievance defense attorney specializes in defending lawyers in disciplinary proceedings before the Maryland Attorney Grievance Commission and the D.C. Bar's Board on Professional Responsibility involving professional misconduct, legal ethics, disbarment, suspensions of law licenses, petitions for disciplinary action, reprimands and sanctions for unethical conduct. If you receive a letter from Bar Counsel Lydia Lawless, Disciplinary Counsel Hamilton Fox, or from any attorney disciplinary board in Maryland or the District of Columbia, retain experienced attorneys with expertise in lawyer discipline and breach of ethics cases to avoid sanctions for professional misconduct. We help lawyers avoid disbarment, suspension, reprimands, censure and informal admonitions by drafting responses to client grievances and ethical complaints; representing lawyers in peer reviews, evidentiary hearings, and oral arguments before the BPR and the Court of Appeals; filing petitions to reinstate an attorney's license to practice law; conducting law firm ethical compliance audits; and drafting legal ethics opinions to protect lawyers from ethics charges. In many cases, disciplinary proceedings may be dismissed, dismissed with a warning, or result in a conditional diversion agreement with Bar Counsel to rectify misconduct. Lawyers may need help in managing their law firm attorney escrow IOLTA trust account and complying with attorney trust accounting rules to avoid charges of ethical misconduct. Do not represent yourself in responding to an attorney grievance, law firm client complaint, or other allegation of ethical impropriety. Attorney grievance defense counsel may help you comply with legal ethics rules, avoid sanctions like suspension or disbarment, and avoid future attorney grievances.

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By The Lawyer's Lawyers | Kramer & Connolly and Irwin R. Kramer who are responsible for the content of this informational website.   This website is designed for lawyers faced with attorney grievances. As cases do differ, past performance does not guarantee future results.
 

NOT AFFILIATED WITH THE ATTORNEY GRIEVANCE COMMISSION OF MARYLAND
OR THE BOARD ON PROFESSIONAL RESPONSIBILITY OF THE D.C. BAR