What is Payment processing?
What is payment processing for law firms?
Payment processing software for law firms allows firms to receive and track clients’ payments electronically, with the ability to accept payments by credit card, debit card and electronic checks.
Why should law firms accept electronic payments?
Law firms should accept electronic payments to get paid faster and to increase their collection rates. Several legal industry surveys have shown that law firms that adopt e-payments and offer their clients the ability to pay online see tangible benefits. One recent survey found that the time it takes law firms to collect invoices decreased by more than 20% using electronic payments. The same survey said that law firm collections increased by 7% within several months of implementing electronic payments.
What forms of payment can a law firm accept through electronic payments software?
E-payments solutions allow law firms to receive payments from clients via debit cards, credit cards and e-check (ACH) payments.
What types of legal fees can clients pay using electronic payments software for law firms?
All electronic payments systems enable law firm clients to pay the amounts on their invoices electronically. In addition, some payments systems allow clients to set up payment plans to pay their legal fees over time. Some also allow firms to set up recurring charges in order to offer their services on a subscription basis.
A relativity new option that some payment solutions offer is “buy now, pay later” financing. Under this option, clients can choose to finance their payments through a third-party lending company. If the client is approved for a loan, then the law firm receives 100% of its fee up front, while the client pays the fee over time to the lending agency.
Should a law firm use a built-in or standalone electronic payments solution?
Law firms have two options when selecting e-payments software. One option is a standalone payment processing platform. Popular examples of standalone payment platforms for law firms include Gravity Legal, Headnote and LawPay. These products can be used on their own or through integration with other legal technology products, most typically law practice management platforms.
Another option for law firms is built-in payment processing software. In recent years, many law practice management platforms have begun offering their own online payments products built natively into their platforms. For lawyers using a practice management platform, the advantage of built-in payments software is that it seamlessly integrates with the platform’s billing and accounting features. This makes it easier for law firms to include e-payment options on their invoices and to track and manage payment receipts. A disadvantage for law firms of native e-payments is that the solution is not portable, so if the law firm moves to a new practice management system, it will have to change to a different e-payment product.
Can law firms use payment apps such as CashApp, PayPal or Venmo?
The question of whether law firms can use payment apps such as CashApp, PayPal or Venmo remains unsettled. Legal ethics panels in only two states have considered the issue, and both have concluded that law firms may use payment apps, as long as they take certain precautions. The concerns around these apps are that they could compromise client confidentiality or that they could cause lawyers to violate their obligations regarding the management of clients’ funds. Several legal ethics authorities recommend using payment applications that are specifically designed for law firms in order to avoid these concerns.
Can a law firm pass along payment processing fees to its clients?
State ethics rules differ on the question of whether a law firm can pass along payment processing fees to its clients. Some states prohibit lawyers from passing on these fees, while others allow the practice. However, the majority of ethics authorities agree that, as a matter of practice, law firms should not pass on these fees, even when they are legally allowed to do so.
Will an electronic payments solution protect my IOLTA account?
Electronic payments solutions that are specifically designed for legal professionals will protect your IOLTA account. Payment solutions that are designed for law firms ensure that any transaction fees are not debited from your IOLTA account and that any unearned fees are deposited to your IOLTA account. These solutions allow the law firm to choose which accounts funds are deposited to and which accounts fees are debited from.