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Ethical implications of charging credit card fees: Insights from the NYSBA

Stacked3Here is my recent Daily Record column. My past Daily Record articles can be accessed here.


The Ethical Implications of Charging Credit Card Fees: Insights from the NYSBA

As the legal profession adapts to the digital age, the types of payment methods accepted from clients have likewise evolved. Lawyers in 2023 accept many forms of payment from clients, including credit cards. In fact, accepting credit card payments for legal services has become increasingly commonplace.

However, that wasn’t always the case. When lawyers first proposed the idea of accepting credit cards for payment of legal fees, there was significant resistance. The concern was that legal clients who were facing the complexities of their cases would be further burdened by the additional costs associated with credit cards. This resistance was grounded in our profession's commitment to maintaining a fair and equitable relationship between lawyers and clients.

Over time, however, attitudes changed. Credit cards were viewed with less skepticism, and as a result, many lawyers now regularly accept credit cards from clients. By doing so, they increase access to justice by making it possible for potential clients to afford lawyers when they might otherwise have been unable to do so. In other words, when lawyers accept credit cards, they offer their clients much-needed flexibility and convenience.

However, with this ease of payment comes new ethical considerations. Credit cards are a unique form of payment and as is always the case when it comes to any type of legal fee arrangement, transparency and reasonableness are always essential, as recently explained by the New York State Bar Association in Ethics Opinion 1258 (Online: 

At issue in this opinion was whether it is ethical for lawyers to pass credit card processing fees onto clients as an expense, and under what circumstances. 

In reaching its determination, the Committee on Professional Ethics first confirmed that lawyers in New York can ethically accept credit cards from clients to pay for legal services as long as the following conditions are met: 1) The legal fee charged is reasonable; 2) The attorney maintains the client's information in strict confidence; 3) The lawyer doesn't let the credit card company influence their independent professional judgment when representing the client; 4) The lawyer informs the client prior to processing the credit card charges, giving the client an opportunity to question any billing discrepancies; and 5) In case of any disagreements regarding the lawyer's fee, the lawyer seeks to obtain a peaceful and quick resolution, and if relevant, follows the fee dispute resolution program set forth in 22 N.Y.C.R.R. Part 137.

Next, the Committee turned to the issue of charging clients the cost of the merchant processing fee. According to the Committee, Rule 1.5(a) of the New York Rules of Professional Conduct, prohibits attorneys from imposing "an excessive fee or expense" on a client. The rule outlines a series of factors, although not exhaustive, to help determine if a fee or expense is too high. The Committee explained that when a lawyer wants to pass a merchant processing fee to a client who uses a credit card for payment of legal services, it is considered an "expense" under Rule 1.5(a), which mandates that an attorney provide written notification to the client about the "fees and expenses" for which they will be accountable.

The Committee concluded that because a merchant fee from a credit card transaction is an “expense,” New York lawyers are permitted to transfer the merchant processing fee to clients who use credit cards to pay for legal services, as long as both the lawyer's fee and the processing fee are reasonable, and the lawyer previously notified the client in writing and received their approval to proceed.

Protecting the interests of legal consumers is essential regardless of the payment method accepted. This opinion, and others like it, play a pivotal role in safeguarding the interests of legal clients. They ensure that regardless of the payment method, the ethical standards of the profession prioritize the rights and interests of clients, reinforcing the fundamental principles of fairness and integrity in legal practice. 

Of course, whether it’s good business to pass processing fees onto clients is a different issue. Just as you may avoid gas stations that charge more for gas, so too may a legal client avoid a law firm that abides by this practice. 

Another option would be that once your firm begins to accept credit cards, consider increasing hourly rates across the board to account for expected credit card processing charges. Either way, your firm gets paid the same amount, but the process is simplified and your client likely will feel less resentment. Ultimately, the choice is yours, and you should do what works best for your firm and its clients.

