Where may a lawyer direct credit-card payments of advance fees when the processor also makes debits?

Plain-English summary

The lawyer accepted credit-card payments for legal services. The opinion says advance payments of fees and expenses must enter the trust account, not the operating account even for an immediate transfer. Earned fees should leave trust reasonably promptly.

A processor may take debits from operating while sending advances to trust and earned fees to operating. The opinion also allows all card deposits into trust with debits from operating, provided earned fees are removed reasonably promptly. Chargebacks may not come from the trust account.

The official text states that it applies Rule 4-1.15 as it stood before changes to subsection (f) in 2016 and subsection (c) and comments in 2019.

Currency note

The official opinion says it applies Rule 4-1.15 before the July 1, 2016 change to subsection (f) and January 1, 2019 changes to subsection (c) and its comments. These trust-account holdings use that earlier rule text.

In practice

For the payment arrangements asked about, the opinion separates advance and earned funds and keeps processor chargebacks out of trust. Its stated rule version predates the later amendments identified by the official page.

Common questions

Q: May advances pass briefly through operating before transfer to trust?

A: No. The opinion forbids even temporary placement of client advances in operating.

Q: May the processor debit operating and deposit advances into trust?

A: Yes. The opinion permits debits from operating with deposits routed by whether the funds are earned or advanced.

Q: Can all card deposits go to trust?

A: Yes, if debits come from operating and earned fees are removed from trust reasonably promptly.

Background and rules framework

The opinion applies Rule 4-1.15(a) and then-current subsection (c) to advance and earned funds, and Rule 4-1.15(a)(3) to chargebacks. Its notes identify later changes to subsections (c) and (f).

Citations and references

Missouri Rules of Professional Conduct:

• Rule 4-1.15(a), (a)(3), (c), and (f) (historical versions noted in source)

Other opinions cited:

• Missouri Formal Opinion 128

See also

• Missouri Informal Op. 2017-01: Fees in Trust

Source

• Landing page: https://mo-legal-ethics.org/informal-opinion/2014-05/

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Reference Note: Effective January 1, 2019, Rule 4–1.15(c) was repealed and a new 4–1.15(c) was adopted. Effective January 1, 2019, Comments [5] and [6] to 4–1.15 were repealed, and new Comments [5], [6], and [20] were adopted. This opinion is based on Rule 4–1.15 in effect prior to that date.

Reference Note: Effective July 1, 2016, subdivision 4–1.15(f) of Rule 4 was repealed and a new subdivision 4–1.15(f) adopted in lieu thereof. This opinion is based on Rule 4–1.15 in effect prior to that date.

Attorney accepts credit card payments for legal services.

Question 1: If a credit card processing company will allow deposits and debits out of only one account, is it ethically permissible to allow credit card payments of advanced funds for fees and expenses to be deposited into the operating account and immediately transferred into the trust account?

Answer 1: No. Pursuant to Rule 4–1.15(a) and (c), a client’s advance payment of fees and expenses must be deposited in the trust account, and those funds may not be held, even temporarily, in Attorney’s operating account. Funds should be withdrawn promptly from the trust account as fees are earned or expenses incurred, pursuant to Rule 4–1.15(c) and Formal Opinion 128.

Question 2: Is it permissible for Attorney to allow the credit card company to take debits from Attorney’s operating account only and make deposits in either Attorney’s trust account or operating account, as designated by Attorney as either earned fees or advance payment of fees and expenses?

Answer 2: Yes. This method complies with Rule 4–1.15(a) and (c). And in accordance with Rule 4–1.15(a)(3), it is not permissible for chargebacks to come from the trust account.

Question 3: Is it permissible for Attorney to place all deposits from a credit card transaction into the trust account but take all debits from the operating account?

Answer 3: Yes, this method complies with Rule 4–1.15, provided Attorney removes from the trust account any funds that represent earned fees within a reasonably prompt period of time.