This is a guest post. Nothing in this post is intended to be construed as legal advice and should not be relied on as such. The views and practices expressed in the post are the author’s, and may not reflect the official stance of LawLytics.
The ability to accept payments online is becoming more and more important for law firms and solo practitioners, and understandably so. Compared to in-person payments, online payments offer obvious and compelling benefits: they are more convenient for both the client and the law firm; they are much more efficient from a bookkeeping and accounting perspective; and in many ways they are more secure.
However, along with all the advantages to this technology come some pretty significant risks. While PCI, data breaches, and trust accounting are all very important topics about which any lawyer or firm who wishes to accept electronic payments should educate themselves, I want to cover a risk very few attorneys, in my experience, recognize or fully appreciate: the unintended attorney/client relationship.
Suffice it to say, the formation of the attorney-client relationship is a murky area of professional ethics and, consequently, professional liability. Not only is the test in most states very subjective, the proof of the elements can be very difficult to establish or defend. My intention is not to provide a comprehensive analysis of the topic, but rather to raise the issue of how accepting payments online may serve as key evidence that an attorney-client relationship existed, even when the “client” was rejected, terminated, or virtually unknown to the attorney or firm. While I do not know whether this specific issue has been litigated, I have heard several stories of prospective clients trying to force the relationship by making payments through a firm’s website. Why would someone do that? For starters, it could potentially conflict out specific firms/attorneys, forcing the opposing party to hire outside their geographic area; it could potentially force the attorney/firm to continue representation; and worst-case, it could potentially lay the foundation for a bar complaint or malpractice lawsuit (see Togstad 291 N.W.2d 686 (1980)).
As most corporate in-house attorneys would say, the goal is not to win a trial on the merits, the goal is to avoid litigation altogether. My intention here is not to litigate whether accepting an online payment can establish an attorney-client relationship, but rather to raise the issue and offer the following advice:
1) Do not make your “Pay Now” or “Pay Online” option publicly available. Consider hiding the URL that hosts your payment page from your site map and, if possible, require a password to access it (one that is only available to existing clients).
2) Use a provider that gives you access to real-time transactional data and notifies you of all transactions. If someone submits an unwanted payment and you immediately return it before it settles into your trust account, you’ll be in a much better position to argue your intent was not to engage in the relationship, not to mention you’ll avoid the headache of dealing with the trust account withdrawal.
3) Make sure any communication with the prospective client contains an adequate disclaimer, which should include language pertaining to the receipt of payments (online or otherwise).
4) Establish a standard practice of sending adequate declination letters and termination letters.
5) Properly train your support staff and vendors hired to perform work on your website. I can’t emphasize this one enough.
Accepting online payments makes life easier for everyone, but like anything else, doing it negligently or recklessly could expose your practice to unnecessary risks. Hopefully this article has not only presented the possible risks but given you some action steps to mitigate or avoid them.
About the author: Wyatt Worden is of counsel at Worden Law in Norman, OK and handles a wide range of cases including matters related to nonprofit law, contract drafting, and immigration. Worden is also the founder of Telos, a payment processing system that donates 50 percent of its profits to the charity of your choice.
