Ohio Board Advisory Opinion Op 07-003

Op 07-003Ohiobar

Testo completo

The Supreme Court of Ohio
BOARD OF COMMISSIONERS ON GRIEVANCES AND DISCIPLINE
65 SOUTH FRONT STREET, 5TH FLOOR, COLUMBUS, OH 43215-3431
(614) 387-9370 (888) 664-8345 FAX: (614) 387-9379
www.sconet.state.oh.us
OFFICE OF SECRETARY
OPINION 2007-3
Issued April 13, 2007
SYLLABUS: A lawyer may accept credit card payments from clients for earned
legal fees, reimbursement of legal expenses, advances on unearned legal fees,
and advances on future expenses. Credit card payments for earned fees and
reimbursement of legal expenses belong in a business account, whereas, credit
card payments for advances on unearned legal fees and advances on future
legal expenses must go into a client trust account. Preferably, a lawyer would
maintain two credit card merchant accounts, one used for credit card payments
to a business account and one for credit card payments to a client trust account.
But, because two merchant accounts may not be feasible or practical, it is
acceptable for a lawyer to maintain one merchant account with the credit card
payments all going into a client trust account, provided that the credit card
payments for earned legal fees and reimbursements of expenses are promptly
transferred from the trust account to a business account.
A lawyer may place his or her own funds into a client trust account to pay
brokerage and credit card service charges. Credit card service charges are the
responsibility of the lawyer and may not be deducted from the interest earned on
a client trust account.
OPINION: This opinion addresses questions regarding credit card payments by
clients.
1. May a lawyer accept credit card payments from clients for
earned legal fees, for reimbursement of expenses, for advances
on unearned legal fees, and for advances on future expenses,
and, should these credit card payments go into a client trust
account or a business account?
2. May a lawyer deposit his or her own funds into a client trust
account to pay the service fee charged by a credit card
company on a client’s credit card transaction?
Op. 2007-3 2
Question 1
The Ohio Rules of Professional Conduct do not prohibit a lawyer from accepting
credit card payments from clients. But, like any other method of payment, a
lawyer must handle the funds in a manner consistent with Rule 1.15 of the Ohio
Rules of Professional Conduct.
Rule 1.15 governs the safekeeping of funds and property. Comment [1] to Rule
1.15 explains “[a] lawyer should hold property of others with the care required of
a professional fiduciary.”
Lawyers should thoroughly familiarize themselves with all the requirements of
Rule 1.15. For example, Rule 1.15(a) establishes detailed requirements for
holding funds of clients (or third persons) in a separate interest-bearing account
in a financial institution. The rule requires, inter alia, that “[t]he account shall be
designated as a ‘client trust account,’ ‘IOLTA account,’ or with a clearly
identifiable fiduciary title,” that certain records be kept, and that records be
preserved for a period of seven years after termination of the representation or
the appropriate disbursement of such funds, whichever comes first.
But, most pertinent to this opinion is the first sentence of Rule 1.15(a) and Rule
1.15(c) in its entirety.
Rule 1.15(a) A lawyer shall 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.
Rule 1.15(c) A lawyer shall deposit into a client trust account legal
fees and expenses that have been paid in advance [by the client],
to be withdrawn by the lawyer only as fees are earned or expenses
incurred.
Pursuant to Rule 1.15(a), payments from a client for earned legal fees and for
reimbursement of expenses advanced by the lawyer go into a lawyer’s business
account.
Pursuant to Rule 1.15(c), payments from a client made as advances on
unearned legal fees and as advances on future expenses go into a client trust
account.
The question arises how a lawyer who has only one merchant account for credit
card payments may properly accept credit card payments for some funds that
belong in a client trust account and some funds that belong in a business
account.
Op. 2007-3 3
The ideal solution would be for the lawyer to establish two merchant accounts for
credit card payments, one crediting payments to a client trust account and one
crediting payments to a business account. But, this may not be practicable or
feasible.
There is an alternate solution. If a lawyer wants to accept all types of payments
(for earned and unearned fees as well as for expense reimbursement and future
expenses) and it is not practicable or feasible for lawyer to set up two merchant
accounts, one where the credit card payment would go into a client trust account
and one where the payment would go into a lawyer’s business account, the
lawyer should set up a single merchant account as a client trust account. Under
this alternate solution, all credit card payments would go into a client trust
account, but the earned fees and reimbursement for expenses would be
