Safeguarding client funds is one of the most important duties a lawyer has. It’s also one of the easiest to get wrong. Trust account management is, on paper, straightforward: Keep client money separate from your own, keep accurate records and reconcile every month. In practice, even honest lawyers sometimes find themselves in disciplinary trouble because they didn’t pay enough attention to the details.

And yes, while we like to joke that many lawyers “went to law school because we can’t do math,” regarding trust accounts, math is no joking matter. Mishandling client funds can put your license at risk.

Now add modern payment apps to the mix. Venmo, PayPal, Zelle, Cash App, Apple Pay and Google Pay are commonly used by clients. They make it easy to pay you from the waiting room, the couch or even while standing in line at the grocery store. For them, it’s as natural as ordering coffee on their phone. But what works for buying lunch doesn’t always work for holding client funds. These consumer-oriented tools were not built with the strict requirements of the Oklahoma Rules of Professional Conduct (ORPC) in mind.

Accepting retainers or settlement funds through a P2P app without safeguards can undermine client confidentiality, violate trust accounting rules and leave you scrambling if a transaction is reversed. Across the country, bar associations have weighed in. The short version? You can sometimes use them, but only with serious precautions. And if you’re handling unearned fees or other trust funds, legal-specific payment processors are almost always the safer route.

A REVIEW OF THE ORPC IOLTA

The ORPC require a lawyer to hold property of clients or third persons separate from the lawyer's own property. This means retainers and flat fees, filing fees, deposition and expert witness fees, as well as settlement proceeds, should go into a trust account until distribution.^[1] These funds must be deposited in an Interest on Lawyers’ Trust Account (IOLTA). The interest earned on IOLTAs is pooled and transferred to the Oklahoma Bar Foundation.

The fiduciary nature of the attorney-client relationship and the need for public confidence in the legal profession require lawyers to maintain trust accounts with the utmost accuracy. Because of this, one requirement under Rule 1.15(k) is that financial institutions must report any overdrafts of IOLTAs to the Oklahoma Bar Association Office of the General Counsel.^[2]

Interest earned by pooling these funds in an IOLTA trust account is forwarded to the OBF by the financial institution where the account is held. These funds are used to support civil legal aid services for the poor and elderly, provide greater access to justice, provide public law-related education programs, support high school mock trial programs and support many other vitally needed law-related charitable programs and activities throughout Oklahoma.

ORPC Rule 1.15(h) states:

A lawyer or law firm that holds funds of clients or third parties in connection with a representation shall create and maintain an interest-bearing demand trust account ("IOLTA Account") and shall deposit therein all such funds to the extent permitted by applicable banking laws, that are nominal in amount or to be held for a short period of time in compliance with the following provisions:

These funds should be nominal in amount or held for short periods of time. To determine whether the client funds are "nominal in amount" or "to be held for a short period of time," the lawyer should consider whether the funds could be invested to provide a positive net return or benefit to the client considering these factors:

1. 1. 1. the amount of interest the funds would earn during the period the funds are expected to be deposited.
      2. the cost of setting up and administering the account, including the cost of lawyer's services, bookkeeping costs, and the cost of preparing any tax reports required for interest accruing to a client's benefit.
      3. the capability of the financial institution to calculate and pay interest to individual clients.

Client funds that do not meet the nominal or short-term definitions may be placed in a separate account that may earn interest for the client's benefit. The client's tax ID number should be used on such an account.^[3]

FEES MUST BE EARNED 

Unearned legal fees, expenses that have not yet been incurred and third-party funds related to representation must be placed in an IOLTA account. Retainers, flat fees (until earned), filing fees, deposition and expert witness costs and settlement proceeds must also be held in trust for distribution. Settlement funds are not to be disbursed until all allocation disputes have been resolved.

