Lawyers and paralegals may enter
into agreements with financial institutions or other companies that offer debit
or credit card processing services, subject to certain conditions. Such
institutions or companies’ fees are a cost of carrying on practice and are not
to be charged to the client. As a
result, any agreements that a lawyer or paralegal enters into for processing
debit or credit card payments must provide that all service charges, discounts,
and other fees payable by the lawyer or paralegal to the financial institution or
other company are to be deducted from the lawyer or paralegal’s general account
and that no such charges are to be deducted from the lawyer or paralegal’s
trust account. The client must receive full
credit for the face amount paid in respect of the invoice.
Confidentiality of client
information must also be preserved in the use of debit or credit cards. The
debit or credit card sales slip issued by the lawyer, paralegal or firm to the
client may show the name of the lawyer, paralegal or firm and its address, the
words “legal services”, a file number, any other necessary code numbers, the
dollar amount, and the date. The nature
of the legal services must not be indicated.
Details of the services are to be provided to the client in the usual
It is important for lawyers and
paralegals to consider that the procedures of some financial institutions or debit
and credit card processing companies may place lawyers or paralegals in
contravention of By-Law 9. Some institutions or companies require
merchants (including lawyers and paralegals) to designate only one account into
which debit or credit card payments are to be deposited. In addition, the fee charged by the financial
institution or debit or credit card processing company is automatically debited
from this account. This process does not
permit lawyers or paralegals to receive both retainers and payments for billed
fees and/or disbursements by debit or credit card. Subsection 7(1) of By-Law 9
requires lawyers and paralegals to deposit funds received in trust (e.g.
retainers) into an account designated as a trust account. Meanwhile, subsection 8(2) of By-Law 9
prohibits the deposit into trust accounts funds that are received by the lawyer
or paralegal on account of fees for which a bill has been delivered.
Consequently, the use of one account for both purposes is not permissible. Lawyers and paralegals are urged to canvass
this issue with the financial institution or company that they are using or
contemplating using for processing debit or credit card payments. If the financial institution or company
imposes the above restrictions, lawyers and paralegals can only designate their
general account and thus may only receive payments for billed fees and/or disbursement
by debit or credit card.
Some lawyers or paralegals wish
to take clients’ credit card numbers over the telephone and process payment of
accounts that way. Although the
signature of the client on the sales slip is the best proof of the client’s agreement
to use this payment service, accepting credit card numbers by phone could be
acceptable provided that the lawyer or paralegal has delivered the bill to the
client for the services rendered before doing this and the agreement with the
processing company allows this. After
the payment is processed in this manner, there is a risk that the client could
claim that the lawyer or paralegal was not authorized to process the payment.
Lawyers or paralegals who opt to process credit card payments by telephone are
urged to consider implementing additional safeguards so that misunderstandings
do not arise between the firm and the client.
BookkeepingGuide for Lawyers
Bookkeeping Guide for Paralegals