With a H/T to Debra Feinberg I’ve discovered Squareup, an application which allows you to convert your smart phone into a credit card swiping machine to accept payments which then go directly to your account…sort of. All I kept thinking of was how ideal for the solo practitioner, or the lawyer who gets tagged at the court house for representation spontaneously from a pro se litigant who then gets cold feet at the last minute….just whip out your smart phone and card reader, get paid, get to work. More importantly, even if you are simply working more traditionally and don’t want contracts, card reader monthly fees, etc. here is an almost perfect device to assist with your business at low- to- no cost (traditional percentages per transaction apply similar to Paypal.) And the card reader is free!
Take a look:
Read the Terms of Service, however. They do say monies received prior to going to your bank account will be commingled. Yes, the dreaded ‘commingled’ funds if it is an unearned fee. But you know what? I’m willing to bet in the not too distant future this type of ‘commingling’ will no longer be considered ‘commingling’ under the rules. Why? Because let’s face it. If you have a bank account with the bank and all you have to show for it is a statement, your money is not reposing in its own little hermetically sealed baggie in the vault. It’s sitting next to someone else’s money in the bank doing its own ‘commingling’ or it’s off financing someone’s home….until you withdraw it. 
What do you think? Could this work for your practice?
I don’t think the “co-mingling” rules are likely to change at all in the near or even distant future. They are designed to keep attorneys from using funds clients have given them for safe-keeping (essentially) until the work is actually performed. The use of IOLTA accounts isn’t about keeping the money actually, physically parceled, it’s about accounting, making it easy to track when an attorney has taken funds they are not yet entitled to, made them available for operating expenses, and possibly used them before earning them. Just because the money isn’t physically separated by the bank is immaterial.
Taking credit cards for services already rendered is no problem–but using a device like this for retainers is asking for problems. The money couldn’t be deposited into your operating account if it’s a retainer–and if it’s deposited into your IOLTA account, the fees *can’t* be taken from that account, because that is an operating expense. It’s a pain, yes, but I highly doubt that will change.
So, if you are willing to hold off on collecting the fee until *after* the representation, then maybe it would work. Otherwise, not worth the risk.
David, You realize I was being facetious about physically ‘touching.’ Yes, of course it is an accounting issue. However, based upon your argument, then no attorney can accept credit card payment this way or any other way because they all charge fees to the vendor. You are permitted to keep a small amount of your own money in an IOLTA as a hedge against any issues which might trigger an automatic report such as an inappropriate bank fee/error. http://www.dcbarfoundation.org/documents/NewRuleOrder.pdf (this is just one example). Other states have considered Paypal. It’s why I see it changing
The issue with Square use by lawyers isn’t commingling as much as it is the transaction limits. When I looked into Square, they had two limits that made this service unattractive. The first was a $125 limit on any one charge and the second was a monthly limit that was expressed in dollars.
My hourly rate is more than $125 (and I suspect most are), so this won’t be a viable solution until they raise the roof a bit.
Mark, I don’t mean to question you but in their own ad they use a $300 couch! I’m sure the terms of service and amounts will change as they grow. I know they limit the amount of transfers to you per day/week. So there are potential issues as they grow. Yet, this is something to keep an eye on for the not so distant future.
Mark-
Perhaps that has changed from when you first looked at Square. From their current website:
“How much money can I accept?
Square enables you to accept card payments of any amount. No limits.”
Yes, I realize you were being facetious, but I don’t see it changing.
There are actually a couple of vendors that specialize in merchant services (credit card processing) for attorneys. They will set it up so that all money charged will go into an IOLTA account, while the credit card fees come out of your operating account. I think that is the future… technology adapts.
From Attorney Dan Reuter:
Here in Indiana there is only one credit card provider who works with the lawyers’ trust account system. So no expenses or unearned fees (retainers, etc.), or PI judgment proceeds can go through any other system. However, if, like me, you do mostly family & criminal law on a fixed-fee basis, none of this constitutes a problem. My problem is that few of my clients have credit cards. I’ll look @ this “squareup”, though.
I think it is only practical for a smartphone or a 3-g IPad. Apparently it works via WiFi (since it works on an IPod Touch), but there is no WiFi available to the public in the court houses I frequent. I guess you could do it via MiFi, but now we are playing around with a lot of hardware. I use a touch & not a smartphone because you can’t take a mobile phone with you into jail & I often want my calendar, etc. when talking with jail residents.
For what it’s worth, I’ve been using AcceptPay by American Express (www.acceptpay.com) for about six months and have been recommending it to both attorneys and non-attorney business owners. They haven’t aggressively marketed this service to lawyers, and there’s no smartphone swiping option, but I’ve been pretty happy. It’s really run by a company called PaySimple, which from my research is among the best out there for streamlining the receivables process. I went with them because it’s very easy to set up automatic recurring billing, which supports a big part of my business model: flat-fee legal service plans that are billed monthly and vary in price by the amount of services included. I sign clients for a minimum one-year commitment and AcceptPay has made the payment part of this very easy.
The regular invoicing and collection features are pretty good too and allow me to accept payments by credit card, eCheck and ACH payments in person, by phone or via online payment form. I can also set up unlimited, free user profiles to help me get out of the bookkeeping business some day. The rates are pretty reasonable and customer support has been outstanding.
Of course, being able to deal with trust accounts is a huge issue. AcceptPay is able to support dual accounts for my trust account and operating accounts (client funds are deposited into my trust account and monthly fees are withdrawn from my operating account and/or charged to a credit card).
The only downside I’ve found is that while AcceptPay integrates with QuickBooks, that doesn’t include QuickBooks Online (unfortunately, I’ve found that a lot of things that say they integrate with QB don’t integrate with QB Online).
Hope this helps.
Brian
“14. Representation and Warranties
You represent and warrant to us that: …(j) you are not engaged in and will not accept payment for any of the following: …(16) bankruptcy attorneys.”
I would never accept payment from a client via a credit card for attorney’s fees & costs associated with a bankruptcy, but debit cards with MC/Visa logo are basically a cash transfer.
I wonder why squareup specifically excluded bankruptcy attorneys from using its service.
edsager
They probably just want nothing to do with anything that even smacks of ‘discharge’ possibilities and being a third party to it…who knows.
I wonder if this works with LawPay? LawPay does credit card processing for lawyers and is set up to handle trust accounting. It would be great if they are compatible with Square’s swipe technology.