Providing online payment options opens up a world of opportunity to law firms seeking to streamline and improve their legal billing processes.
But accepting credit cards can also put lawyers at risk of compliance violations—particularly if you don’t use a payment processor that has key safeguards in place.
Do accept credit cards
Clients are used to paying for almost everything with a credit card. It’s convenient and familiar—and many of them distinctly prefer it to paying for services by writing and mailing a check.
Because credit cards make payments easier for your clients, they’re more likely to pay promptly with a credit card compared to a check. Your team will spend less time tracking down unpaid invoices and enjoy a more reliable cash flow.
Using electronic billing instead of paper billing also streamlines administrative processes, giving lawyers more room in the day to do billable work.
Don’t use a generic payment processor
There are some risks to accepting credit cards, however, at least if you use a non-legal payment processor.
The problem is that for almost all other businesses, credit card payments can be deposited into the same account that charge fees are withdrawn from. But if a law firm is seeking to deposit a payment into a client trust account, that setup doesn’t work.
Under Rule 1.15 of the ABA’s Model Rules of Professional Conduct, funds held in a trust account are to be withdrawn only as fees are earned or expenses incurred—and the processing fees exacted by payment processors are the lawyer’s responsibility to pay. There are also strict penalties for law firms that commingle the funds held in trust and operating accounts.
If your law firm is using a generic online payment processor, you won’t be able to deposit credit card payments directly into the client’s trust account without risking an ethical violation when the processing fee is withdrawn from that same trust account.
At the same time, client funds that are held in trust must be deposited directly into the client’s trust account—they can’t first detour through the law firm’s operating account.
Do use a legal-specific payment processor
Fortunately for lawyers, legal-specific payment processors have designed their software with law firms in mind.
In particular, legal-specific payment processors allow payments to be deposited into one account while processing fees are withdrawn from another. This helps eliminate the risk of a compliance violation due to commingling funds or withdrawing processing fees from a trust account.
Legal-specific payment processors can also provide similar protections for refunds, voids, and chargebacks.
Don’t let your processor charge more for specialty cards
Different payment processors organize their processing fees in different ways.
Some payment processors will offer what seems like a good deal—a lower fee percentage for “standard” cards and a higher one for “specialty” cards. The issue with this approach to fees is that specialty cards include rewards cards and corporate cards—by far the most common credit cards used by clients to pay for legal services.
Instead, law firms can benefit from using a processor that charges a flat fee for all card types.
It’s also worth asking your payment processor what they charge for debit cards, e-checks, and ACH transfers. Although almost all your clients will want to use a credit card, it helps to accommodate the full range of online payment options.
Do look for data and analytics
A good legal-specific payment processor will help you harness the power of your data.
Look for features such as a secure online portal that lets you run reports by sales, item, deposits, reconciliations, and more.
The portal should also give you access to data including:
- Scheduled invoices
- Advanced metrics and analytics
- How much you’ve taken in during a specific time frame
Do offer online payment options
Ultimately, law firms stand to benefit from offering online payment options to their clients and accepting credit cards. The key is to use a legal-specific payment processor that doesn’t charge more for specialty cards and offers the opportunity to learn from data.
The results? Better cash flow, streamlined collections, time saved on the billing process, and a better understanding of billing analytics.