Today’s legal clients want convenience, security, and flexibility when paying for their legal fees. Law firms with limited lawyer payment methods aren’t giving their customers the client experience that they want. At the same time, these law firms are also hurting their bottom line.
What methods do clients prefer over cash or check? The 2020 Legal Trends Report shows that most consumers (65%) favor electronic lawyer payment methods. These payment methods include credit cards, debit cards, or online payment systems (such as Online Payments in Clio Manage). Law firms that offer more payment methods (especially online payment methods) make it easier for clients to pay, which leads to a better client-centered experience. Firms will also benefit from having clients paying their bills faster—close to 40% faster, according to the 2017 Legal Trends Report.
Read on to learn more about the lawyer payment methods your clients want—and how to choose and implement them.
Are lawyers allowed to accept online payments?
While it’s clear that clients increasingly want to pay their legal fees by credit card or online payment, are lawyers allowed to accept payments online? In short, yes—but it also depends. As with many elements of practicing law, the answer to this question requires law firms to consider their ethical obligations.
One of the most common ways for lawyers to accept online payments is via credit card through an online credit card payment solution. Although lawyers have been accepting credit card payments for legal fees since 1974 (ABA Formal Opinion 338, dated November 16, 1974), the ethics of law firms accepting credit cards can be complex for the following reasons:
- Accepting credit cards in person and online may require different ethical considerations.
- The rules can vary depending on a law firm’s location.
Specifically, as our guide to the ethics of law firms accepting credit cards discusses in detail, some lawyers remain hesitant to accept credit card payments for legal fees. One of the reasons for this hesitation is that people can use credit cards in so many ways. For example, clients could use credit cards to pay outstanding legal fees, put funds into a firm’s trust account, or reimburse a firm for expenses. Clients can use credit cards flexibly—which different state ethics committees may address in different ways.
Four general ethical considerations for law firms accepting credit cards
- Can I accept payment for legal fees and expenses via a credit card?
- Can I accept advance payment of fees via a credit card?
- Can I pass a surcharge to my client to compensate for the processing fees charged by some credit card processors?
- Can I set up recurring charges to customers once they have stored a credit card on file with my law firm?
The ethics opinions on these considerations vary state by state. For example, the ethics opinions of four states expressly permit law firms to accept credit cards in all four of the above hypotheticals. However, the ethics opinions of eight states forbid passing credit card surcharges to clients.
Law firms also need to exercise care regarding how and in what instances they accept online payments via methods like PayPal or Apple Pay. Ethics opinions around other online payment methods are still evolving,
For example, though collecting fee payments for completed legal services may be acceptable, taking retainers or holding unearned fees may not be possible with some payment methods. When firms place funds directly in a trust account, services that transfer funds into other accounts or take processing fees may conflict with the rules. For example, the ABA’s Model Rules of Professional Conduct Rule 1.15: Safekeeping Property (c) notes that lawyers must deposit any legal fees and expenses paid in advance into a client trust account (until the fees are earned or expenses are incurred).
Lawyers must check and abide by specific rules for law firms on accepting credit credits and other online payment methods in their jurisdiction. Lawyers should also check in regularly as the rules continue to evolve.
What forms of payment should lawyers accept?
You also need to determine what lawyer payment methods to accept. As we’ve outlined above, the key (especially if you’re a solo attorney or a new firm) questions to consider include:
- What lawyer payment methods do your clients want?
- What are the ethical rules and guidelines for payments in your jurisdiction?
- What forms of payment can your firm handle?
Your law firm can still accept payment methods like cash and checks. But your firm also needs to look beyond these traditional methods and consider lawyer payment methods that can benefit clients more. Online payment methods also tend to bring significant benefits like faster payments, more revenue, and even more clients to your firm.
According to the 2019 Legal Trends Report, law firms’ ability to accept online payments can make a significant difference when attracting clients. Specifically, 50% of clients say they are more likely to hire a lawyer who takes online payments. And 47% of clients noted that they’re more likely to hire a lawyer who accepts automated payments or fund transfers.
Choose an all-in-one payment solution to streamline your billing and payments process
An all-in-one billing payment solution is the best place to start. By connecting your billing process and payments, you can create smooth, streamlined workflows to save time and money on your billing and collections process. The right solution can also help you avoid potential compliance issues while still accepting the online payments that clients want.
For example, consider online payments in Clio Manage. Clio’s built-in credit card processing system lets you automate your billing workflows and securely collect legal credit card payments—giving clients the convenient, client-centered experience they want.
Online payments in Clio Manage (Clio Payments) also help your firm stay compliant while accepting online credit card payments. Clio Payments does this by allocating fees (earned and unearned) to operating and trust accounts according to professional and state bar trust accounting guidelines, and by protecting IOLTA accounts from chargebacks should there be a dispute.
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Get paid faster by offering these 4 lawyer payment methods
Offering a greater variety of payment methods—especially payment methods that make it easier and more convenient for clients to pay their bills—leads to faster payments (and, subsequently, more revenue). Specifically, the 2019 Legal Trends Report notes that 57% of online payments get paid within the day they’re billed, and 85% are paid within a week.
With this in mind—if your firm wants to get paid faster and improve your law firm cash flow—consider the following lawyer payment methods:
As we’ve already outlined, offering credit card payments (specifically online credit card payments) can be an excellent payment method for law firms for multiple reasons:
- It’s familiar to clients. For many clients, credit card payments are already their preferred payment method in their day-to-day life (whether paying for big-ticket purchases, daily expenses, or utilities).
- It’s more convenient for clients. More than just familiar to clients, online credit card payments allow clients to pay their legal bills quickly, easily, and more securely online.