withdrawn from the trust account promptly and placed into the business account.
This is the approach taken by several states. See Kansas Bar Assn, Op. 01-2
(2001), Maryland State Bar Assn, Op. 03-06 (2003), Missouri SupCt., Advisory
Comm. Informal Op. 20000202 (9/00-10/00), North Carolina State Bar, Op. RPC
247 (1997), Oregon State Bar, Formal Op. 2005-172 (2005).
In this Board’s view, this is an acceptable approach because the lawyer’s
fiduciary duties are fulfilled. All the credit card payments would go into the client
trust account, bout the earned fees and reimbursement for expenses would be
withdrawn promptly from the trust account and placed into the business account.
This arrangement honors the strict requirement of Rule 1.15(c) that legal fees
and expenses that have been paid in advance go into a client trust account, and
accommodates Rule 1.15(a) by the prompt transfer of the earned fees and
expense reimbursement into the business account.
In conclusion to Question 1, the Board advises as follows. A lawyer may accept
credit card payments from clients for earned legal fees, reimbursement of legal
expenses, advances on unearned legal fees, and advances on future expenses.
Credit card payments for earned fees and reimbursement of legal expenses
belong in a business account, whereas, credit card payments for advances on
unearned legal fees and advances on future legal expenses must go into a client
trust account. Preferably, a lawyer would maintain two credit card merchant
accounts, one used for credit card payments to a business account and one for
credit card payments to a client trust account. But, because two merchant
accounts may not be feasible or practical, it is acceptable for a lawyer to maintain
one merchant account with the credit card payments all going into a client trust
account, provided that the credit card payments for earned legal fees and
reimbursements of expenses are promptly transferred from the trust account to a
business account.
Op. 2007-3 4
Question 2
Rule 1.15(b) states: “A lawyer may deposit the lawyer’s own funds in a client
trust account for the sole purpose of paying or obtaining a waiver of bank service
charges on that account, but only in an amount necessary for that purpose.”
Comment [2] to Rule 1.15 explains that it is proper for a lawyer’s own funds to be
placed into a client trust account to pay brokerage and credit card service
charges.
While normally it is impermissible to commingle the lawyer’s own
funds with client funds, division (b) provides that it is permissible
when necessary to pay or obtain a waiver of bank service charges
on that account. The following charges or fees assessed by an
IOLTA depository may be deducted from account proceeds: (1)
bank transaction charges (i.e., per check, per deposit charge); and
(2) standard monthly maintenance charges. The following charges
or fees assessed by a client trust account depository may not be
deducted from account proceeds: (1) check printing charges; (2)
not-sufficient-funds charges; (3) stop payment fees; (4) teller and
ATM fees; (5) electronic fund transfer fees (i.e., wire transfer fees);
(6) brokerage and credit card charges; and (7) other business-
related expenses, which are not part of the two permissible types of
fees. Accurate records must be kept regarding which part of the
funds are the lawyer’s. [Emphasis added.]
In application, a lawyer is responsible for the credit card fees incurred from a
client’s payment by credit card. Unlike some service charges (such as normal
monthly maintenance fees or deposit and check transaction charges) that may
be waived by the bank or that may be deducted from the interest earned on an
IOLTA account, a charge or fee associated with the use of a credit card may not
be deducted from the interest.
For related guidance see rules promulgated by the Ohio Legal Assistance
Foundation pursuant to R.C. 120.52, in particular, Rule 120.51-1-03(R), Rule
120.51-2-01(C)(2), and Rule 120.51-2-02(C). See also, www.olaf.org (last visited
2.7.2007) under Frequently Asked Questions. “May I use a credit card to accept
payment from a client?” and “What about service charges?” (stating that credit
card brokerage fees are the account owner’s responsibility and may not be
deducted from the interest earned).
In answer to Question 2, the Board advises as follows. A lawyer may place his
or her own funds into a client trust account to pay brokerage and credit card
service charges. Credit card service charges are the responsibility of the lawyer
and may not be deducted from the interest earned on a client trust account.
Op. 2007-3 5
Advisory Opinions of the Board of Commissioners on Grievances and
Discipline are informal, nonbinding opinions in response to prospective or
hypothetical questions regarding the application of the Supreme Court
Rules for the Government of the Bar of Ohio, the Supreme Court Rules for
the Government of the Judiciary, the Ohio Rules of Professional Conduct,
the Ohio Code of Judicial Conduct, and the Attorney’s Oath of Office.

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