Question of the Week: Can law firms accept credit card payments?


Accepting credit cards has many benefits for any business, but concerns about compliance obligations have caused law firms to hesitate when it comes to allowing clients to pay with them. Not accepting them, however, can significantly impact cash flow, which winds up leading many firms to ask if there is a way to accept credit card payments while maintaining compliance. 

The short answer is, yes, as long as firms ask the right questions and set up certain internal plans and processes. 

Benefits and Challenges

Not only do credit cards increase cash flow, but they also improve client satisfaction in an age where online payments are the norm and customers expect to be able to pay by credit card. They also open up the doors to work with potential clients who may not have the initial funds to outlay through check, but can provide a credit card for legal fees. Even better, accepting these payments takes less time on your end when clients are able to pay online, eliminating the typical time spent on receiving and processing checks. 

The challenges with accepting credit cards for law firms are primarily associated with the nuances of legal accounting. IOLTA accounts come with very strict rules about how they must be managed, and these requirements extend to anything that can impact them, including credit cards. Any firm looking to take advantage of its benefits should take the time to set up the proper precautions first to avoid being in violation. 

To be ready to add credit cards as a method of payment, law firms need to be prepared to address potential issues both externally and internally. 

The Merchant

Regardless of which credit card merchant the firm decides to go with, it needs to be able to answer certain questions. While merchants deal with thousands of businesses, the unique requirements of trust accounting often mean they’re not prepared to handle issues like avoiding the commingling of firm’s funds and client trust funds. Not all merchants are created equal and every lawyer should be concerned about adhering to the ABA Model Rules for Professional Conduct when dealing with credit cards. 

However, finding the right merchant is doable and firms can feel confident with the correct choice that their compliance standards are being met. To find the right merchant, be sure to find out:

  • Can payments be accepted for two types of accounts (trust and general accounting) in order to stay compliant with Model Rule 1.15
  • Can processing fees be paid by a linked account rather than taken out of the initial payment from the client?
  • Can chargebacks be set to be made only to the main operating account, even if the original charge was to a client trust account?

If the merchant is unable to answer these questions or doesn’t have clear answers, that’s a sign they may not be the right fit for your law firm. Consider legal-specific options like LawPay that will make it easy to separate earned and unearned fees while protecting your IOLTA accounts. 

Internal Issues to Address

Accounting can get messy quickly if there’s no plan for how credit card payments are going to be implemented in the workflow, especially when the billing and accounting systems are separate. To avoid a disaster, you need a plan in place to track what invoices are tied to payments. 

Your firm is also going to want to address:

  • How will voids and chargebacks be handled?
  • Can we batch apply these payments at the end of the month?
  • How are we going to make sure these payments are properly applied in our accounting system?

Start Accepting (With Due Diligence)

Law firms can use the right payment tools to start accepting credit cards quickly and securely. But before doing so, they need to make sure to choose the right merchant who can meet their legal accounting compliance requirements, address potential internal concerns, and create processes. With those pieces in place, law firms can be set to start getting paid faster while giving their clients a better experience. 

For detailed ways to stay compliant and protect your firm while benefiting from the increased cash flow credit card payments offer, check out Can legal clients pay by credit card?


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