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BILLING & COLLECTIONS

San Diego firm gets more cash faster with easy-to-use online credit card payment system

It can be pretty daunting to introduce a new feature on your website, especially one that involves financial transactions. But when it came time to update the website for San Diego law firm Marks, Finch, Thornton & Baird, LLP, and start offering clients the ability to pay their bills online, the only thing that really caught firm administrator Linda Quindt off-guard was how quick and easy it was to do.

“The firm had already been accepting payment by credit cards for years through LawPay,” says Quindt, “and adding the online payment option turned out to be simply a matter of filling out some forms to identify where the payments were to go.”

After that, LawPay sent to Quindt some sample webpages for the web designer, the one webpage was added and clients started paying right away. “We didn’t even send out an announcement and the clients were already using it.”

Law firms still slow to accept credit cards

It was actually more work persuading the lawyers to get on board with accepting credit cards to begin with, says Quindt. “More and more clients wanted to pay with credit cards for points and the lawyers were getting pressure.” At first, the firm offered the credit card payment option to only good clients, but gradually extended the option to the rest of their client base. “We started giving people who were bad payers the opportunity to pay with credit cards. Once they knew they could use their credit cards to pay their fees, they stopped being bad payers.” The lawyers came around when they saw how credit card payments increased the turn-around on payments. So it was less of a sales pitch to convince the lawyers to make the move to accepting online payments.

Edie Zimmerman, owner of Legal Software Solutions based in Centerpoint, Indiana, says that this resistance to accepting credit card payment is common in the industry. “Many firms still do not accept credit cards for payments. Attorneys are still kind of old-fashioned that way.” But Zimmerman points out that it’s a resistance borne out of an abundance of caution. “Any time a client puts money in the firm’s trust account via a credit card, no fee can come out of that. If the client pays $1,000 that full $1,000 has to hit the trust account and the merchant has to pull their fees from the operating account. There has to be a clear distinction made,” says Zimmerman. “It’s totally against the bar rules to have any monies like that coming out of the trust account. Attorneys are held accountable to the nth degree and they don’t want to take any chances on the merchant messing them up.”

Mutual benefits of accepting credit card payments

Despite the obstacles, Laura A. Calloway, Director of Service Programs and Practice Management Assistance Programs for the Alabama State Bar, believes there are many reasons law firms should be embracing the option to accept credit card payments. “When you accept credit and debit cards you make it easy for your clients to pay you,” says Calloway. “Many people don’t like to carry cash or use checks, and they often want the benefits of using rewards cards for larger purchases, so they are happier to pay when offered the option to do so by electronic payment.”

But it’s not only good for the client; it’s good for the firm. “When you accept credit cards you are essentially shifting the client’s borrowing from your firm to someone else,” Calloway explains. “When lawyers perform work before they are paid what they are really doing is making unsecured loans. Accepting credit and debit cards gets you out of the unsecured loan business.”

Calloway points out that swiping a debit or credit card often involves less immediate work for your staff than accepting and depositing a check or cash. And if you visit with clients and accept payments away from the office, accepting electronic payments through a mobile phone can allow you to obtain payment that you know is good without having to accept a large amount of cash.

Be mindful of associated fees and other potential problems

On the downside, though, there are fees associated with accepting credit cards. According to Calloway, “if you’re not careful in choosing your merchant services provider they can substantially reduce your profit margin on particular services.”

Zimmerman agrees. “I had one client who had himself set up with Square. I was absolutely blown away when I saw how much money they were taking in order to process a client payment for him. We have a very specific merchant—Tsys, located in Omaha, Nebraska. Our clients end up getting a very special deal by going through this merchant, because we have an automatic integration set up within our software. It’s very user-friendly and easy to do. We got this client over from Square to Tsys and he’s going to save hundreds of dollars—and sometimes on a single transaction.”

In addition to merchant fees, Calloway cautions about the potential for chargebacks. “Clients can dispute credit card charges,” says Calloway, “resulting in chargebacks that take time and effort to defend against. And the window of time for a chargeback is larger than that for stopping payment on a check.”

Another factor to be considered is the nature of the case. For example, Calloway says, if your client is facing bankruptcy or is trying to get a debt forgiven, it is unethical to enable the client to run up a debt while clearing another one.

And then there’s the problem of money comingling. It’s important to select a merchant account that understands the necessity of setting up the accounts properly, and who will ensure that your procedures are in compliance with payment card industry data security standards (PCI-DSS).

“Some credit card processors are not capable of making the distinction between a trust account and an operating account,” says Calloway. “Putting money in the wrong account is a potential problem.”

Zimmerman agrees, “Be extra careful on the differentiation between credit card payments going into trust versus operating. Be very clear with the merchant that no admin fees, no charge whatsoever can come out of that trust account. You’d be surprised with how many merchant accounts should know it, but don’t. It can be quite chaotic. Get that at the beginning of the conversation that they pull those costs from the operating account.”

Proceed with caution, but proceed

These challenges, though, are not insurmountable. There are merchants, such as LawPay and LawCharge, who are set up to handle law firms specifically.

“It depends on your practice area,” says Quindt,” but my advice would be to offer the credit card option if there’s a demand from the clients. It’s the new way of paying their bills. They don’t carry cash anymore—it’s debit card or credit card. The law firm has to adapt as well. I think it makes it really easy for the clients if you add the payment option to your website.”

3 ways to avoid chargebacks

Calloway offers these tips to avoid chargebacks: 

1. Don’t just swipe the card and have the cardholder sign the receipt. Create a charge authorization form that sets out the work done or references the itemized statement of account and the exact amount that will be charged and have the cardholder sign that as well.

2. Verify the name on the card and the identity of the person using it by requesting and ID and noting that fact. If the cardholder is not the client, include a statement that the cardholder understands that the charge is for legal services provided to the client and intends to pay for the same. Tie this statement back to the client matter number or statement of charges.

3. Include your credit and debit card charge policies in your fee agreement and have the client initial them.

Bonus tip

If you email your invoices to clients, include a link in the email to your online payment page. This combination will likely lead clients to pay even faster.


Related reading:

How are your billing and collecting processes?


How document automation can save you thousands


How to raise fees without upsetting or alienating clients


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