RI-393
January 6, 2026
SYLLABUS
A lawyer may utilize person-to-person payment applications (P2P payment apps), such as Venmo, PayPal, Zelle, Apple Cash, or Cash App, to receive funds including earned fees, unearned fees, and third-party funds. However, lawyers must take additional precautions in utilizing such P2P payment applications when accepting funds, other than earned fees, to ensure that said funds are promptly transferred directly into an IOLTA or other lawyer trust account for safekeeping consistent with the Michigan Rules of Professional Conduct.
Lawyers must also take steps to ensure that any information identifying the client, client matter, or other confidential information is protected when using such P2P payment applications to receive fees.
Even when using P2P payment applications, lawyers must avoid commingling of funds and maintain appropriate records of deposits and withdrawals.
References: MRPC 1.1, 1.5, 1.6, 1.15(f) and (g); Michigan Ethics Opinions RI-344, RI-364, and RI-381.
TEXT
As person-to-person payment applications (P2P payment apps) are becoming more prevalent, they represent a convenient, and sometimes necessary, way for lawyers to receive funds. These applications also present lawyers with potential ethical concerns regarding confidentiality, trust fund accounting, timing of deposits into trust accounts, commingling of trust funds with operating funds, data security, and safekeeping of client property.
Introduction
P2P payment apps have become commonplace in the realm of commerce and are used to pay for a variety of products and services. For some consumers, P2P payment apps have replaced bank accounts and credit cards as their primary methods of payment, and these apps sometimes represent the only means of payment some individuals have available to them. In some ways, concerns about using P2P payment apps are analogous to questions lawyers had about accepting payment of legal fees by credit card in the 1980s in that they involve payment to a third party, which then distributes those funds to the lawyer. However, the presence of additional features, such as integrated social media functionality and timeliness of deposits into lawyer operating and trust accounts, complicate ethical considerations regarding these apps even further. In general, lawyers do not violate their ethical duties by accepting payment via P2P payment apps but must take sufficient precautions when doing so to protect the confidences of their clients and to ensure that the funds are handled and accounted for appropriately.
Background
P2P payment apps are typically mobile phone apps or web-based services that act as payment intermediaries for consumers. Some of the more common P2P payment apps include PayPal, Zelle, Apple Pay, Google Pay, Cash App, and Venmo, although the number and features of such apps, as well as the specific method by which they provide their services, varies and is constantly changing. These apps allow consumers to deposit funds into a P2P provider’s account, authorize payments to others, and accept payments from others. P2P payment apps may be linked to bank accounts or credit accounts, but they may also stand alone as their own equivalency to a savings or checking account. As a means of transferring money between parties and accepting payments, these apps are not only useful but are sometimes necessary to enable payments for attorneys.
P2P payment apps are also an important tool for a growing number of consumers who are unable to open bank or credit accounts or who choose not to do so. According to the FDIC, in 2021, “4.2 percent of U.S. households – representing about 5.6 million households – were unbanked,”1 meaning that nobody in that such a household had any type of bank account. The same study reported that “14.2 percent of U.S. households – representing about 19 million households – were considered underbanked,”2 meaning that they had a checking or savings account but utilized nonbank financial services such as payday loans, tax refund anticipations loans, check cashing services, etc. These households utilize online payment services, such as P2P payment apps, at a substantially higher rate than banked households.
The rates of unbanked and underbanked households increase for low-income adults, younger adults, and adults with disabilities but also include individuals who have been “blacklisted” and are unable to open traditional bank accounts due to poor prior banking history. As the use of P2P payment apps, particularly as a primary form of payment, increases, the inability of lawyers to accept these forms of payment could act as a barrier to access to legal representation for some segments of the population. In the context of criminal law, for example, defendants may be able to pay their legal fees only through P2P payment apps, meaning that it is increasingly important that lawyers be able to utilize these types of apps to collect legal fees.