- It helps your firm get paid faster. When it’s easier for clients to pay, they tend to pay their legal bill sooner. Moreover, online credit card payments reduce the time delay between the client making a payment and your firm receiving it. The 2017 Legal Trends Report supports this—Clio payment data tells us firms get paid 39% faster when collecting fees via a secure online credit card payment platform when compared to other means.
- It gives clients more flexibility. Clients may not have the cash on hand to pay a large legal bill. Alternative fee arrangements may better serve these clients. Firms that use payment plans via credit card can also provide further payment flexibility for clients.
Choosing a credit card processing solution
It’s important to choose a credit card processing solution carefully. As our guide to picking the best credit card processing service for lawyers explains, the right credit card processors for lawyers should be legal-specific and should offer firms solutions that:
- Integrate with firm processes. Potential legal credit card processors should work with your firm’s billing, accounting, and practice management software. When your firm’s tools work together, you can save time, reduce redundant data entry, and lower the chance of human error.
- Offer competitive pricing. Take into account the processors’ monthly and per-transaction fees.
- Can ensure trust accounting compliance. As we mentioned previously, the ability to ensure trust accounting compliance is essential when accepting credit card payments online—and the right credit card processor can help. A law-specific credit card processor like Clio Payments helps your firm stay compliant by charging credit card processing fees and account fees to your operating account.
While offering online and in-person credit card payments deliver many benefits to lawyers and clients, credit cards are not the only online payment option to consider.
Like credit cards, debit payment options provide clients with the convenience, efficiency, and familiarity they want and expect. Specific to legal services, the 2019 Legal Trends Report noted that 40% of clients would never hire a lawyer who didn’t take credit or debit cards.
Online debit payments allow clients to make convenient payments without having to worry about interest payments. For law firms, it’s important to consider their ethical responsibilities when accepting online debit payments—as with all online payment options.
By accepting multiple online payment options, law firms make it easier for clients to pay, which can help grow their practice. Providing various convenient lawyer payment methods is just one way to prioritize the client-centered experience.
To learn more about why the client experience matters, listen to this episode of Clio’s Matters podcast.
Accept ACH payments
ACH or “automated clearing house” is another commonly used term for eChecks (electronic checks). Offering online ACH payments is another lawyer payment method legal professionals like you should consider to make payments faster and more convenient.
An electronic check—or eCheck—serves as a digital version of a traditional paper check. eChecks use the Automated Clearing House (ACH) network to transfer funds electronically from a client’s checking account, so they can pay their bills directly from their online bank account, opposed to writing a check. eChecks function similarly to paper checks—but with a lower cost than credit cards. When using online payments in Clio Manage, a $2 flat fee is applied to ACH payments of any amount. If you often work with large bills, this small flat fee will offer significant savings compared to traditional credit card fees.
To accept eChecks, law firms need to use an online payment solution thtat includes eChecks as a payment method. A legal-specific eCheck processor allows law firms to accept eChecks as a lawyer payment method securely.
Attorneys should be aware and careful to follow ethical guidelines when accepting payments via eCheck just as they would with any lawyer payment method. However, using legal-specific processors can make this easier.
Law firms can also consider online payment systems like PayPal when looking for lawyer payment methods that clients want.
PayPal offers a convenient, easy-to-use payment option that appeals especially to certain generations of clients.The 2017 Legal Trends Report found that 18% of millennials prefer to use PayPal or similar platforms to pay their legal fees—a significant difference from the 11% of Americans who said the same. Thus an alternative option like PayPal may be particularly attractive to lawyers focused on bringing in younger clients.
However, platforms like PayPal do come with different considerations than other lawyer payment methods. For one, PayPal takes a cut of payments. It’s also important for law firms to ensure payments accepted via platforms like PayPal follow all ethical and compliance rules. As mentioned earlier, the nature of PayPal could make it difficult to ensure compliance when accepting payment for retainers or funds for a trust account. In a 2018 opinion, the South Carolina bar allowed lawyers to accept payments via PayPal, as long as certain restrictions—like not commingling client funds with their own—are followed.
Be sure to check your state’s rules about accepting legal payments via PayPal to ensure you’re able to stay compliant.
Final notes on lawyer payment methods
Payment is an integral part of a successful law firm’s billing process. However, firms may not be taking full advantage of the lawyer payment methods available today. However, by giving legal clients what they want when it comes to payments—convenient and secure ways to pay—attorneys can encourage clients to pay promptly.
While today’s technology makes many potential payment methods for law firms available, not all options are suitable for all firms. For many law firms, looking for an option that works with other firm tools (such as practice management software) and that allows them to accept multiple payment methods is the best all-in-one payment solution.
For example, Clio Payments makes it easy for law firms to accept secure legal credit card payments online. You can also use Clio Payments to set up recurring credit card payment plans for clients. And, because online payments in Clio Manage is a component of legal practice management software, it works seamlessly with your billing workflows to save you time and help your firm get paid faster.
When considering potential payment methods, it’s crucial for law firms to research their state bar’s rules and regulations and any applicable ethical considerations before implementing digital payment methods.
Moving beyond traditional payment methods to offer different payment options to clients can reveal many benefits for law firms, but the core advantage centers around clients. Client-centered law firms put their clients’ experience first—and today’s clients want more options and convenience when working with services. For law firms, offering convenient payment methods like online credit card payments gives clients what they want, while also helping boost law firm revenues and growth.
The information in this article applies only to US practices. This post is provided for informational purposes only. It does not constitute legal, business, or accounting advice.
We published this blog post in October 2021. Last updated: .
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