Can a Hawaii lawyer accept credit card payments for fees, and how must trust and earned funds be separated?

Plain-English summary

The opinion concludes that an attorney may accept credit cards in payment of legal fees and expenses, except as prohibited by law or the Hawaii Rules of Professional Conduct. Because unearned funds and earned funds must be kept apart, the opinion identifies three ways to handle credit card receipts: dealing with a bank that lets the attorney direct deposits into specific accounts; maintaining two credit card plans, one solely for the client trust account (retainers and flat fees) and one solely for a business or other non-trust account; or accepting card payments only for retainers and flat fees deposited into trust, or only for earned fees deposited into a non-trust account. Holding or clearing accounts that commingle these types of funds violate HRPC 1.15.

The opinion states that unearned retainers and flat fees must be deposited intact into a trust account and maintained there until earned, citing HRPC 1.15(c) and the Rules Governing Trust Accounting. Earned fees cannot be deposited into a trust account, because doing so commingles funds under HRPC 1.15(a).

On charges associated with accepting credit cards, the opinion concludes those charges may be passed to the client with the client's advance consent under HRPC 1.2 and 1.4(b). If card-related charges are charged against a client trust account and the client has not given advance consent, the attorney must deposit into the account funds reasonably sufficient to pay those bank charges, citing HRPC 1.5(b).

In practice

Under this opinion, a Hawaii lawyer who accepts credit cards must set up processing so that unearned retainers and flat fees land in trust intact and earned fees go to a business account, never through a single commingled holding or clearing account. The opinion holds that the attorney may pass credit card processing fees to the client only with the client's advance consent, and that absent such consent the attorney must fund the trust account to cover any bank charges drawn against it.

Common questions

Q: Can a Hawaii lawyer accept credit cards for legal fees?

A: Yes. The opinion concludes an attorney may accept credit cards for legal fees and expenses, except as prohibited by law or the Hawaii Rules of Professional Conduct.

Q: How must credit card receipts be split between trust and operating accounts?

A: Per the opinion, unearned retainers and flat fees must go intact into a trust account and earned fees cannot, so the lawyer must use a bank that directs deposits, two separate card plans, or accept cards for only one fund type. A single holding or clearing account that commingles them violates HRPC 1.15.

Q: Can the lawyer pass credit card processing fees to the client?

A: The opinion concludes those charges may be charged to the client with the client's advance consent. If charged against the trust account without advance consent, the attorney must deposit funds sufficient to cover the bank charges.

Background and rules framework

The opinion interprets HRPC 1.15 (safekeeping property; commingling), including HRPC 1.15(a) and 1.15(c), together with the Hawaii Rules Governing Trust Accounting (Rule 4). It also relies on HRPC 1.2 and 1.4(b) for client consent to pass through card charges and HRPC 1.5(b) for the duty to fund the trust account when charges are drawn against it. The safekeeping provisions correspond to Model Rule 1.15.

Citations and references

Rules of Professional Conduct (Hawaii; cf. Model Rules):

• HRPC 1.15 (safekeeping property; commingling), including 1.15(a) and 1.15(c) (cf. Model Rule 1.15)
• HRPC 1.2 (scope of representation) (cf. Model Rule 1.2)
• HRPC 1.4(b) (communication) (cf. Model Rule 1.4)
• HRPC 1.5(b) (fees) (cf. Model Rule 1.5)

Other authority:

• Hawaii Rules Governing Trust Accounting, Rule 4 (RGTA 4, including 4(a))

See also

• CA Ethics Op. 2007-172: Credit Card Payments for Fees and Costs
• Alaska Ethics Op. 2023-2: Modifying Credit Card Preauthorization

Source

• Landing page: https://dbhawaii.org/legal-ethics-advice-for-hawaii-lawyers/
• Original PDF: https://dbhawaii.org/wp-content/uploads/FO_45.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.
Disciplinary Board of the Hawai#i Supreme Court
201 Merchant Street, Suite 1600
Honolulu, Hawai#i 96813
Telephone (808) 599-1909
www.odchawaii.com
Chairperson

Hon. Clifford L. Nakea (Ret.)
Vice Chairperson

Hon. Leslie A. Hayashi
Secretary

Nathan J. Sult, Esq.
Treasurer

Joy M . M iyasaki, Esq.
Filing Clerk

Board M embers
James L. Branham, Esq.
Gary M . Farkas, Ph.D., M BA
Diane D. Hastert, Esq.
Philip D. Hellreich, M .D.
Shelton G.W. Jim On, Esq.
Harrilynn K. Kame#enui, Esq.
Hon. Evelyn B. Lance (Ret.)
Philip H. Lowenthal, Esq.
Jeffrey P. M iller, Esq.
Carolene N. Kawano Neely, M .S.W., M .Ed.
Jeffrey S. Portnoy, Esq.
Irwin J. Schatz, M .D.
Judith A. Schevtchuk, Esq.
Asst. Chief Eugene Uemura, (Ret.), M A.Ed.

Faye F. Hee
Board Counsel

Bradley R. Tamm, Esq.

FORMAL OPINION NO. 45
HANDLING CREDIT CARD PAYMENTS
An attorney may accept credit cards in payment of legal fees
and expenses, except as prohibited by law or the Hawai#i Rules of
Professional Conduct.
An attorney who accepts credit card payments for retainers,
flat fees, and/or earned fees has three choices in the handling of
these funds: 1) deal with a banking institution which allows the
attorney to direct the deposit of these funds into specific
accounts; 2) have two credit card plans - one solely for the client
trust account for retainers and flat fees and one solely for a
business or other nontrust account; or 3) accept credit card
payments only for retainers and flat fees to be deposited into a
trust account or accept credit card payments only for earned fees
to be deposited into a business or other nontrust account.
"Holding" or "clearing" accounts commingling these types of funds
(retainers, flat fees, and earned fees) violate HRPC 1.15.
Unearned retainers and flat fees must be deposited intact into
a trust account. HRPC 1.15(c); Rules Governing Trust Accounting,
Rule 4. These funds must be maintained in trust until earned. RGTA
4(a).
Earned fees cannot be deposited into a trust account. HRPC
1.15(a) (commingling); RGTA 4(a).
Any charges associated with the acceptance of credit cards may
be charged to the client with the client's advance consent. HRPC
1.2; HRPC 1.4(b). If any charges associated with the acceptance of
credit cards are charged against a client trust account and the
client has not given advance consent to charges, the attorney must
deposit into the account funds reasonably sufficient to pay these
bank charges. HRPC 1.5(b).
The Disciplinary Board's mission is to maintain the integrity of the legal profession
and protect the public from professional misconduct by attorneys.

DATED:

Honolulu, Hawai#i, June 26, 2003
Carroll S. Taylor
Chairperson, Disciplinary Board

UPDATED:

Honolulu, Hawai#i, March 19, 2015

Hon. Clifford L. Nakea (Ret.)
Chairperson, Disciplinary Board

FORMAL OPINION No. 45, Page 2.