Credit Card Surcharges Revisited

Remember the Payment Card Interchange Fee Settlement?

Processing credit card payments is a fact of life for today’s law firm. So are costly surcharges – the fee assessed by your bank or credit card processor for the privilege of accepting this form of payment.

In 2015 – 2016, some Oregon law firms took the position that the Payment Card Interchange Fee Settlement (PCIFS) permitted them to pass on credit card surcharges to clients.  As a reminder, the PCIFS was a class action settlement among merchants, Visa, MasterCard, and other defendants. American Express and Discover were not part of the litigation.  Applying the conditions of the settlement to a service-based industry like the legal profession was always tenuous at best.

Regardless, using the PCIFS as a justification for passing on credit card surcharges became moot in mid-2016 when the Second Circuit Court of Appeals reversed and remanded approval of the settlement.

The Post-PCIFS Era

If you’ve read my blog before, you know I’m an ardent advocate of absorbing credit card surcharges as a cost of doing business. This doesn’t mean watching money fly out the door without recourse.  It does mean you shouldn’t pass on surcharges as a separate cost item to the client.  Consider:

  • Assessing surcharges (or crediting clients for the net amount less fees) involves extra administrative and bookkeeping steps.  If you get the math wrong and the transaction involves trust account funds, you could face disciplinary action.
  • Firms who want to charge for credit cards often bill clients for postage, faxing, scanning, and photocopying.  These items already rate high on the client annoyance scale.  Pass on surcharges and that scale may tip.
  • Ethically, clients are not obliged to pay any cost to which they did not agree.  If you did not include the right to assess surcharges in your fee agreement, you cannot unilaterally pass on the cost after the fact.  Granted, you can fix this by modifying your fee agreement – but it isn’t necessarily advisable and may not be successful.  See OSB Formal Opinion 2005-97.
  • Fees can be adjusted to reflect this, and other, costs of doing business.
  • Surcharges are outright illegal in some states and capped in others.
  • Passing on surcharges may trigger compliance with Regulation Z of the Truth in Lending Act:

Passing the merchant fee on to the client or crediting the client for the net amount of the transaction only … may implicate Regulation Z of the Truth in Lending Act, 12 CFR §226.  As a result, you may be compelled to offer cash discounts to all clients and make specified disclosures to your clients who pay by credit card.  See CONSUMER LAW IN OREGON ch 14 (Oregon CLE 1996 & Supp 2000).  OSB Legal Ethics Opinion No. 2005-172.

As Before: Proceed at Your Own Risk

If you want to assess surcharges, do your own research and proceed at your own risk.

I leave you with these words of wisdom from LawPay, a popular credit card processor serving the legal profession:

While your state may allow you to pass on transaction fees to clients, think carefully before doing so. Potential clients will not expect a higher fee simply because they use a different form of payment. In today’s market the best practice may be to simply absorb these fees yourself as the cost of doing business.

All Rights Reserved 2018 Beverly Michaelis

Obstacles to Improving Workflow


I asked this question during the recent CLE, Best Practices for Client Intake, Engagement, and Workflow.  You may be interested in the results:

For those who don’t have the time

This is a hard one, and I get it. But nothing will change unless you make the time.

I don’t have a magic solution for adding a 25th hour to the day. I do know that if something is important enough, we make room for it. So if you’re motivated, start by looking for time on your schedule. Find two one-hour blocks, whether they are close in time or a month apart. Schedule appointments with yourself. Mark the subjects “Workflow:brainstorm” and “Workflow:prioritize.” Commit to making the first time block outside the office. Leave your smartphone and other devices behind. Grab a legal pad, a pen or pencil, and go. Visit your favorite coffee shop or sit in the park.

Brainstorm

During the first time block, make a list of all the functions in your office that you’d like to improve. Dream small: “I wish saving email to the client’s file was easier,” or dream big: “We need a better conflict system.” Don’t rule anything out. Just let the ideas come and go until the hour is up.

prioritize

Your goal during the second time block is to prioritize. This can happen in your office IF you commit to working distraction-free. This means no phones, no checking email, no interruptions by others. You are in an appointment, albeit with yourself. If the temptations are too great, leave. As before, don’t bring devices.

