Recently in Massachusetts, an attorney has been brought up on BBO disciplinary charges for using paypal to charge his retainer fees.  Using paypal is inappropriate if, like this attorney, you used your IOLTA funds to pay for personal and business items.  It’s also improper because fees and other charges are taken out of the IOLTA and not your operating account.

If your clients charges a credit card to pay your retainer, the entirety of those funds must be deposited into your IOLTA account.  No fees or other charges must be taken from those funds.  Any and all fees must be paid out of your operating account and is a cost of doing business.  You cannot charge your client the fees associated with using a credit card.

Law firm merchant accounts such as Affiniscape or LawCharge are set up to serve law firms specifically.  They will deposit all retainers into your IOLTA and take any fees or chargebacks from your operating account.  This is the ONLY way to charge credit cards in your law practice.  Do not use paypal!