Lawyers should be able to use a variety of online payment apps, such as Venmo and PayPal, to accept payments, including trust funds, according to a proposed ethics advisory opinion being prepared for the Professional Ethics Committee.
Committee member Skip Smith, who chairs a subcommittee looking at payment apps, said the subcommittee hopes to have a finished opinion ready before the PEC’s June meeting. He reported at the committee’s January 15 meeting.
Two lawyers have requested guidance on using payment apps and Bar ethics staff passed the issue to the PEC since there is no precedent on how to answer.
Smith said options include directing staff to not answer the inquiries for lack of precedent, instruct staff to respond with an answer adopted by the committee, approve an ethics opinion to provide guidance to all Bar members, or propose a rule amendment. He said the subcommittee will suggest an ethics option and will consider whether a rule amendment is needed.
This issue is complex because Bar rules specify that lawyers must keep separate legal fees and trust funds, and also specify how trust funds, including IOTA trust funds, must be handled, Smith said. And different payment apps have different ways of receiving, holding, and forwarding payments as well as charging for their services.
According to backup information provided to the committee, “IOTA accounts must be held in federally insured banks, savings and loans, state or federal credit unions, or open-ended investment company registered with the SEC, all of which must be authorized by federal or state laws to do business in Florida. Rule 5-1.1(g)(1)(D). Web based payment services that do not transfer funds directly from the payor to the payee’s bank account may not comply with the above requirements for financial institutions.”
“We plan to recommend that the committee issue a formal advisory opinion on this issue and secondly that opinion conclude that it is acceptable for the lawyer to accept such payments, including payments that would qualify as trust funds, so long as certain requirements are met,” Smith said.
He said the subcommittee will meet again on January 28 to approve its proposed advisory opinion and will probably also address whether a rule amendment is needed.
“We haven’t reached that question yet,” Smith added.
The information provided to the PEC noted the wide range of payment apps, including some designed specifically for law firms, such as LawPay and LexCharge, and other broader based services, such as ApplePay, Circle/Square, Venmo, and PayPal.
That backup information noted, “Services operate differently. Some move funds directly from the payor’s bank account to the payee’s bank account; some move funds from a payor’s credit card to a payee’s bank account; some services hold funds of either a credit card or bank account for a period of time before transferring to the payee. Service fees for various transactions differ, depending on the web-based payment service’s terms of operation. Some offer more security and privacy than others.”