It is time to think about electronic payments and the future of legal law. You see, in a future legal system, it will be common to be able to pay for legal services by making electronic transactions. Payments in this manner are actually considered “electronic transactions.” In fact, most payment systems like MasterCard, Visa, and Discovery are based on an electronic transaction network that has become widely accepted in the legal industry as well as throughout the rest of the payment system industry.
Electronic transactions have already reached the point of being considered the “in thing” at the universities. For example, law school tuition and law school fees are paid through electronic transfers from a bank account to a bank account. And there are currently even online bar admissions! In fact, in some states, there is now an entire division on electronic transactions law. There is even a national Electronic Transactions Association!
So, what does all this mean for you as a legal professional? Well, as a legal professional who makes payments via electronic transfer, your clients may very well be in for a rude awakening or at least an expensive one. Most if not all of the major companies in the world today make and distribute their products and services via electronic transfer. Will your client do the same? Will he or she balk at the prospect of making electronic payments to you via wire transfer?
I would bet my last dollar that they will. Why? Because your clients will not be aware of the ramifications of not making electronic payments to you via electronic transfer. What does your client do if he or she misplaces or lost his or her wallet key that contained the money for his or her legal service? Well, he or she quickly goes to their computer and prints out a new one…or goes on a shopping spree, because electronic funds can’t be replaced easily without losing money.
Does this mean that your client cannot sue you for making those improper electronic payments to him or her? Not at all! The reality is, the Electronic Funds Transfer Act (EFT) governs whether or not your client is able to sue you based on the unauthorized use of his or her credit card. So, whether or not your client lost his wallet key that contains the money for his or her legal service, it is irrelevant! If he or she lost the cash itself, then there is certainly cause for a lawsuit.
So, when it comes to electronic payment issues, remember that it all depends on the state in which you practice. Not all states allow clients to collect electronic payments from their clients without first holding the payment in escrow. Many states actually require that you hold the money until the payment is complete.
When it comes to electronic funds transfers, just make sure to hold on to the money until the client has fully completed his or her attorney services. Then transfer the funds, according to the terms of your agreement. It would be awfully difficult to try and recover a payment if your client, after having received it, immediately throws it away or does not even finish paying you! On the other hand, some states do allow you to charge for an electronic transaction, even though it was not complete. This is why it is very important to know the laws before you begin practicing law.
For example, if you accept a prepaid debit card payment, and you do not credit the account, it will remain a debit card and cannot be used as legal tender. But if you accept the card over the phone, and issue the money, it becomes a negotiable instrument. If you do something else with it (such as keeping it in a savings account), it becomes a legal necessity. Always keep these things in mind, and you will do much better as a professional than as a novice litigator!