In State ex rel. Oklahoma Bar Association v. Weigel, the Oklahoma Supreme Court found that an attorney violated Rule 1.15(a) by taking client fees without completing the agreed work and by failing to keep client funds separate from personal funds. The court emphasized that advance fee retainers must remain segregated until earned. It also clarified that attorneys may not label advance payments as “nonrefundable retainers.” While fixed fees are permissible, lawyers must refund any unearned portion if representation ends before the work is completed, as required under Rule 1.16(d).^[4]

TECHNOLOGICAL COMPETENCE 

There is an ethical obligation for lawyers to keep abreast of changes in the law and its practice, which includes understanding the benefits and risks associated with relevant technology. This implies a proactive duty to research and comprehend the security features, terms of service and potential vulnerabilities of any payment platform used in their practice.^[5] 

PEER-TO-PEER PAYMENT APPLICATIONS 

Using peer-to-peer payment applications introduces many risks that extend well beyond basic trust accounting rules. While these tools may be convenient for clients, they were not designed with lawyers’ fiduciary duties in mind. Issues such as data security, privacy, transaction fees and even the possibility of chargebacks can create ethical and financial complications if not fully understood. Lawyers must also know the regulatory limits of these services, including the lack of federal insurance protection and the potential for technical glitches or outages.

SECURITY AND PRIVACY CONCERNS 

Lawyers must take reasonable steps to prevent the inadvertent or unwanted disclosure of information regarding transactions with parties other than the lawyer, the client or a third person paying. Several privacy concerns arise when using payment applications. Payment apps often have access to large amounts of personal data, including names, contact information and financial details. If these apps lack strong security measures, that data may be at risk of exposure or theft. Some providers even store data in jurisdictions with weaker protection laws, further increasing vulnerability.

Another issue is data sharing. Many payment apps share user information with third parties for purposes such as marketing or business analytics, and sometimes, they even sell that data. This practice can expose client information beyond its intended scope and potentially conflict with a lawyer’s duty of confidentiality. Although most apps use encryption to secure transactions, the strength of encryption varies. Inadequate protection could leave sensitive data open to threats. Anonymity is not always possible with payment apps.

In situations where a lawyer or client may need anonymity, such as in certain trust or escrow matters, this limitation can be problematic. Finally, data retention is also a concern. Even after a user deletes an account, some apps keep data for extended periods, creating lingering risks that cybercriminals could exploit.

TRANSACTION FEES 

Payment apps charge transaction fees for receiving payments, and these fees should be a significant consideration when collecting retainers. Lawyers may need to factor in these fees when determining their retainer amounts to ensure they receive the appropriate funds for their services. Furthermore, payment apps withdraw these fees directly from the payment the client makes.

The ORPC requires lawyers to keep client funds separate from their own, maintain accurate records and avoid commingling their personal funds with client funds. Regarding the use of payment apps for handling client funds, the transaction fees charged by these apps can create ethical issues. Lawyers are encouraged to carefully review the user agreements or terms of service before they begin accepting payments, particularly retainers for legal services through their existing trust, operational or personal accounts.

Unless there is a different agreement between the attorney and the client, it is the lawyer's responsibility to pay any transaction fees charged to the account, and such costs should not be deducted from the client's trust funds.

CHARGEBACKS 

Payment apps also present challenges with chargebacks. A chargeback occurs when a credit card payment is reversed at the request of the bank or cardholder. For lawyers, this can be particularly difficult because legal services are not tangible goods that can be easily evaluated. Clients may dispute the value of services provided and request a chargeback, leaving the lawyer with the burden of proving that services were delivered.

Unlike regulated credit card systems, many payment applications will freeze the entire account rather than isolating the disputed transaction. This means that funds from other clients may be temporarily inaccessible, creating serious risks for lawyers who are holding other clients’ money in the same account. Because of these complications, attorneys should be cautious about using platforms such as Venmo, PayPal or Cash App for retainers and should be familiar with the chargeback processes of these providers.

BANK REGULATIONS VERSUS USER AGREEMENTS 

Another critical distinction lies between traditional bank regulations and the user agreements of payment apps. The Consumer Financial Protection Bureau (CFPB) has warned consumers not to store funds with payment apps, noting that these services are not federally insured. This creates risks if the app faces financial troubles or bankruptcy. Unlike deposits held in Federal Deposit Insurance Corp.-insured banks, funds stored in payment apps do not carry the $250,000 per client protection guarantee.^[6]

The collapse of platforms such as FTX highlights the danger when customers cannot access funds because protective measures are absent. In addition, payment apps may face liquidity crises if too many users attempt to withdraw funds at once – a scenario that would rarely occur under traditional banking safeguards.

