Why lawyers should consider credit card payments

Numerous credit cards spread out on wood grain background

Many smaller law firms look at billing as a necessary evil. It’s not the act itself that’s the problem. You need to get paid, after all. And sending out the invoice is easy.

It’s the getting paid part that’s often hard. Keeping tabs on your client receivables is time-consuming. Sending out dunning letters not only takes up (unpaid) time, it creates discomfort for you and for your slow-to-pay client. And that discomfort has only intensified during the pandemic.

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 2017 study from global payments provider TSYS, 76% of consumers use credit or debit cards when making one-time online payments. And 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. Plus, they like the fraud protection that card issuers provide.

If you think credit card payments might make sense for your practice, here are some things to think about as part of your due diligence.

How to get started

For one thing, you’ll need to work with a credit card processing firm. 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 pretty much handles everything from there. And you don’t have to keep (and protect) 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.
  • How does the potential vendor handle online transactions that don’t involve credit cards? (We’ll talk more about those other transaction options shortly.)
  • 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 as a service more attractive.

Avoid these plastic pitfalls

While most states allow lawyers to accept credit cards, there are ethical aspects you’ll want to keep in mind.

One is the issue of credit card processing fees. They’re typically not huge—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.

True, you could pass on those fees to the client. But that’s not recommended. Clients will resist, for one thing. 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, you probably need to cover them as part of the cost of doing business.

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.) And 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 expert in your state.

Other ways to help clients pay

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.

There are also peer-to-peer services such as Venmo, PayPal, Google Pay, and Apple Pay, to name a few. Younger clients in particular are accustomed to using services like these. One service worth checking out is ClientPay, which provides features and functions specifically tailored to legal practices.

Let clients know they can pay by card

If you decide it makes sense to accept credit card or electronic payments (or both), then you want to make sure that clients and potential clients are aware of these payment options. Display the payment options you offer prominently on your website, mention them in your emails, and include them in other marketing materials.

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

But that’s not the only reason to consider expanding your payment options. If you worry about getting paid during the pandemic (and beyond), allowing credit card payments could make things easier for both you and your clients.

To learn more about the ways that your firm can boost its client experience and add business, download our complimentary guide, 7 things you don’t know about your clients.

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