While it does not violate Bar rules, The Florida Bar is cautioning lawyers that allowing automatic clearing houses (ACH) to draw filing fees and other costs directly from lawyers’ trust accounts when they e-file court documents could prove problematic.
“The Ethics Department has concerns that use of an ACH will not provide adequate documentation for disbursements and we have concerns about a third party having access to a trust account in that way,” said Bar Ethics Counsel Elizabeth Tarbert. “Although the rules do not prohibit it, it is not recommended that lawyers use ACH, particularly on a regular basis.
“Additional concerns arise when a lawyer asks a client to authorize the lawyer to remove funds from the client’s bank account to pay the lawyer for legal fees because it doesn’t allow the client the opportunity to dispute the fee directly with the lawyer — it is like a lawyer asking the client for unlimited advance authorization to charge fees to the client’s credit card,” Tarbert added. “We advise against it. If a lawyer advances filing fees out of the lawyer’s operating account, the lawyer can choose to use ACH as the risk would fall on the lawyer. Lawyers may have similar concerns about putting their own money at risk, however.”
The issue has risen as the Florida courts switch from paper to electronic filing, which also allows the online payment of filing fees and other costs. Electronic filing became mandatory for all civil trial court cases and for the Supreme Court on April 1, and will become mandatory for criminal cases on October 1. It also will be phased in for all district courts of appeal by the end of the year.
Automatic clearing houses are services in which an account holder authorizes a payment to be withdrawn from the account; a common type is a homeowner allowing a monthly mortgage payment to be withdrawn from his or her checking account.
Lawyers have been contacting both the Bar’s Ethics Hotline and the Law Office Management Assistance Service with questions about using electronic checks or ACH to pay filing fees and costs as part of e-filing. (The statewide portal through which all e-filing is done also accepts credit card payments via Master Card, American Express, and Discover.)
LOMAS Director Judy Equels said: “It is not recommended that you chain your IOTA account to the e-filing electronic payment system as these charges are ACH, which in effect is granting third party access to the trust account. Please note that while making ACH transactions via a trust account is not specifically prohibited, in the past, ACH transaction via the trust account raised red flags to our auditors.”
She added that with e-filing, there is somewhat less concern because “in this instance it is the courts’ electronic payment system.”
“LOMAS recommends that you use your operating account for paying fees when e-filing, and then reimburse yourself or your firm from the trust account,” Equels said. “LOMAS further recommends that you open a low-balance operating account or low-limit credit card to handle these transactions so that you are not exposing high balance accounts to the ‘cloud.’”