Payment methods have been tracked by the US Federal Reserve since 2000. Nearly $43 billion of transaction value was attributed to checks in 2012. In that same year, credit and debit cards accounted for $23.9 billion. Check volumes fell to $14.5 billion in 2018, the most recent year for which Federal Reserve data is available. Card usage has exploded to $117.4 billion. Sixty-six percent fewer checks are being written. There has been a 392% increase in the use of credit cards! 

 Many consumers have been cut off from law firms that don't accept credit cards for their litigation support services.

The use of credit cards to pay legal fees is deemed unacceptable in paying for litigation support services. The committee found that professional services should not be classified with 'sales of merchandise and sales of nonprofessional services'.

This is even though credit and debit card payments have eclipsed checks by hundreds of billions of dollars in other industries. Many lawyers are accepting credit cards, which makes them more efficient and results in higher collections. This article aims to provide readers with a detailed explanation of the ethics of accepting credit cards for attorneys, some specifics they need to keep in mind, and how to handle them.

Because credit cards have very flexible uses, lawyers have not accepted them. Some state ethics committees have not addressed all the issues surrounding this flexibility equally. Credit cards are just a means of transferring money. Invoice payments, attorney reimbursements, and trust fund deposits can all be made by credit card charges. Clients can be offered affordable options by lawyers by setting up payment plans and offering flexible billing options for litigation support services. Before starting to accept credit cards, lawyers may want to consider their current practices when using credit cards. 

The acceptance of credit cards by law firms raises four ethical questions.

• Is it possible to accept credit card payments for legal fees and expenses?
• Is it possible to accept credit card payments in advance?
• Is it possible for me to charge my client a surcharge to compensate for the processing fees charged by some credit card companies?
• Once I keep a customer's credit card on file, can I recur an overdraft charge?

• According to ethics opinions published by four states, law firms can accept credit cards in all four of the hypotheticals presented here. The ethical concerns of the four states remain unaddressed. 
• Ten states have issued ethics opinions on accepting credit cards for fees and expenses, but none have addressed whether a firm can accept credit card transfers for advanced fee deposits. 
• There are ethical opinions in eight states that prohibit the passing of credit card surcharges to clients.

There was a stigma attached to accepting credit cards. Credit card acceptance wasn't allowed for lawyers to advertise. These ethics opinions prohibit lawyers from displaying promotional materials provided by credit card companies no other than a small insignia tactfully displayed in the attorney's office. Most retail stores' Visa and Mastercard stickers could also not be displayed. A directory of credit card-accepting firms that provide litigation support service could not be included.

Firms that accept credit cards are now able to advertise without many of the restrictions associated with lawyer advertising. Attorneys may still need to inform their clients about the possibility of interest being charged on their payments in states that have not updated their ethics opinions on the subject.

Several ethics committees have approved accepting credit cards as payment for legal fees for litigation support services. Credit card payments into trust accounts have been slower to be approved by these same committees.

Ethical dilemmas can arise when advance fee deposits are made by credit card. Credit cards have two functions that may impact deposits into trust and they are Chargebacks and Processing fees.

Chargebacks - Chargebacks are the first issue when accepting credit card fees into trust. Trusted funds entrusted to lawyers must be held inviolate. Funds held in trust should not be accessible to other entities. A credit card processor will attempt to claw back money deposited in a disputed transaction if a client disputes a charge. Credit card companies can access the trust account of law firms that use credit cards. 

In addition, if the funds in dispute have already been transferred, the credit card company may be seizing trust funds belonging to another client. In addition to two angry clients, an ethics complaint is brewing in the law firm.

Solution 

Resolution Ethics committees have come up with a variety of solutions for chargebacks to avoid becoming a moral hazard:

• Clients who deposit funds using credit cards can establish separate trust accounts with firms. Funds may be held in trust not only until they are earned, but also until the period during which a client can initiate a chargeback has passed. In general, credit card companies give a grace period of sixty days.  
• Operational accounts are used to collect credit card fees. The processing fees and chargebacks of credit card transactions may also be deducted from an operating account in cases of contract credit card processors. It protects a law firm from having charge-backs that could create ethical violations, as the funds seized are not the law firms, but rather the clients.

Processing fees - Another issue is the processing fee. Typically, credit card processors charge a percentage amount per transaction, which is deducted from the net total deposited to the merchant. Typically, most charge between 2-3% of a transaction. Clients may deposit $1,000 into their law firm's trust account. He receives only $980 to deposit in the trust. As a processing fee, twenty dollars were collected. If a client expected the full sum to be available for bills or expenses related to their case, this could present ethical issues. 

Solution

• Attorneys can avoid this issue by paying the processing fee themselves or charging their clients a surcharge for the amount.

Credit card acceptance is not just an ethical matter, but also a compliance issue. Major credit card processors require businesses accepting credit cards to comply with the Payment Card Industry (PCI) standards. According to the industry, businesses accepting credit card payments should comply with five compliance goals:

• Maintain a secure network.
• Protect the information of cardholders.
• Establish a Vulnerability Management Program.
• Strong access control measures should be implemented.

Ensure the security of information.

While law firms were late to adopt electronic payment systems, 53% are now equipped to do so. In the legal industry with litigation support services, consumers are beginning to adopt electronic payment methods. Mostly this is due to client demand. The collection rate of your law firm and ability to attract paying customers for litigation support services will increase if you accept credit and debit cards as a payment method.