The Florida Bar

Florida Bar News

Ethics panel looks at implications of lawyers using online payment apps

Senior Editor Top Stories

Online paymentThe ethical ramifications of using online payment services such as PayPal, Venmo, and Apple Pay, some of which can delay payments of funds into IOTA trust accounts, potentially mix trust and non-trust account funds, and reveal client information, is being studied by the Professional Ethics Committee.

The full committee has created a subcommittee to make recommendations, which could include a formal advisory opinion.

Bar Ethics Counsel Elizabeth Tarbert said the Bar’s Ethics Hotline has received several inquiries about using payment apps.

“If the payment is to the lawyer for fees and costs that the lawyer has already earned and advanced and it is the lawyer’s money, it doesn’t matter,” Tarbert said. “The only time…the rules are going to apply is if the lawyer or third party is offering payment to the lawyer and the [payment] does not belong to the lawyer” such as advance payment for fees or costs, receiving settlements, monies to be held in trust, or other such transactions.

In those cases, the funds are to go to trust accounts, not lawyer operating accounts, and if they are short-term deposits for small amounts, they are to be deposited in accounts where the interest goes to The Florida Bar Foundation’s IOTA program. Bar rules set out regulations for institutions handling such funds, and Tarbert said some payment apps do not appear to meet those standards, including complying with state and federal rules for financial institutions authorized to handle IOTA funds.

Some also hold the payments for several days before disbursing to the lawyer, with the app, not the IOTA program, benefitting from the earned interest, she said.

Some apps require users to enact certain private settings, otherwise the transactions can be seen by anyone.

“In Venmo, anybody in the world can see you’ve made a transaction with another person” if the privacy settings are not set up, including the amount and purpose of the transaction, Tarbert said.

She also said some apps act as credit card payment processors and Bar rules allow for payments by credit cards, while other apps transfer funds between bank accounts, which might raise questions.

Committee members noted there are some payment apps designed to be used by lawyers, and at least one participates in the Bar’s Member Benefits program.

“There’s a question of whether these funds in the possession of [a payment app] are in the lawyer’s possession yet and the [IOTA] rules…apply,” said committee member Skip Smith.

He added while a lawyer is responsible to set privacy standards on an app, the lawyer is not responsible if the client using a payment app fails to use privacy controls or wants the information made public.

“This is an important issue and I get calls from people often, wondering about what they can do in this area, particularly with trust accounts,” said committee member Tim Chinaris.

The committee acted at its October 9 meeting during the Bar’s Fall Meeting and instructed the subcommittee to report by December 20, so the committee can discuss it at its January meeting.

News in Photos

Columns

Balancing on the Breath

Columns | Sep 20, 2021

The Mindful Lawyer

Mindfulness | Aug 23, 2021

The Mindful Lawyer: Resistance is Fertile

Mindfulness | Jul 21, 2021

How to deal with third-party lienholders in property damage cases

Columns | Jul 15, 2021