PayPal: Lawyer’s Friend or Foe?
Posted on 09/30/2013 by beverlym
PayPal is a very tempting credit card processing service with nice extras like Web site
integration and online invoicing. There is no disputing its familiarity or popularity. But
before you jump on the PayPal bandwagon, do your homework.
1. Is it less expensive or more expensive than comparable services?
2. Is the Web interface user-friendly?
3. How long will PayPal hold your funds before disbursement? (This has been a
problem for some users.)
The solution is to comparison shop. All banks offer credit card processing, so check
with your branch first. Other options include:
QuickBooks – check out this post from Attorney at Work
Authorize.Net – see this review
Square – Attractive, but be sure to read this then check out the latest rate plans
CenPOS for Droid lawyers
If you prefer processors who cater to the legal profession consider:
Beacon Processing Solutions
Virtual Payment Systems – see this review
To be clear, I had never heard of Lawyer Payments or Atticcus until I ran a Google
search. I’m not aware of any lawyers using these services, so conduct your due
diligence – always a good idea when choosing a credit card processor. Also of note: In
2011 Beacon Processing Solutions appeared to discontinue serving the legal
profession, preferring to focus on doctors instead. I’m happy to say that as of 2012 they
are back in the business of offering specific credit card processing solutions for lawyers.
How One Lawyer Does It
Georgia Lawyer Leslie Stewart offers PayPal directly on her Web site with direct links
for incremental payments of $200, $300, or $500 [scroll to the bottom of her page].
Clients are told:
“The retainer fee paid via the Internet can be paid by check or credit card. Both of these
require the use of a third party verification service, in this case, PayPal.com. You must
register and provide information to them to ensure that you are the person paying the
fee and it is from verifiable funds.
You are not charged an additional fee for using PayPal.com. With a payment by
electronic check or credit card, lawyer and client both agree that these funds are a
prepayment for immediate compensation for the lawyer’s commitment to perform future
services, e.g., a flat-fee agreement, the funds are the property of the lawyer and may
be deposited in the lawyer’s operating or business account. PayPal.com will remit
payment to this office to be deposited in said account.
If you do not wish to enter into this arrangement, then you are welcome to mail us a
Online payment will take place only after Attorney and Client have entered into an
agreement concerning fees.”
Ethical Compliance: Payment Methods are Irrelevant
Make certain any terms you include on your Web site are fully compliant with the
Oregon Rules of Professional Conduct. For example, the above site contradicts itself
by initially referring to the fee paid via PayPal as a “retainer fee” then later as a
“prepayment for immediate compensation for the lawyer’s commitment to perform future
Make your language clear, simple, and consistent.
If your intention is to collect a fixed fee earned upon receipt, say so. See Oregon Formal
Ethics Opinion 2005-151: Fee Agreements: Fixed Fees. A sample fixed fee/earned
upon receipt fee agreement is available on the PLF Web site. [This can be offered as a
click-through agreement if desired.]
If the client is remitting a retainer for fees that have not yet been earned, and there is no
written earned upon receipt fee agreement, the funds are NOT the property of the
lawyer and must be deposited in your IOLTA Account. See The Top 10 Trust Account
Questions: Safekeeping Funds.
Remember: the method of payment (cash, check, echeck, wire transfer, credit card) is
completely irrelevant. If the funds are earned by your actions (you did the work and
billed the client) or by contract (you have a written, signed earned upon receipt fee
agreement) they are yours and should be deposited into your business account.
If the funds are not yet earned, use your IOLTA account.
Read more insightful tips about accepting credit cards in this article from GPSOLO and
in this post from the Lawyerist. For ethical limitations relating to credit card payments,
see FAQ About Credit Cards.
Originally posted at http://oregonlawpracticemanagement.com/2013/09/30/paypallawyers-friend-or-foe/ on September 30, 2013. All Rights Reserved.