Credit card processing for lawyers: trust accounts and fees

Credit card processing for lawyers works the same way as for any professional practice, except for one thing: some of the money isn't yours yet. Bar rules generally require retainers and other advance payments to sit in a client trust account until they're earned. That shapes everything about your card setup: which account a payment lands in, who pays the processing fee, and what happens if a client disputes the charge. Get it wrong and a routine card payment can leave your trust account short.

We're a payments company, not your ethics counsel, and the rules vary by state bar. This guide explains how card payments interact with trust accounting, using the ABA's Model Rules and bar guidance we can point to, so you know which questions to ask your own bar and your processor.

How do law firms accept credit card payments?

The same ways other professional firms do, through a few channels:

• A terminal at the front desk for clients who pay in person.
• A virtual terminal for payments taken over the phone, keyed in by staff.
• Invoices and payment links sent by email or text.
• Recurring billing for payment plans on fees already earned.
• A payment page on your website for retainers or consultation fees.

Every one of those channels has to answer the trust question before it goes live. A payment link for an unpaid invoice and a payment link for a new retainer may look identical to the client, but they need to land in different bank accounts. Our professional services page covers card acceptance for firms more broadly.

Can a lawyer put credit card payments into a trust account?

Yes, and for unearned money, generally you have to. The ABA's Model Rule 1.15(c) says a lawyer "shall deposit into a client trust account legal fees and expenses that have been paid in advance, to be withdrawn by the lawyer only as fees are earned or expenses incurred" (ABA). How the client pays doesn't change that. A retainer paid by card is still a retainer.

The same rule limits what else goes in. Rule 1.15(b) lets a lawyer deposit their own funds in a client trust account "for the sole purpose of paying bank service charges on that account, but only in an amount necessary for that purpose." That's why card fees and chargebacks need careful handling, as we'll get to.

The ABA's Formal Opinion 505, issued in May 2023, addressed fees paid up front. In the ABA's summary, fees paid in advance, including flat fees, have to be deposited in a client trust account until earned, and under the Model Rules an advance fee can't be nonrefundable, with any unearned portion returned to the client (ABA).

The Model Rules are a template. Each state adopts its own version, and state bars issue their own opinions on flat fees, trust accounting, and card payments. Read your state's version of Rule 1.15 before you set anything up.

Which payments go to trust and which go to operating?

Ask one question about every payment: has the work it pays for been done? If not, it's client money and belongs in trust. If so, it's yours and belongs in operating. Under the Model Rules, the split looks like this:

The Washington State Bar Association's trust account guidance takes this to its practical end: if you accept cards for both advance fees and earned fees, you need two merchant accounts, one tied to your trust account and one to your business account, and a card payment for an advance fee has to go directly into trust rather than into the business account first (WSBA).

Two merchant accounts means two merchant IDs, two sets of statements, and two payment links or terminal profiles. It's more admin, and it's the cleanest way we know to keep the money where it belongs. Our explainer on the merchant ID covers what each one does.

Who pays the processing fee on a trust deposit?

You do, from your operating account, if you set it up right. The trouble is that some processors take their fee out of each deposit before it lands, which is called net settlement. On a trust account, that means the fee comes out of client money.

Here's what that looks like. Say a family law practice in Seattle takes a $5,000 retainer by credit card, and its all-in card cost on that sale is 2.9%, an assumption for the example. That's $145. On net settlement, $4,855 lands in trust. The client's ledger says $5,000 is being held for them, the bank says $4,855 arrived, and the $145 gap is either covered by other clients' money or shows up as a shortfall at reconciliation. Neither is a good look in a trust account audit.

There are two common fixes:

1. Have the processor bill all fees for the trust merchant account to your operating account, usually once a month, so the full $5,000 lands in trust. WSBA's guidance says you may be able to arrange for trust account card fees to be charged to your business account.
2. If fees must come out of trust, keep your own money there to cover them. WSBA says to deposit your own funds to cover fees charged to the trust account, and Model Rule 1.15(b) allows your own funds only in the amount necessary. Whether card processing fees count as "bank service charges" under your state's rule is a question for your bar.

Option one is cleaner, and it's the first thing to ask any processor, us included. Get the answer in writing: when are fees collected, and from which bank account? If you work with us, your dedicated rep can walk you through how deposits, fees, and chargebacks would flow for each account before you sign anything.

What happens when a client disputes a trust deposit?

The processor takes the disputed amount back from the bank account tied to that merchant account. If that's your trust account, a chargeback can pull out money that belongs to other clients, especially if you've already earned the retainer and moved it to operating. WSBA's guidance calls a chargeback against the trust account potentially disastrous for exactly that reason, and says to make sure the processor can't take chargebacks out of trust.