Use of P2P payment apps raises potential concerns regarding confidentiality, trust fund accounting and timing of deposits into trust accounts, commingling of client or third-party funds with the lawyer’s funds, data security, and safekeeping of client funds. However, a complete prohibition against P2P payment apps, or onerous restrictions upon the use of such applications, could limit access to legal representation for the 19 million underbanked households in America and any other individuals who choose not to utilize traditional bank accounts or credit cards. This opinion provides Michigan lawyers with guidance on the use of P2P payment apps in legal practice. As these services and their features are constantly changing, this opinion sets forth a framework for a lawyer’s compliance with ethical rules regarding the use of P2P payment apps, and that framework should be adapted and applied to the specific P2P payment app when attorneys are considering utilizing that app or service. For any P2P app that lawyers choose to utilize, it is their duty to research and understand the features and functionality of the app in order to ensure compliance with the Michigan Rules of Professional Conduct.
Data Security
When third-party services are utilized in the provision of legal services, the protection of client secrets and confidences extends beyond privacy settings. To ensure that the highest level of security is employed in the handling of client and third-party funds, lawyers should follow best practices with respect to data security. Such practices include, but are not limited to, using multi-factor authentication (MFA) on P2P accounts when available, regularly monitoring transactions for unauthorized activity, avoiding linking P2P accounts to trust accounts if security risks are present, and avoiding the use of P2P payment apps that do not provide adequate security measures. It is the responsibility of a lawyer to educate themselves on the unique features of the specific technologies they employ and to ensure they have taken proper precautions to protect client and third-party funds, as well as their client’s confidences.
Confidentiality
Some P2P payment apps, such as Venmo, permit account holders to publicly indicate to whom they have made a payment, from whom they have received payments, and the purpose of the payment. This feature could permit any member of the public, if they have been notified in the app, to see a payment to a lawyer and information regarding the type of legal services provided. In some cases, this is a default setting, and the account holder/payor may not even be aware that such information is publicly available. This raises concerns relative to potential disclosure, both intentional and accidental, of confidences or secrets of a client under MRPC 1.6. The wide and ever-evolving landscape of P2P payment apps and their features means that lawyers must be aware of the unique features of any such apps they choose to utilize for accepting client payments.
If the P2P payment app contains any social-media-like functionality, the lawyer must ensure that their privacy settings have been set to the highest level and must pay particular attention to ensuring such social media functions have been disabled. Regardless of the lawyer’s privacy settings, they should avoid including client-identifying or case-related information in descriptions, accounts, or other areas within the P2P payment app.
Even if a lawyer has set their privacy settings to the appropriate levels, it may still be possible for payment information to appear on a client’s public list of transactions. Lawyers should advise their clients to exercise caution when utilizing P2P payment apps to ensure that they are aware of possible disclosure of their legal fee payments and social media functionality. While it is not possible for lawyers to ensure that their clients have properly protected their own secrets, lawyers have a duty to “maintain the requisite knowledge and skill… including the knowledge and skills regarding existing and developing technology that are reasonably necessary to provide competent representation for the client in a particular matter.”3 As such, lawyers should advise their clients to avoid including client-identifying or case-related information in descriptions, accounts, or other areas within the P2P payment app.
Lawyers should be aware of potential privacy concerns relative to P2P payment apps, both generally and with respect to the specific apps they employ. As with any electronic storage of client-related information, it is the duty of the lawyer to take reasonable steps to prevent third parties from accessing client data.
