Does it Matter How I Get Paid?
The Perils of Peer-to-Peer
Mark W. Gifford Wyoming State Bar Office of Bar Counsel Cheyenne, Wyoming
As it is with everything else, technology is impacting the way lawyers receive payment for their services. The further technology strays from the regulatory framework in which the banking industry operates, the riskier it becomes for lawyers to accept payments via the more technologically advanced platforms. These risks are heightened when a lawyer uses peer-to-peer (P2P) payment platforms for advance fees, costs and other transactions that must be deposited in the lawyer's trust account pursuant to Rule 1.15,W.R.Prof.Cond.
As a starting point, it is critical that all client payments for advance fees and costs be deposited directly into the lawyer's trust account. Such payments cannot pass through the lawyer's operating account on their way to the trust account. This would constitute commingling of the lawyer's funds with those belonging to the client or other third party. No matter how brief the period of commingling, there is still the risk however theoretical, that client funds would be exposed to the lawyer's creditors. This practice is strictly prohibited by Rule 1.15.
P2P payment apps are ubiquitous and include PayPal, Venmo, Zelle, Google Pay, Apple Pay and others seemingly too numerous to count. How a lawyer chooses to be paid for services, whether by cash, check, money order or in baked goodsm matters greatly when the payment or other property must be held in trust. P2P payment apps present particular challenges and corresponding risks for such transactions. "Broadly speaking, some of these applications move money directly from one bank account to another bank account, while other applications move the money through an intermediary 'digital wallet.'"1
Such applications are ripe for potential commingling of the lawyer's personal funds, earned fees, and client funds. At the very least, a lawyer would be wise to set up a separate account through which any transactions consisting of client funds are directed. Though having multiple accounts may be tedious (and will increase the lawyer's recordkeeping and monitoring efforts), the potential for client harm and related misconduct outweigh any concerns of convenience."2
No matter which...