Set it up so it can't happen:

• Ask whether chargebacks, refunds, and fees on the trust merchant account can be debited from your operating account instead.
• If they can't, get the processor's written answer and talk to your bar before you take card retainers.
• Reconcile the trust account every month, so a chargeback never sits unnoticed.

Prevention matters as much as plumbing. A signed engagement letter, a statement descriptor clients recognize, and invoices that show what was done give a client fewer reasons to dispute a charge, and give you evidence if they do. Our guides on how to prevent chargebacks and on chargebacks vs refunds cover the evidence that wins disputes.

Can lawyers charge clients a credit card fee?

Sometimes, with three sets of rules to satisfy: your bar's, the card networks', and your state's. Start with the bar. The New York State Bar Association's ethics committee said in Opinion 1258A, issued April 23, 2024, that a lawyer may pass a merchant processing fee on to a client paying by credit card if both the legal fee and the processing fee are reasonable, and if the lawyer has explained the charge and gotten the client's consent in advance (NYSBA). It treats the fee as an "expense" under Rule 1.5. WSBA's guidance takes a similar line: advance notice, and no more than a fee that reasonably reflects your actual card cost.

Then the networks. Visa caps a credit card surcharge at your merchant discount rate or 3%, requires notice to your acquirer at least 30 days before you start, and neither Visa nor Mastercard allows a surcharge on debit or prepaid cards (Visa, Mastercard). Some clients will pay a retainer with a debit card, so your system has to tell the two apart.

Then state law. Connecticut, Maine, and Massachusetts ban credit card surcharges, and New York requires a seller that surcharges to post the total card price (GBL 518). A firm in New York City should read the statute alongside the bar opinion. Our guide to whether it's legal to charge a credit card fee covers each state.

One more wrinkle is specific to law: if a client pays a $5,000 retainer plus a $145 card fee in one transaction, the $145 reimburses your cost rather than paying for legal work. Whether it can pass through trust, and how to move it out, is exactly the kind of question to put to your state bar's ethics hotline. You can sidestep it by charging a fee only on earned-fee invoices, or by not surcharging at all.

Our view: a card fee on a large retainer can sour a new client relationship before the work starts. If you do it, put it in the engagement letter, offer a fee-free way to pay, and keep it at or below cost. Our credit card surcharging program handles the network disclosure and setup.

Invoices, payment links, and payment plans for law firms

Much of a firm's billing happens by email and phone, and a few habits keep it clean:

• Send a payment link tied to the right merchant account: a trust link for retainers, an operating link for invoices. Label them so staff can't mix them up.
• Put the payment link on the invoice itself, so the client sees what they're paying for before they pay.
• Use recurring billing for payment plans on earned fees, with the client's written consent to store the card and the schedule spelled out.
• Expect higher costs on keyed and online payments, which carry more fraud risk than a card tapped in person. Our guide to card-not-present transactions explains why.
• Never write card numbers in a file note, an email, or your case management system. Our PCI compliance guide covers the basics.

Our online payments include hosted checkout and fraud screening with AVS and CVV checks, and the virtual terminal handles invoices, payment links, and recurring billing.

Law firm card processing setup checklist

1. Read your state's version of Rule 1.15 and any bar opinions on card payments, flat fees, and trust accounting.
2. Decide which payments go to trust and which to operating, and write it down for staff.
3. Set up separate merchant accounts for trust and operating if you take both kinds of payment.
4. Get it in writing that fees, refunds, and chargebacks on the trust account are collected from operating.
5. Fund the trust account with your own money only as your state's rule allows.
6. Update your engagement letter: accepted payment methods, any card fee, and the client's consent.
7. Create separate, clearly labeled payment links for retainers and invoices.
8. Reconcile the trust bank balance against client ledgers every month.
9. Confirm your system never surcharges debit or prepaid cards, if you surcharge at all.
10. Train whoever takes phone payments on which account each payment belongs in.

When is taking cards not worth it for a law practice?

When your processor can't keep fees and chargebacks off your trust account. In that case, we'd take cards only for earned fees into operating, and accept retainers by check or bank transfer until the setup is fixed.

It may also not be worth it for very large retainers. On a $25,000 retainer, 2.9% is $725, and some clients paying that much would rather wire it. Cards earn their keep on smaller, frequent payments: consultation fees, monthly invoices, and payment plans. If most of your work is flat-fee matters, your state's rule on flat fees decides the setup, not your processor.

Your next step

If you already take cards, your statements show how fees are being collected and from which account. Send one for a free statement review and we'll show you what you're paying and how the fees are being taken, so you can check it against your trust accounting. Or contact us to talk through a two-account setup before you start. Bring your bar's rules; we'll bring the payments side.