Why lawyers should consider credit card payments

Many small law firms and solo attorneys see billing as a necessary evil. It’s not the act itself that’s the problem. You deserve to get paid for work you’ve performed, after all.  

Sending out the invoice is easy, but getting paid is often the hardest part. Keeping track of your client receivables is time-consuming, and sending out letters not only takes up time and generates further administrative costs, but it also creates discomfort for you and for your client. That discomfort has only intensified as inflation has left many consumers scrambling to stretch a dollar further than it should have to go.  

But there’s a way to ease the pain for both parties — by setting up your firm to accept credit card payments. Doing so can help you get paid faster. If a client’s finances are temporarily tight, they can pay you without having the money in the bank just yet.  

What’s more, people prefer the convenience of plastic. According to a recent study from Forbes Advisor, 76% of consumers prefer to pay businesses with a credit card. Plus, some businesses specifically look for law firms that accept credit cards. It’s more convenient, and it makes expenses like legal bills easier to monitor.   

If you are open to the idea of accepting credit card payments but aren’t quite ready to take that plunge, here are some things to think about as part of your due diligence.  

How to get started

First, you’ll need to work with a credit card processing company. There are numerous firms and platforms available, and they make card transactions much easier to handle.  

Processing firms also offer services that can add value to both you and your client. For instance, you can send out your bills by email and set up that system so clients can pay by credit card directly from the email itself. The credit card processing company essentially handles everything from there, and you don’t have to keep your client’s sensitive financial data.  

What should you look for in a processing company? That depends on your firm’s operations. Here are a few things you may want to consider:  

• What are the total service costs? Processors make their money by charging a monthly service fee and a fee per transaction. Also, to avoid other surprise charges, be sure to read the fine print. Work with a company that provides clear, transparent reports each month — or better yet, a company that works with other law firms.
• How does the potential vendor handle online transactions that don’t involve credit cards? 
• Can the processor’s platform integrate with your other management software, like accounting and billing? Applications that play nicely together can make adding credit card payments more attractive as a service. 

Plastic pitfalls to avoid

While most states allow lawyers to accept credit cards, there are ethical considerations to keep in mind.  

One is the issue of credit card processing fees. They’re typically not significant — generally around 2% per transaction, depending on the processing company. But if the bill is big, 2% can seem pretty steep. Those fees are one reason why many smaller practices shun plastic payments.  

You could also pass on those fees to the client. That has become more common since the COVID-19 pandemic, with small businesses across industries trying to recover from the lean years by passing the card-processing cost along to the consumer. Think carefully before you take that step, however. Clients dislike that practice, for one thing, and they are very aware of how much “junk fees” for events, hospitality charges at restaurants, and other “new” expenses are costing them. If they pay you $1,000, they don’t want you to treat that payment as, say, $980 (the billed amount minus the processing fee).   

What’s more, some jurisdictions follow a 1974 ABA ethical opinion that forbids passing on those charges. Therefore, it’s a good idea to assume that you are responsible for these fees until you determine definitely that you are not.   

If you decide to accept credit card payments for retainer fees, you need to consider how to handle those payments. Most likely, you’ll want to have those fees routed into an escrow account. If you accept payments for trust accounts, be aware that there are strict considerations regarding how you should manage these funds. For one thing, you want to keep them separate from your firm’s operating account.  

To make sure you understand the ethical ins and outs of credit card payments, talk with your bank or other knowledgeable legal finance experts in your state. One phone call could make things a lot clearer and help you make a more informed decision.

Other avenues for client payment

Credit cards aren’t the only electronic payment option available. There are platforms available that allow clients to pay via debit cards or e-checks. These services typically have lower fees than credit card processor charges. But they require clients to have the funds already on hand, so they won’t work for customers who want to pay up but don’t have the funds available. Since they are not as familiar as credit cards, they are not as popular.  

There are also peer-to-peer services such as Venmo, PayPal, Google Pay, and Apple Pay, to name a few. Younger clients are accustomed to using services like these. One service worth checking out is ClientPay, which provides features and functions specifically tailored to legal practices. Starting in 2023, these peer-to-peer platforms were required to keep closer track and provide more reporting to the IRS for payments of over $600 for goods and services.  

According to “The Ultimate Guide to Legal Payments” from the American Bar Association, law practices that offer a variety of payments methods save as much as three hours a day, see a spike in profitability of up to 10%, and get paid 32% faster. That isn’t to say your practice will see numbers like that once it starts taking credit cards, but it is good evidence that credit card payments are something to strongly consider.  

Offer convenience to your clients today

In a competitive legal market, firms are seeking ways to stand out. Client experience is a keyway to do that. Clients are not only looking for strong legal skills, but they also want and need a legal representative who’s friendly, caring, and easy to work with. Offering convenience like credit card payments can provide your firm with a competitive edge and could open up a new market of clients.   

Download our complimentary guide to learn more about the ways that your firm can boost your client experience and add business.