Trust fund accounting for client and third-party funds
Lawyers are required to maintain appropriate and detailed accounting of receipt and disposition of trust account funds. MRPC 1.15(g) requires that “legal fees and expenses that have been paid in advance shall be deposited in a client trust account and may be withdrawn only as fees are earned or expenses incurred.” These requirements apply to any funds for fees or expenses paid in advance via P2P payment apps, and it is the lawyer’s responsibility to ensure compliance with established trust fund accounting practices. Such practices could include printed or digitally-stored statements from the P2P payment app provider, a separate record of all trust funds maintained by the lawyer identifying the app from which those funds were received, a record of any disbursements made through a P2P payment app, and any other ledgers, documents, or processes allowing the lawyer or law firm to track the source, handling, safekeeping, and disbursement of any client or third-party trust funds in the lawyer’s possession. While a lawyer’s existing client trust-fund accounting practices may be sufficient to ensure compliance with ethical requirements, the use of new technologies requires a review of existing practices to ensure that they are compliant. If not, the lawyer must implement new processes and procedures, including the possibility of opening multiple P2P payment app accounts, to ensure compliance if they choose to accept payment via P2P payment apps.
The use of P2P payment apps is complicated by the fact that a lawyer may not hold earned fees or the lawyer’s own funds in an IOLTA or other client trust account. Thus, the account into which funds are transferred from the P2P payment app will differ depending upon whether those funds represent earned fees or other funds. MRPC 1.15(f) mandates that “a lawyer may deposit the lawyer’s own funds in a client trust account only in an amount reasonably necessary to pay financial institution service charges or fees or to obtain a waiver of service charges or fees.” Therefore, payment for earned fees through a P2P payment app must be transferred to a lawyer or law firm’s operating account and fees paid in advance, or third-party funds must be transferred into an IOLTA or other trust account. It is the lawyer’s responsibility to ensure that funds being disbursed from a P2P payment app are deposited in the appropriate account.
Avoiding commingling of funds
Lawyers must also ensure that client and third-party funds are deposited and maintained in an IOLTA or other trust account to avoid the commingling of those funds with the lawyer’s funds. Once a payor submits a payment to a lawyer through a P2P payment app, the app may be configured either to deposit the funds directly into a designated account or to retain those funds in the lawyer’s P2P payment app account until the lawyer directs the provider into which account the funds should be transferred. Lawyers are required by MRPC 1.15(g) to maintain unearned funds in a trust account until such time as they are earned or until expenses have been incurred, while earned funds must be deposited into the lawyer’s operating account. The requirements of Michigan Ethics Opinion RI-344 dealing with handling of earned and unearned fees received via credit card should be used as guidance for lawyers opting to utilize P2P payment apps. The committee is not, however, opining whether the brief commingling of earned and unearned funds in P2P payment app accounts, as analogous to credit card accounts, is impermissible.
The transfer of funds from the lawyer’s P2P payment app account into the appropriate bank account, whether it be their operating account or trust account, should be done promptly. Some P2P payment apps, however, do not provide the ability to transfer from a single P2P account into multiple external accounts, e.g., transfers from one P2P account into either operating or trust accounts, and it may be onerous to do so in other apps. It may be necessary for the lawyer to establish two accounts with the P2P provider: one for earned fees and one for unearned fees or other third-party funds.
Lawyers must also ensure that no charges for the use of P2P payment apps are passed on to their clients unless there is client consent, and the charges must reflect the actual cost to provide the service.4
CONCLUSION
P2P payment apps are important tools for lawyers to offer legal services to a wider range of clientele and to assist with equitable access to legal representation. As such, lawyers are permitted to utilize P2P payment apps to collect payment of funds from clients and third parties. Lawyers are ethically required to maintain technological competence in deciding how to utilize P2P payment apps to ensure that they are complying with their ethical obligations. Lawyers must ensure that they maintain the confidentiality of client information when using such apps. Lawyers must also ensure that they are employing appropriate security measures to prevent fraud, maintaining complete and accurate records of transactions to ensure proper safeguarding of client funds, and are properly accounting for any related P2P user charges. Given the risks associated with P2P payment apps, lawyers should exercise caution to ensure that they utilize only those apps that allow them to comply with their ethical obligations or consider alternative methods of payment.
1. 2023 FDIC National Survey of Unbanked and Underbanked Households, at 13 (2023).
2. Id., at 27.
3. MRPC 1.1, Comment; Michigan Ethics Opinion RI-381
4. See ethics opinions RI-364 (2013).