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Credit Card Transactions

Credit cards are a convenient method of making a payment in a busy law firm but these transactions come with particular requirements.

Under rule 5.05(2), lawyers are only permitted to make withdrawals from a trust account when there are sufficient funds to cover the withdrawal and it falls into one of several situations. One of those situations is that the money is required to reimburse the member for money properly spent or incurred on behalf of a client.

This means that a lawyer may not withdraw funds from a trust account to reimburse the member’s or the firm’s credit card for an expense until that expense has been posted to the credit card account. In addition, the lawyer’s books and records must include adequate supporting documentation such as a receipt. The credit card receipt should be itemized for each transaction and that receipt should be placed in the file with the respective amount highlighted.

Lawyers are also restricted as to what can be paid into a trust account. Rule 5.04(5) provides that a lawyer can only pay trust money, money that has been inadvertently drawn from the trust account and money made up of both money belonging to a client and money belonging to the lawyer into a trust account. The rules also provide that certain money shall not be paid into a trust account – see rule 5.04(7).

Section 3.6-1 of the Code of Professional Conduct provides that a lawyer must disclose all financial dealings between the lawyer and the client. It also states that the lawyer cannot charge fees, extra fees, rewards, costs, commissions, interest, rebates, allowances or other compensation related to professional employment without first disclosing it to the client and obtaining his or her consent.

Credit card companies charge a transaction fee to the account to which a credit card payment is deposited. In accordance with the provisions outlined above, this fee is not permitted to be processed through a trust account and therefore, a payment made on a credit card that will charge a fee to the account to which it is deposited is prohibited.

Lawyers should also review resources on Using Credit Cards with a Rewards Program.


Withdrawals and Transfers from Trust Accounts: rule 5.05 (Law Society Rules)

Deposits in Trust Accounts: rule 5.04 (Law Society Rules)

Reasonable Fees and Disbursements: section 3.6-1 (Code of Professional Conduct)

Using Credit Cards with a Rewards Program

Related Topics:

Withdrawing and Transferring Funds from Trust Accounts

Maintenance of Records: rule 5.02 (Law Society Rules)

Payment and Appropriation of Fees: section 3.6-10 (Code of Professional Conduct)

Reasonable Fees

Handling Cash

Trust Cheques

Managing Money

Law Office Organization and Administration

(Posted: June 12, 2020)