Pull out the list of ideas from your brainstorming session and start marking what is most important: first, second, third, and so on. If you’re in your office, type up the list. If you’re out and about, take a moment when you get back to do so.

Investigate

Schedule another one hour appointment on your calendar. This third time block will be devoted to investigating options for the number one priority on your list. Google is your friend. Look for online reviews from neutral, authoritative sources. The ABA Legal Technology Resource Center is a good starting point. Check out blog posts that come up in search results. Ask colleagues by posting to a listserv. If you have an IT person, get their input. Ask staff. Depending on how complicated your first priority is, you make have to block out more time for this step. However, there are definitely some small-scale functions that you can reasonably investigate in an hour’s time.

Keep going: implement and master

Sticking with your number one priority, make a decision on which option you want to pursue. Schedule out more appointments on your calendar to implement the option. Then wait. Live with your new technology or process a while. Be prepared to make adjustments. When you are comfortable and feel you have mastered the new workflow, move on to priority number two and repeat the steps above. My point: you can find the time and you can make the time. It doesn’t have to happen all at once.

Procrastination

We sometimes procrastinate about improvements we know we should make because we feel overwhelmed or have trouble accepting change. Hopefully the approach outlined above will help you overcome these concerns. If after the brainstorming session you are worried that your priority list has nothing but large-scale items, consider reaching out for expertise. Ask colleagues for referrals to IT or other consultants. Consider using the practice management team at the OSB Professional Liability Fund. You don’t need to do it all, and you don’t need to do it alone. There is help. It may be that you would benefit by blocking out time for a second brainstorming session. Use this appointment to identify three things that are important to you that you can realistically accomplish in the next twelve months. Save your original list, but table it for now.

The Payoff

You can do this. Remember, if you are overwhelmed pick the top three things you know can be accomplished in the next twelve months. Save your other ideas, but table them for now.

Stay motivated! Improving workflows will make your life easier by eliminating unnecessary, repetitive steps. This will reduce your stress and free up more time. Who doesn’t want that? And with three or more successes under your belt, I know you’ll want to keep going.

All Rights Reserved 2018 Beverly Michaelis

 

The Best of 60 in 60 from the 2018 ABA TECHSHOW

It’s hard to categorize the annual “60 in 60” tips session at ABA TECHSHOW because it could be anything – useful websites, new apps, career resources, gadgets, editing and proofreading tools for lawyers, or anything else the panelists find that we can’t live without.  Below is a sample of what was covered this year.  For the complete list, view my story on Wakelet.

The short list from 60 in 60

  • TimeFlip – a battery-powered cardboard polygon that uses an app on your smartphone to track time spent on meetings, phone calls, email, and other tasks.
  • Dryver – the mobile app where you can hire a driver starting at $15.95/hour to drive you around in your own car.
  • Ceev.io – the free Chrome extension that uses your LinkedIn profile to create a resume. Here’s mine. Choose from four themes, nine accent colors, and five different fonts at no charge. Unlock more options for $10.  My tip: also consider Strikingly, which allows you to create a website using your LinkedIn profile.
  • The Noris digital pencil from Staedtler – an electromagnetic input pencil that feels like your old #2, looks like your old #2, and works with Samsung smartphones.
  • Sideways Dictionary – a site that demystifies tech babble like “sandboxing” or “honeypot,” which have nothing to do with kids playing or bears eating honey.
  • PerfectIt – an intelligent editor and proofreader with a special style sheet specifically designed for lawyers. $99 a pop, integrates with Microsoft Word. Check out the free trial.
  • Flow-e – an email and task management platform combined to transform your inbox into a highly visual task board (Kanban style) or Sanebox, which automatically filters unimportant email out of your inbox (works with Gmail, Office 365, Apple iCloud, etc.).

There’s so much more … like how to create your own digital medical exhibits

Hopefully I’ve tempted you. Check out the complete list from 60 in 60!  Where else will you learn how to validate websites, determine if your passwords have been compromised, use private browsing, convert your blog into a podcast, check Google trends, or mute calls using your Apple watch?

All Rights Reserved 2018 Beverly Michaelis

Postscript

For more summaries of 2018 ABA TECHSHOW tips, advice, and resources for lawyers, see my main Wakelet page.

