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Table of Contents

Lead Story

Checks have staying power, paper not so much

Patti Murphy
ProScribes Inc.

News

Industry Update

Public, private effort to secure systems, reduce cyber crime

Appeals court revives ATM price-fixing case

Appeals court gives green light to CFPB challengers

First Data opens new chapter

Features

Bridging the EMV divide

The Mobile Buzz: Diners' technology wish list

Views

The very point of sale: Think big, go bold

Dale S. Laszig
DSL Direct LLC

Impact of scale on cost and margin in the U.S. merchant acquiring industry

Brooke Ybarra
First Annapolis Consulting

Education

Street SmartsSM:
The power of residual income - Part 1

Jeffrey I. Shavitz
TrafficJamming LLC

Who wins with AmEx full-service acquiring program?

Ken Musante and Jon Shipley
Eureka Payments LLC, Select Bankcard LLC

Legal ease: Choosing a lawyer for your payment business

Adam Atlas
Attorney at Law

Endemic lack of protection for card data in stores

Brand Barney
SecurityMetrics

Company Profile

AP Technology

New Products

Free online security learning center

SecurityMetrics Learning Center
SecurityMetrics

Business-driven video storytelling

Video Storytelling
Board Studios Inc.

Inspiration

The 'do' in the doldrums

Departments

Readers Speak

Letter from the editors

Resource Guide

Datebook

Skyscraper Ad

The Green Sheet Online Edition

August 24, 2015  •  Issue 15:08:02

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Legal ease: Choosing a lawyer for your payment business

By Adam Atlas

Clients will often tell their lawyers more than they tell their spouses. For this reason and many others, selecting legal counsel for your business (and personal) needs should be done with care. The purpose of this article is to identify several factors to consider when selecting legal counsel for your payment business.

Qualifications

Lawyers are licensed on a state level. As a matter of law, they are qualified to provide legal opinions only on the laws of the state for which they are licensed. For example, an attorney licensed in the State of New York will not give a legal opinion on the enforceability of a contract under the laws of the State of Florida.

Qualifications, however, run deeper than licensing. Lawyers are expected to take on mandates only in those areas of practice in which they have knowledge and experience. Being licensed as a lawyer does not give an attorney the ability to provide advice on any topic. Most lawyers will specialize in one area or another.

For example, some lawyers will only provide trial work before courts, while others will not set foot in a courtroom. At a more precise level of specialization, lawyers usually have a niche, such as labor law, family law, criminal law or real estate law. And within each general niche there are subcategories of specialization. For example, among payment lawyers, some focus on issuing contracts, while others focus on ISOs, etc.

It is usually advantageous to hire counsel qualified and experienced within your specific business niche. Lawyers with this degree of specialization will be able to provide advice based on similar scenarios they have seen in prior cases. Niche lawyers have also come to know the personality traits of certain participants in the niche industry and are in a position to provide candid insights into the way in which certain processors or banks are likely to carry on.

Trust

A mutually trusting relationship must exist between lawyer and client. This is a two-way street. Clients should trust their lawyers and lawyers should trust their clients. Apart from mistrust being unpleasant, a lack of trust inhibits lawyers' effectiveness in representing their clients. The classic example of this is a criminal defense counsel who should know about all possible pieces of relevant evidence to build the best defense possible.

Similarly, when engaging with payment counsel, clients shouldn't feel as if they have to hold back relevant information for any reason. Clients are sometimes embarrassed about how aggressive they wish to be vis-à-vis agents or, at the other extreme, are reluctant to explain all of what they really want. These situations must be avoided; clients should speak freely about their wishes. Similarly, lawyers must speak freely about the risks their clients face. It is never enjoyable to deliver bad news, but lawyers are obligated to give advice to their clients whether or not it will be well received.

Moral match

Lawyers are free to accept or reject client mandates, provided that when terminating clients, they assist in the transition to other lawyers where required. There have been a handful of times during my dozen years in the payments space when I have either declined to take on a new client or terminated a relationship with a client because I felt that supporting the individual's business was inconsistent with my personal moral beliefs. Each lawyer has a moral compass, and each of us also has a unique tolerance for clients who are very different, ethically, from ourselves.

Legally, of course, a lawyer is prohibited from assisting a client in perpetrating crimes. From time to time, without judging their clients and without the clients being criminal, lawyers may simply decide they prefer to not support certain clients. It's better to have this kind of a separation earlier than later so as not to waste the time of either client or lawyer.

In short, it is optimal when a general moral match exists between lawyer and client. I have found this to be the case in my encounters with parties and lawyers opposite me. A lawyer is traditionally considered an extension of your ego, meaning an extension of you as a legal person. It is therefore sensible that your lawyer align with your worldview as closely as possible because he or she will be making certain key decisions for you.

Business match

Good lawyers are expensive and bad lawyers are expensive. From a business perspective, it is important that your legal counsel be aware of the general context of your payment company and have a billing rate that is consistent with your budget and the needs of your business.

Fifteen minutes at a high hourly rate may be far more valuable than 10 hours at a low hourly rate. Transparency and communication are essential to building a healthy business relationship between lawyer and client. When unpleasant billing surprises are avoided, a mandate with a high price is manageable. However, if a client is shocked by the fee for services rendered, the lawyer and client will have relationship repair work to do.

Technical match

If you communicate with your clients through instant messaging or texting, it is fine to expect your lawyer to match your preferred communication style. Communications with legal counsel should, of course, be given additional protection from third-party access so as to preserve lawyer-client privilege. However, provided that customary security measures are followed, it is reasonable for clients to expect their lawyer to be on the same page as they are in terms of communication style.

Payments reality check

A payment lawyer should be able to size up the scope of a payments project under consideration and assess its strengths and weaknesses from a legal perspective – not just on the face of the project but also within the evolving landscape of the payments industry. For example, how would virtual currency impact the project, or how would a novel payment form factor influence the project, etc.? Payments attorneys should be at the forefront of knowledge in our increasingly diverse payments markets.

In publishing The Green Sheet, neither the author nor the publisher is engaged in rendering legal, accounting or other professional services. If you require legal advice or other expert assistance, seek the services of a competent professional. For further information on this article, email Adam Atlas, Attorney at Law, at atlas@adamatlas.com or call him at 514-842-0886.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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