Retainer Agreements: Whether Credit Card Processing Charges In California Can Be Passed On To Client Through Retainer Agreement Is An Open Question

Most Prudent Course Is To Treat It As a Non-reimbursable “Overhead” Expense.

            We commend practitioners to read Nicole Nuzzo’s article “The Credit Card Conundrum:  Passing Credit Card Processing Fees On To Client,” published in the December 2022 issue of Orange County Lawyer at pages 56-59.  In this article, she concludes it is an open issue in California whether credit card processing fees for client payments can be passed on to the client under a retainer agreement.  Citing to ABA Formal Opinion 93-375, she suggests that the critical distinction may be whether the charges are “overhead costs” or “direct costs”—the former generally not reimbursable and the latter usually reimbursable.  Other states come to conflict conclusions on the issue.  However, we believe she suggests that the less riskiest approach is to not seek reimbursement of such charges, especially with respect to unsophisticated clients.  In any event, the client needs to agree in advance to reimburse these credit card processing fees to client’s attorneys to make these charges potentially subject to recapture.