A Look at the Challenges of Accepting Credit Card Payments in Law Firms

Challenges of Accepting Credit Card Payments in Law Firms

Accepting client payment by credit cards has long been debated in the legal community, but with their overwhelming benefits and widespread use, many law firms have become more open to the idea. Credit cards offer a way to get paid faster and can potentially increase client volume by providing an option for clients who may not be able to pay by check or cash.  While the process of beginning to accept credit card payments while staying compliant may seem daunting, the rise of legal-specific credit card processors and ways to become knowledgeable of the potential risks makes it easier than ever before for lawyers to do so.




Choosing a Vendor Provider

Choosing the right credit card processor depends on a number of legal-specific accounting requirements. Lawyers have unique needs that not all vendors are equipped to deal with, such as maintaining trust account compliance by avoiding commingling of funds. The credit card processor should have a way to link both trust accounts (for retainers) and operating accounts (for bill payments) rather than all funds being deposited into one primary account.

Processing Fees

The handling of processing fees is another key item that presents unique challenges to law firms. Trust deposits and retainer payments require the amount deposited to be exactly what the client pays. No funds should be deducted from that deposit to cover the fees but should instead come from a linked operating account.

Ideally, any fees should be paid in one monthly transaction. Lawyers can request this from their credit card processor in order to make sure the fees aren’t being applied to their client’s payments. Monthly billing also makes it easier when entering the transaction as an expense into bookkeeping.


Chargebacks occur when a client disputes a charge after the funds are withdrawn from the account. Chargebacks can present a bookkeeping concern if not recorded properly. Even if the original credit card payment was paid into a trust account, the chargeback should come from the operating account to avoid affecting client ledgers.

Overcoming External Challenges to Accepting Credit Cards

When selecting a credit card provider, the research can quickly become overwhelming, especially since firms must make sure providers are able to meet their unique needs. Given the extensive requirements, using a processor who deals primarily with law firms is the safest option. Companies like LawPay are aware of all compliance regulations and have developed platforms designed to meet these rules, as evidenced by their compliance features seen here: https://lawpay.com/features/compliance/.




Firms which use separate systems for their billing and accounting can run into problems when processing credit cards. Online payments can prove especially difficult to track as credit card companies typically deposit the payments in a batch into operating accounts. While this often happens for checks as well, it’s more difficult to tell what invoice the payment is for when it comes to credit cards as there’s rarely a memo attached.

To help address credit card batching and the problem of determining how to apply the payment, it’s helpful to put a mechanism into place to batch the payments in the accounting system as well. This makes it easier to keep the books accurate. Otherwise, the payments will need to be manually sorted through during bank reconciliation, which can quickly become a mess.

The easiest way to avoid dealing with the complexities of separate accounting and billing systems is to instead find a tool that integrates both. Having both functions in one system reduces the chance of error and creates a more streamlined process. Legacy desktop programs such as PCLaw, Tabs3 and Abacus, and cloud-based systems such as CosmoLex are equipped to make sure payments are properly applied in billing and accounting for accurate books and client trust ledgers.




Accepting payment by credit cards is not without its challenges. Lawyers are responsible for more than the average business when it comes to making sure payments are processed correctly. The use of trust accounts and general compliance requirements means lawyers have to be careful when implementing this payment method into their firm, but the benefits to the firm can certainly be worth the work to do so.

Find out more about how to properly accept credit cards and other types of payment at your law firm in Avoiding Compliance Issues When Getting Paid.


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