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Virtual Law Office 105: Processing Credit Card Payments

By William Peacock, Esq. on January 09, 2015 | Last updated on March 21, 2019

How complicated is getting paid by credit card?

In an ideal world, one would only need a credit card processor, such as the many ones we've talked about that handily operate via an attachment to your smartphone. If a food truck can take plastic, lawyers certainly should be able to do so too, right?

Except IOLTA accounts. Damn trust accounts. If you're taking payment in advance of services rendered, things get immensely complicated because most credit card processors take their cut out of what the consumer pays -- which creates an obvious ethics issue for unearned fees that are supposed to be sitting in your IOLTA account.

Why Most Credit Card Processors Don't Work for Lawyers

Here's how most credit card payment processors work:

  • You swipe the card for $3,000 using a handy smartphone attachment as an advance payment on anticipated legal work.
  • The credit card processor charges a per-transaction fee -- either a flat fee or a percentage.
  • The net amount is deposited into your account.

See the obvious IOLTA issue? You haven't earned the money yet, so you can't let a third-party take a chunk -- the entire amount needs to go into your trust account, with the fees covered by a second business account.

The only caveat is for lawyers who only bill after services have been rendered. Ask any lawyer who has been practicing for a while how easy it is to collect after the job is already done -- there's no quicker way to lose earned fees. But for some folks (those working on contingency, those who have high net worth clients, etc.), this isn't a concern, and any credit card processor will do the job.

Which Processors Do Work?

Lawyerist has done a ton of leg work here -- they've broken down 10 different options, only a few of which are capable of handling the IOLTA/dual-account issue.

The bad news? The lawyer-specific options, as you may have guessed, seem to universally cost more.

The good news? You'll (hopefully) have fewer ethical conundrums.

Which should you pick? A few of these options integrate with popular cloud practice management platforms or QuickBooks accounting software. The convenience factor alone might be enough to press your hand. And if not, you can always compare the fees.

Have a recommendation? Tweet us @FindLawLP.

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