Can Your Law Firm Accept PayPal or Venmo? Should It?
When it comes to running a law firm, especially small or solo practices, getting money through the door is the only way to keep the door open. As such, it can literally pay to accept credit cards and alternative payment options to checks and cold hard cash.
Before you set up a new payment method for clients, you should review your state's specific ethical considerations relating to the fees charged by credit card, and alternative payment, processors, like PayPal or Venmo. Also, you need to be aware of the potential drawbacks to using certain services.
Can You Accept PayPal and Venmo Just Like Credit Cards?
Fortunately, credit cards and alternative payment processors can easily be accepted under most state's ethical guidelines. Generally though, because most often attorney fees are paid into a trust account, rules vary from state to state on whether you can pass the payment processors fees on to the client. However, most, if not all states, prohibit those fees from being deducted from a client's trust account. While Arizona is okay with passing the fees along to clients, the Michigan bar is not. Also, some states specifically prohibit lawyers from promoting specific credit cards.
However, unlike credit cards, PayPal, Venmo, and their ilk, don't require the payment receiver to even know where the money's coming from as both can be tied to both credit cards and bank accounts, and can allow users to maintain a "cash balance" akin to an electronic checking account. But, most services do charge fees for money transfers that aren't between friends and family, and as such, a state's rules on credit card fees will apply.
Should You Accept These Payment Services?
Probably yes, but you'll likely want to stick to the big payment providers and do your research on your state's ethical requirements for doing so. Also, you should know the ins and outs of how the services work so you can help unfamiliar clients avoid making mistakes.
If you perform fixed fee, or flat rate, services, it seems like a no brainer to have at least one alternative payment method for clients to pay you. After all, you don't want a client to not hire you because you don't accept credit cards, particularly as the newest generation of legal consumers are millennials who really seem to love services like Venmo for their ease of use and for being paperless.
The processing fees can often discourage firms from using these services, especially in states where the fees cannot be passed onto the client. However, though the fees are annoying, losing $50 off a $2,000 retainer will hurt less than losing the client, or waiting weeks for the client to actually cut you a check, then you depositing that check, and waiting for it to clear.
- Are Encrypted Messaging Apps for the Paranoid or Lawyers? (FindLaw's Technologist)
- The Best Credit Card Payment Services for a Law Firm (FindLaw's Strategist Blog)
- 3 Ways to Handle Invoicing and Get Paid (FindLaw's Strategist Blog)
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