There has been a repeated refrain during the pandemic regarding the importance of getting the bills out and getting paid. One bit of advice that is constant is “take credit cards.” But what should a lawyer know? What are the options and ethics to consider? Are there other types of e-payments a lawyer can take?
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Why Take Credit Cards?
Taking charge cards from clients makes it easier for them to pay you and for you to process the payments. Firms that accept credit cards are paid 40% faster, according to the 2017 Legal Trends Report by Clio. When it comes to making one-time online payments, 76% of consumers preferred to use their credit or debit cards, according to the 2017 TSYS U.S. Consumer Payment Study. Consumers like to pay with credit cards as they can get rewards points, cash back and other perks. Paying legal bills with a credit card is also a convenience for clients.
For law firms, taking credit cards means you get paid faster, the money is often deposited in your account sooner than a check, and it may reduce re-keying of payment information into your time/billing or practice management or accounting software if there is integration with your credit card processor. You can send out your bills electronically and include a link to pay with a credit card. The transaction is handled through the payment processor so that your firm does not have to deal with PCI compliance and the risk of having credit card information in your systems. If a client wants to call in a card or make the payment while visiting the firm, you can take the payment online through the credit card processor, so you don’t run the risk of having someone write down the number on a slip of paper at the firm.
Credit Cards and Trust Accounts
As you know, you cannot co-mingle funds from trust and operating accounts. Taking plastic for monies that are to be held in trust has some challenges. You will need to ensure first that any money that should be held in trust is never held in an operating account to be moved over. No credit card fees from the merchant should ever be taken out of the trust account. And, if the client disputes the charge, the merchant should not remove the funds from the trust account without notifying you first and verifying your permission.
For North Carolina lawyers, “The Lawyer’s Trust Account Handbook” from the N.C. State Bar has a great article by Peter Bolac called “Top Tips on Trust Account: Do’s and Don’ts of Accepting Credit Cards.” (The tips include reviewing RPC 247 Payment of Fees by Electronic Transfer; 97 FEO 9 Credit Card Chargebacks Against a Trust Account; and 2009 FEO 4 Credit Card Account That Avoids Commingling.) For lawyers in other jurisdictions, seek ethics counsel or the help of your practice management advisor for the bar, attend trust accounting workshops, and don’t be afraid to ask!
Choosing a Processor for Credit Cards
One way to make sure that your credit card processor is set up to help law firms comply with the strict ethical guidance for trust accounting is to use a service that is specifically focused on serving the legal market. Besides being purpose-built to handle the intricacies of law firm payment needs, legal-specific merchants often offer integration with software and services lawyers use, such as time/billing, accounting and practice management applications. These integrations make it easy to make sure payments are accounted for and information does not have to re-keyed.
When shopping for a credit card processor, consider costs such as transaction fees and monthly rates, and read the fine print. Check to see if the card processor integrates with the firm’s practice management or time/billing/accounting software or service. Make sure the reporting from the processor is clear and includes all the information you need. See how they handle recurring payments, as well as other transactions such as ACH and e-checks. How will they handle refunds, returns and chargebacks?
Many bar associations have a relationship with LawPay for members. Other legal-specific credit card payment processors include ClientPay, Headnote, LexCharge and MyCase Payments (only for subscribers).
ACH and E-payments
For lawyers who would like to take payments online but can’t take charge cards, LawPay and others have solutions for payment online for debit card or e-check. ACH fees are often lower than credit card processing fees. Other legal payment processors have similar options. North Carolina licensed attorneys should read “Disbursement Against Funds Credited to Trust Account by ACH and EFT” (2013 Formal Ethics Opinion 13), and lawyers in other jurisdictions should check to see if there is a similar opinion.
Another potential for earned fees is QuickBooks Payments, which lets you take debit cards, e-check, and ACH bank transfers. Finally, there is Google Pay for Business for earned fees, but you have to set up a Unified Payments Interface ID with your bank.
Peer-to-Peer Payment Processors
For lawyers contemplating using P2P (peer-to-peer) services including Venmo, Cash App, PayPal, Google Pay and Apple Pay to obtain trust monies, tread carefully and read the article “Proceed With Caution: Person to Person Payment Applications.” If you decide to use P2P services for earned fees, this Above the Law article describes some things to consider, like privacy settings and transfer limits.
Charging a Surcharge or Convenience Fee on Credit Cards
Some lawyers do not want to pay a 3% transaction fee on a $10,000 legal bill and will consider charging a “convenience” fee. Before you decide to do this, ask yourself: Is it ethical? Is it legal? Is it a good idea? This thread from the ABA GP|Solo discussion list explores the issues and lawyers discuss the pros and cons of this practice. Suggested alternatives include raising rates to help cover transaction fees versus charging an additional fee.
Concerned About Getting Paid?
Yes, you probably can take credit cards. It is efficient for you and easy for your client. If you take cards for earned fees it is a simple decision-making process. If you take credit cards for monies held in trust the considerations are weightier, though working with a legal-specific credit card processing company can help you maintain compliance. If you are concerned with getting paid during the pandemic (and beyond), adding a credit card option may be a good decision.
© 2020 North Carolina Bar Association. Updated from an article that first appeared in From the Center, the blog from the North Carolina Bar Association Center for Practice Management. Reprinted with permission.
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