Engagement Letters Are Your Friend

Today, I’d like to share a recent post from our friends at NW Sidebar about the importance of engagement letters.

In Cox v. Alliant Insurance Services, Inc., 2017 WL 4640452 (E.D. Wash. Sept. 19, 2017) (unpublished), the plaintiffs sought to disqualify the opposing law firm based on a conflict of interest. One of the plaintiffs argued that he was a former client of the firm on a substantially related matter, necessitating the law firm’s withdrawal.

The plaintiff’s contact with the firm was as a representative for a corporation.  In concluding that no attorney-client relationship existed between the plaintiff and the law firm, the court relied on two key points:

  • The law firm and corporation executed a written engagement agreement that identified the corporation (and not the individual) as the client in the matter.
  • The plaintiff failed to introduce contradictory evidence, i.e., he could not point to any communication or action by the firm which expanded the attorney-client relationship to include him individually as a client.

Read the full post here.

Lessons Learned

As we discussed in the CLE, Limiting Exposure to Conflicts, identifying your client and clarifying the client’s status (prospect, current client, or former client) is paramount to conflict screening and limiting your potential liability. The single best tool at your disposal? Written engagement, disengagement, and nonengagement letters – all of which are available at the Professional Liability Fund website.

But the law firm in Cox didn’t stop at the engagement letter. Firm members were also consistent in their actions toward the corporate representative. There was no evidence of emails, correspondence, or other communication supporting that the corporate representative was an individual client of the firm.

The moral of the story? A solid engagement letter is a small investment to make in the realm of thwarting conflicts and liability. Even better: maintaining consistency in your corporate communications.

All Rights Reserved 2018 – Beverly Michaelis

 

 

Tackling Lawyer Debt

Money is a significant stressor in many people’s lives. Student loan and credit card debt can feel overwhelming, even paralyzing. Here are some resources that can help.

Student loan debt

In a recent guest post on Legal Ease, Andrew Josuweit of Student Loan Hero shared three solutions to ease the burden of student loan debt:

Start the process of tackling student loan debt by checking out the resources published by the Oregon New Lawyer Division. All three Oregon law schools offer a Loan Repayment Assistance Program (LRAP) for their recent graduates. If you attended law school out-of-state, check with your law school to see if they offer their own LRAP. You may also be eligible for the Oregon State Bar’s LRAP program.

For an overview of this topic, check out Navigating Student Loan Repayment Options, a free CLE available on the Professional Liability Fund website.

Credit card debt

If you are struggling to chip away at your credit card debt, consider whether a balance transfer is right for you. In theory, a balance transfer credit card allows you swap out your high-rate card for a cheaper card, paying off your original balance. Nerdwallet recently published a list of the best balance transfer cards for 2018. Terms vary widely, so do your homework. But all in all, the Nerdwallet list seems to include some good deals:

  • Discover – No annual fee, 0% interest on purchases for 6 months and 0% on balance transfers for 18 months, rewards rate 1.00%
  • Citi Diamond – No annual fee, 0% on purchases for 12 months and 0% on balance transfers for 21 months
  • Chase Freedom – No annual fee, 0% on purchases and balance transfers for 15 months, rewards rate 1.00%

For the pros and cons of pursuing a zero percent balance transfer, see this post.

Know your spending habits

Establish a system to track personal income and expenses. Free budget templates are available from Office 365, Mint, or these sourcesQuicken Deluxe is another good solution: cheap, easy to use, and a great value.

Speaking of budgets, have one. Each month, compare your actual income and expenses to the amounts you projected. If you see yourself going astray, make a mid-year course correction.

Be ready to make tough decisions and a few sacrifices to cut back on spending.

Managing the stress

Money management isn’t easy, and being in debt is stressful. But you are not alone. If you don’t know where to start, reach out to the attorney counselors at the Oregon Attorney Assistance Program (OAAP). They are supportive and can point you in the right direction. Help is free and confidential: 503-226-1057 or toll-free in Oregon 800-321-6227.

For an uplifting account of how one lawyer survived law school debt, read this article from the September 2017 issue of InSight, the OAAP publication.

All Rights Reserved 2018 Beverly Michaelis