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Can Lawyers Charge Credit Card Fees? Insights from the Attorney Professionalism Forum

Navigating the complexities of payment processing in the legal profession can be tricky. In this recent article, authored by NYSBA’s Attorney Professionalism Forum; including Vincent Syracuse, Lilliana Iorofino, Hanoch Sheps, Katie O’Leary, and Jean Claude Mazzola, they aim to provide clarity on whether lawyers may ethically charge clients a service or processing fee when they pay legal fees by credit card.

The Verdict: Yes, lawyers may pass on the merchant processing fee as an expense to clients who use their credit card to pay for legal services, but they must adhere to specific guidelines to maintain compliance with Section 518.

Key Points to Consider:

  • Disclosure is Essential: Law firms must clearly disclose any service fees by providing separate charges for the legal fee and the service fee and obtain the client’s consent to the additional charge in advance. This ensures transparency and compliance.
  • Ambiguity in Legislation: The amended statute remains somewhat ambiguous and might have constitutional issues similar to the original legislation. It appears more applicable to retailers, leaving service-oriented businesses like law firms in a gray area.
  • Ethical Compliance: Following the New York State Bar Association’s guidelines, law firms may ethically charge these fees so long as the amount of the legal fee is reasonable, the lawyer complies with the duty to protect the confidentiality of client information, the lawyer does not allow the credit card company to compromise the lawyer’s independent professional judgment on behalf of the client, the lawyer discloses the fee to the client and provides the client the opportunity to question billing errors, and in the event of dispute regarding the fee, the lawyer attempts amicable resolution.

Recommended Practice: Include clear language in engagement letters and invoices. For example: “Payments made by credit card will be subject to a service fee of 2.99% of the payment amount. Two transaction numbers will be generated: one for the payment amount and one for the service fee.”

Looking Ahead: This approach aligns with practices by government entities, such as the Office of Court Administration, which passes on the service fee for credit card payments to the user.

Only time will tell how this legislative ambiguity will be resolved. Meanwhile, law firms can follow this guidance to ensure they remain compliant and transparent with their clients.

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