Florida Bar Ethics Committee Proposes Change to Credit Card Acceptance Fees

Fla. Bar proposes change to ethics rule on credit card fees. Rule 4-1.5(h) Click To Tweet

Recently I felt compelled to see if I could have an impact on all Florida attorneys and their practice. Currently, the ethics rules prohibit lawyers from charging a losing party (or their client) the transactional costs associated with accepting credit cards, or other forms of payment.

Current Rule

The prohibition against passing along the transactional costs is found in Rule 4-1.5(h), which reads:

(h) Credit Plans. A lawyer or law firm may accept payment under a credit plan. No higher fee shall be charged and no additional charge shall be imposed by reason of a lawyer’s or law firm’s participation in a credit plan.

That means if a defendant wants to pay a judgment (or sanction, or fee award) by credit card, the lawyer ends up paying the transactional costs; the rule prohibits them from passing along that cost to the payor or their client. The defendant essentially benefits from using a more costly form of payment (a credit card), while the lawyer eats the costs for offering that option. On a $5,000 payment, a lawyer may end up losing $125 in trasactional costs (assuming a bank fee of 2.5%). That just doesn’t seem fair.

A bit of history: The rule was enacted in the 1980’s during the early days of credit and charge cards. Although I haven’t researched it extensively, perhaps the cost of accepting such a novel form of payment was high at that time, and perhaps the Bar was afraid that lawyers would pass along the high costs associated with equipment and fees to the person paying. However, developments in antitrust law regarding merchant processing fees since the 80’s appear to make the current rule violate the Sherman Act.

To ensure that my clients had the full panoply of options to secure payment of their damages from an opposing party, I sought to change that rule. I argued that, based on my experience in a large antitrust case concerning payment methods, the rule, as currently written, may be contrary to federal law that has developed since the rule was originally enacted. E.g. U.S. v. Am. Express Co., 88 F.Supp.3d 143 (E.D.N.Y. 2015). In particular, the Rule’s prohibition against a lawyer charging a different fee based on the method of payment (called “anti-steering” or “no surcharge”) may be contrary to the Sherman Antitrust Act.  It was on that basis that I requested the rule be changed by the Florida Bar.

Proposed New Rule

Today, the Florida Bar Ethics Committee voted 6-0 to change the rule, and has proposed the following:

(h) Credit Plans.  A lawyer or law firm may accept payment under a credit plan.  No higher fee shall be charged and no additional charge shall be imposed by reason of a lawyer’s or law firm’s participation in a credit plan.Lawyers may charge clients the actual charge the credit plan imposes on the lawyer for the client’s transaction.

Now, the Florida Bar Board of Governors will still have to approve this change, as will the Florida Supreme Court, but it looks likely that Florida attorneys may soon have the option to pass along the transactional costs associated with accepting credit cards. This will give lawyers the option of offering a wider variety of payment forms, similar to other merchants, such as gas stations, which often have a cash price and a (higher) credit price. Although a lawyer need not pass along those costs, hopefully they will at least have the option to do so in the future.

Stay tuned…

 

One comment

  1. The proposed language may present another sort of dilemma in that the “actual” charge imposed by the merchant account or credit issuing company can be very difficult to determine. Most cards issued today are rewards type cards that impose additional charges to the merchant (lawyers in this case) which are not always disclosed for several months after the transaction. Reward cards are issued to circumvent poorly written federal consumer protection laws regarding credit card accounts. The “Reward” is paid for by an additional charge or percentage paid by the merchant.

    proposed: “…… Lawyers may charge clients the actual charge the credit plan imposes on the lawyer for the client’s transaction.”

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