How to get paid quickly with online payment tools in the time of the coronavirus
A few months have passed since the COVID-19 pandemic changed our lives nearly overnight. As shelter-in-place mandates became commonplace, law firms across the country closed their brick and mortar doors and tried to acclimate to the new normal.
At first, many law firms struggled with remote work and had difficulty choosing the technologies needed to facilitate communication and collaboration within virtual law firms.
In particular, one issue encountered by many firms was the inability to access law firm documents and data. The good news is that, as I discussed in last month’s column, there are cloud-based tools available that make it easier the ever to access, manage, and collaborate on law firm documents.
Another common issue faced by many law firms operating virtually has been setting up a process to get paid promptly. Under normal circumstances, when clients put off paying a legal bill—or even ignore it completely—law firm finances can be affected significantly. This problem is all the more amplified during the COVID-19 crisis because cash flow can be negatively impacted by the unpredictability of the current situation. That’s where online payment processing software comes in.
What is payment processing software? Simply put, it allows your law firm clients to make automated clearing house (e-check) or credit card payments online. After all, credit card and online payments are the norm these days, and legal consumers assume that law firms will offer those payment options.
Even more important, coming into the office to pay may not be a safe option for either your clients or law firm staff in 2020. Instead, you’ll have everyone’s best interests in mind when you offer your clients the ability to pay legal bills online from the safety and comfort of their own homes. Not only will your firm get paid faster, but your clients will also have more choices when it comes to paying their legal bills. In other words, it’s a win-win for both your firm and its clients.
Online payment processing categories
When choosing payment processing software for your law firm, it’s important to focus on tools designed with lawyers’ unique needs in mind. Generally speaking, legal-specific payment processing software is preferable because it is ethically compliant and ensures that all fees are deducted from your firm’s operating account rather than its trust account.
That being said, please note that it’s important to gain a full understanding of your jurisdiction’s ethical rules so you can thoroughly vet each provider to ensure the services provided are ethically compliant with your jurisdiction’s rules related to accepting credit card payments.
With payment processing software for lawyers, you can choose payment processing tools that work with your firm’s legal billing or practice management software or a stand-alone platform. The main difference between the two are convenience and cost.
When payments are processed using tools that integrate with or are built into your law firm’s legal practice management software, the payment is immediately reflected in the legal billing or practice management software. If you use a stand-alone tool, you’ll need to manually input the payment into the software.
When it comes to cost, the fees vary greatly from one vendor to another, and sometimes the credit card fees will vary depending on the type used by your client (e.g., Visa versus American Express). There are also annual or monthly fees to be aware of; some payment processing vendors will charge a subscription fee to use their software on top of the fees imposed for each transaction.
In other cases, if the payment processing software integrates with law practice management platforms, you may have to either pay subscription fees for both the payment processing software and the practice management software or pay a higher subscription cost for the practice management software in order to have access to the payment processing software. So it’s important to carefully research the applicable fees and integration costs when considering payment processing software.
Payment processing options for law firms
Now, let’s move on to some of the payment processing tools available to lawyers. Note that this isn’t an all-inclusive list, but it offers an overview of products to consider.
Headnote’s pricing is 1.9% for each ACH transaction and 2.9% for each credit card payment processed. Headnote also offers the option for some prospects to have a customized quote provided based on your law firm’s potential processing volume.
Meanwhile, Lex/Actum’s pricing structure is tiered based on the amount charged each month, with a range of $29 per month (up to $10,000 of transactions per month) to $99 per month ($60,000 or more in transactions per month). The processing fees for each transaction decrease as you move up to the higher tiers. At the lowest tier, the fees are 25 cents per credit card transaction and $2 per ACH transaction. At the highest tier, the credit card transaction fee is 10 cents per transaction while the ACH fee is $1.50 per transaction.
Another stand-alone option your firm might want to consider, especially if it’s a larger firm, is ClientPay. Although not specifically designed for lawyers only, it does provide a legal-specific payment processing tool that is designed to be ethically compliant such that fees are not removed from the trust account. Pricing is not available on its website; instead, you’ll need to request a quote.
A separate category of legal payment processing tools available are stand-alone payment processing tools that also offer the option of integrating with specific legal billing and practice management software programs.
As a stand-alone product, LawPay charges $20 per month in addition to transaction fees, which are 1.95% and 20 cents for standard cards; 2.95% and 20 cents for specialty cards such as American Express along with other rewards, corporate and international cards; and 0% plus $2 for ACH and eCheck transactions. Card brand network fees may also apply to some transactions. LawPay integrates with many different legal billing and law practice management software programs. The full list is available here.
It’s important to carefully research the fees and costs associated with each integration since you may still have to pay LawPay’s monthly fee, various transaction fees and/or pay a higher monthly fee (or pay to participate in a higher tier) for your legal billing or practice management software in order to qualify for the higher tier that includes the LawPay integration.
Meanwhile, LexCharge offers two payment tiers, Gold and Platinum. With Gold, as long as your firm processes at least $500 per month, there are no monthly fees and the transaction fee is 2.95% plus 17 cents per transaction. Platinum is available to firms that process more than $25,000 per month, but you’ll have to request a quote in order to determine how much it will cost. LexCharge is owned by, and integrates with, Rocket Matter law practice management software.
Your final choice is to choose a law practice management software program with a built-in payment processing system. Two companies that offer this option are MyCase and Abacus. (Note that I am the legal technology evangelist with MyCase).
Abacus offers the Abacus Payment Exchange, a payment processing service that integrates with AbacusLaw, Amicus Attorney, Amicus Online and OfficeTools. There is a 3% charge per credit card transaction and a $1 fee per ACH transaction.
For MyCase, payment processing is available to all customers, and there are no additional fees applied to use the built-in payment processing tools other than the per transaction costs: 3% for all credit card transactions, except American Express, which is 3.9%. All ACH transactions are free.
You may be practicing law in the middle of an unprecedented pandemic, but just because your law firm is operating virtually doesn’t mean you can’t successfully collect payments from clients. As long as your firm uses payment processing software, whether standalone or built into law practice management software, it’s business as usual. Using this software, your law firm’s billing processes will be streamlined, making it easier—and safer—for clients to pay their legal bills. In turn, this means your firm will get paid quickly and reap the benefits of the hard work performed on behalf of your firm’s clients.
In other words, despite the uncertain times, the ability to accept online payments can make all the difference to your firm’s bottom line and help to ensure your firm’s continued success in the immediate future and beyond.
Nicole Black is a Rochester, New York, attorney, author, journalist and the legal technology evangelist at MyCase, legal practice management software for small firms. She is the nationally recognized author of Cloud Computing for Lawyers and is co-author of Social Media for Lawyers: The Next Frontier, both published by the American Bar Association. She also is co-author of Criminal Law in New York, a Thomson Reuters treatise. She writes regular columns for ABAJournal.com, Above the Law and the Daily Record, has authored hundreds of articles for other publications, and regularly speaks at conferences regarding the intersection of law and emerging technologies. Follow her on Twitter @nikiblack, or she can be reached at [email protected].