Nicole Black is a Rochester, New York attorney, author, journalist, and the Head of SME and External Education at MyCase legal practice management software, an AffiniPay company. She is the nationally-recognized author of "Cloud Computing for Lawyers" (2012) and co-authors "Social Media for Lawyers: The Next Frontier" (2010), both published by the American Bar Association. She also co-authors "Criminal Law in New York," a Thomson Reuters treatise. She writes regular columns for Above the Law, ABA Journal, and The Daily Record, has authored hundreds of articles for other publications, and regularly speaks at conferences regarding the intersection of law and emerging technologies. She is an ABA Legal Rebel, and is listed on the Fastcase 50 and ABA LTRC Women in Legal Tech. She can be contacted at [email protected].

Driving law firm efficiency: Proven productivity tips

Stacked3Here is a recent Daily Record column. My past Daily Record articles can be accessed here.


Driving Law Firm Efficiency: Proven Productivity Tips

In today’s ever-evolving world, technology has become a key differentiator for lawyers, driving productivity and profitability in a highly competitive market. According to a recent report, the correlation between technology adoption by law firms and increased efficiency is undeniable. There are proven productivity strategies that can streamline legal services and deliver measurable improvements in efficiency and profitability. Firms that take advantage of these tools can dramatically improve work processes and enhance the delivery of legal services.

In the MyCase + LawPay 2023 Benchmark Report Part 1, anonymized data was collected from law firm software users, with a focus on determining how work gets done in law firms. The data was analyzed to identify productivity gains and key performance indicators (KPIs) that would be useful as benchmarks for lawyers seeking to run their firms more effectively.

One notable finding from the report was that lawyers who used passive time-tracking tools captured significantly more time than lawyers who didn’t. If you’re unfamiliar with the concept, this timekeeping tool works in the background, passively tracking all activities done on a computer or in a software program.

The data collected and analyzed showed that if you assume a $350 per hour billing rate, lawyers who used a passive time tracking tool billed an extra 64 hours amounting to additional billable time worth $202,882,750 in 2022. This means that on average, lawyers who used this feature invoiced an additional $22,425 last year!

The report also included data on the realization rates of solo lawyers. Utilization rates measure the amount of time that lawyers spend on billable work or client-related activities compared to the total amount of available working hours. This performance indicator provides insights into how effectively lawyers are using their time and resources to generate revenue for the firm or organization.

One of the calculated KPIs was for solo law firm customers who had at least 5,000 time entries in 2022. The results showed that on average those customers billed 1,539 hours in 2022. The utilization rate for those customers is 76%, and those attorneys billed, on average, 6.1 hours per workday. This is a great data point to use to determine how your firm stacks up and whether there are inefficiencies in your workflows that are reducing productivity.

Another KPI covered in the report was the work-in-progress (WIP) rate, which compares the ratio of the total number of active matters to the total number of matters closed over a certain period of time. Bankruptcy matters had the highest WIP (10.9) in 2022, followed by immigration (10.3), personal injury (10.1), trusts and estates (8.2), and criminal law (8.1). Overall, eleven practice areas were analyzed, and you’ll find WIP rates for each one in the report.

The report also included data on hours billed per case by practice area in 2022, along with data on the number of online court date reminders sent in 2022 for a variety of different practice areas. In other words, it includes various types of productivity data that can help you determine your firm's efficiency strengths and weaknesses. From this information, you can make educated decisions about choosing new tools for your firm to systemize workflows, increase overall efficiency, and significantly improve profitability.

Nicole Black is a Rochester, New York attorney, author, journalist, and the head of SME and External Education at MyCase  law practice management software, an AffiniPay company. She is the author of the ABA book Cloud Computing for Lawyers, co-authors the ABA book Social Media for Lawyers: the Next Frontier, and co-authors Criminal Law in New York, a Thomson Reuters treatise. She writes legal technology columns for Above the Law and ABA Journal and speaks regularly at conferences regarding the intersection of law and technology. You can follow her on Twitter at @nikiblack or email her at [email protected].