OTHER PROBLEMS WITH PAYMENT APPLICATIONS 

Technical glitches and service outages further illustrate the risks of payment apps. Cash App recently suffered a software error that caused duplicate transactions and left many users with negative balances. Although refunds were issued, the disruption created significant problems for affected customers. Similarly, Cash App and Square both reported major outages in September 2023, which delayed transfers and disrupted transactions.

Zelle has also experienced repeated issues. A disruption at JPMorgan Chase in July 2023 lasted over a week, and a separate failure occurred at Bank of America earlier that year. More recently, in May 2025, Zelle experienced a widespread outage affecting several large banks, including Truist, Navy Federal Credit Union and Bank of America. The problem was traced to a third-party processor, Fiserv. During the outage, users could not complete payments, highlighting the fragility of the digital payment infrastructure and the cascading effects of third-party disruptions.

CFPB OVERSIGHT EFFORTS AND LEGISLATIVE REPEAL 

In late 2024, the CFPB finalized a rule to bring large nonbank digital payment platforms – such as Venmo, PayPal, Cash App, Apple Pay and Google Pay – under federal supervision. The rule would have applied to companies processing over 50 million transactions annually, requiring them to comply with regulations similar to those imposed on banks and credit card providers. These included provisions from the Gramm-Leach-Bliley Act (Regulation P), the Electronic Fund Transfer Act (Regulation E) and prohibitions against unfair, deceptive or abusive acts and practices.

However, in early 2025, Congress overturned the rule using the Congressional Review Act. Despite limited bipartisan support, the resolution was passed and signed into law. This repeal not only nullifies the CFPB’s effort to supervise these platforms but also prevents the bureau from issuing a substantially similar rule without explicit new legislative authority.

This rollback results in P2P payment platforms being largely unregulated at the federal level, despite their increasing use for both personal and commercial transactions, including professional services like legal payments. Lawyers using these services should know the potential risks related to data privacy, fraud and fund security due to the lack of federal oversight.

ANALYSIS OF BAR ASSOCIATION ETHICS OPINIONS ON P2P PAYMENTS 

South Carolina Bar Ethics Advisory Opinion 18-05 (2018)

This opinion specifically addressed whether a lawyer may accept an earnest money deposit through PayPal. It concluded that such use is permissible if the PayPal account does not contain the lawyer's own property, thereby preventing commingling. The opinion mandates that appropriate records must be maintained, and if the funds are nominal or short-term, they must be promptly transferred to an IOLTA account for safekeeping. Lawyers are explicitly warned to be aware of the risks of noncollection or reversal of payments, as online payment services have unique terms of service that may allow for reversals on extended timelines compared to traditional checks or wire transfers. It reiterates the requirement for extensive documentation to be kept current and preserved for a period of six years after the termination of representation.^[7]

Florida Bar Professional Ethics Committee Formal Advisory Opinion 21-2 (2021)

This opinion directly addressed whether lawyers may accept payments from clients via web-based payment processing services, including Venmo and PayPal. It concluded that there is no ethical prohibition to using such services, provided the lawyer fulfills certain stringent requirements.^[8]

Lawyers must take reasonable steps to prevent the disclosure of confidential information. This includes using the most restrictive privacy settings available on platforms (e.g., Venmo's "Private" setting) and researching the service to ensure customary security features are in place. While not ethically required, lawyers may consider advising clients about the risks.

Payments must be directed to an account with the service used only to receive client and third-party funds to strictly prevent commingling. These funds must then be promptly placed in the lawyer's qualifying IOLTA account. The opinion also notes that a payee does not immediately acquire possession of funds transmitted by a payment processing service. A "suspense account" may be necessary if direct transfer to IOLTA is impossible due to banking limitations.

Unless there is an agreement to the contrary, the lawyer must ensure that all transaction fees charged by the payment application are paid by the lawyer and are not deducted from client trust funds.

North Carolina State Bar Guidance

Guidance from the North Carolina State Bar indicates a significant evolution in its stance. Previously, regulations required lawyers to deposit advance fees and other mixed funds directly into a trust account, prohibiting the use of intermediary payment services for entrusted funds.^[9]

However, a revised comment now permits the use of an intermediary payment service if it is determined to be "reliable and trustworthy." The lawyer bears the personal responsibility to make a "reasonable investigation into the reliability, stability and viability of an intermediary" to ensure client funds are segregated and safeguarded against loss or theft. The guidance acknowledges that Rule 1.15's strict recordkeeping requirements may prove problematic depending on the specific operation of the P2P application.

Lawyers are explicitly reminded to be mindful of any social media aspects of a payment service that might disclose confidential client information, including payment details. It warns that some applications only allow a lawyer to choose one account for direct deposit, creating a high risk of commingling the lawyer's personal funds, earned fees and client funds, strongly advising setting up a separate account for client funds.

Maine Ethics Opinion 226 (2024)

Issued by the Professional Ethics Commission on Feb. 1, 2024, Maine Ethics Opinion 226 addresses whether Maine attorneys can accept payments through online payment apps – such as Venmo, PayPal, Zelle or Headnote – and the ethical issues surrounding their use.^[10]

The opinion concludes that Maine lawyers may accept payments (typically for legal fees, retainers or expenses) through these third-party payment apps, provided that the app and the lawyer's processes prevent the commingling of client funds with their own, and unearned fees are placed exclusively into client trust accounts. It strongly encourages lawyers to select only apps specifically designed for the legal industry and for ethical rules compliance, noting that some apps have built-in safeguards while others do not.

Lawyers cannot delegate their responsibility for compliance with the Rules of Professional Conduct. Apps should be secure and updated, and lawyers should stay informed about how the apps function.

CONCLUSION 

Bar associations have consistently emphasized the same core requirements: Client funds must remain separate, records must be meticulously maintained, and lawyers bear the ultimate responsibility for safeguarding money held in trust. These principles align with the Oklahoma Rules of Professional Conduct, which focus on preventing commingling, ensuring accuracy and protecting fiduciary relationships with clients.

Peer-to-peer payment apps, while convenient, introduce risks that traditional banking systems and lawyer trust accounts were specifically designed to avoid. Security concerns, transaction fees, chargebacks, account freezes and the lack of federal oversight all stand in stark contrast to the protections built into regulated financial institutions. The lessons from bar association ethics opinions are clear: Lawyers may use these tools in limited circumstances, but only with careful attention to safeguards, client communication and prompt transfer of funds into appropriate accounts.

Ultimately, convenience cannot outweigh compliance. Lawyers who accept payments through consumer-oriented platforms must treat every transaction as if the license to practice law depends on it, because in the end, it just might.

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ABOUT THE AUTHOR

Julie Bays is the OBA Management Assistance Program director, providing assistance to attorneys using technology and other tools to efficiently manage their offices. She joined the OBA as practice management advisor in 2018. She is also involved with the OBA Access to Justice Committee and actively contributes to the ABA Law Practice Division. She writes for Law Practice magazine and has served on the board of ABA TECHSHOW, including as co-chair in 2025.

 

 

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ENDNOTES

[1] ORPC 1.15(a)(c)(d).

[2] ORPC 1.15(k).

[3] “Money and Ethics: Trust Accounts, Expenses, Loans, Gifts, Fee Divisions and Liens,” OBJ, Vol. 76, Issue 34 (Dec. 10, 2005), pp. 2835-2844.

[4] State ex rel. Oklahoma Bar Ass’n v. Weigel, 2014 OK 4.

[5] ORPC 1.1 Comment [6].

[6] https://bit.ly/49hgb6m.

[7] https://bit.ly/4qWUgaU.

[8] https://bit.ly/47A7V04.

[9] https://bit.ly/43o6i3c.

[10] https://bit.ly/4nUxNZv.