If you’re still just accepting checks and cash as forms of payment, you’re losing out on thousands of dollars per year in business.
So says the CEO and co-founder of LexCharge, Jeff Shavitz, who recently authored an article for the Sept./Oct. issue of Law Practice magazine, “Legal Payment Processing Must Change.”
Today, new payment methods such as PayPal and Apple Pay proliferate, and now a handful of firms even accept cryptocurrencies, says Shavitz, who runs the legal credit card processor.
But the legal industry has been slow to adopt these methods – even long-established ones like credit card processing, ACH and eChecks, which are only offered as options by 62 percent of large and midsized firms. The slow adoption is especially surprising considering that the ABA since 1974 has approved credit cards as acceptable payment for fees.
The resistance to change isn’t good for business. “Today’s legal consumers have different expectations than they did even five years ago,” Shavitz explains, referencing examples of a growing percentage of clients who will just take their business elsewhere if they’re not served by today’s convenient options. “Millennials and the population at large are looking to work with law firms that are embracing technology.”
Those observations are backed up by numbers. Shavitz cites a 2017 study of U.S. consumer payments by TSYS, which found that when it comes to making one-time online payments, 76 percent of consumers preferred to use their credit or debit cards, compared with 58 percent in 2016.
Moreover, consider this: Firms that accept credit cards are paid 40 percent faster, Shavitz says, citing a 2017 legal trends report by Clio.
Convinced to make a change? For those looking to add credit card payment options, Shavitz offers some advice:
- Trust account and IOLTA account considerations – Mind the separation of monies when accepting payment. “Make sure that your payments company ensures that no processing fees will ever come out of your trust account,” Shavitz warns.
- Fast funding – “Make sure that your payments provider can fund all your card types in 12 hours, commonly called ‘next day’ funding,” Shavitz advises.
- Payment plan advantage – “Payment plans are perfect for any practice area where clients can’t pay a large balance at once,” Shavitz says. You will find that auto billing a certain amount on a set day every month or quarter not only benefits your customers but your open receivables, as well.
- System integration – Ask your payment processor about its capability to integrate with your time and billing management software for a seamless work flow.
- Understand the differences – “It’s important that you understand the difference between a law firm that swipes credit card payments versus one that takes payments over the phone or via the internet, Shavitz says. “There are different fee classes, developed by Visa and Mastercard, depending on how a law firm is set up to accept credit cards.”
Shavitz also warns lawyers to ask about fees. “The amount of hidden fees, meaning fees that have not been disclosed to a firm [or attorney] and that are considerably higher than anticipated – has escalated over the past 10 years, and the low base rate of 2 percent is now reaching a significantly higher effective rate of 3 percent or greater.”
Credit cards are the first step, but not the only one to consider. “PayPal is now a ubiquitous term; so are Square, Stripe and Apple Pay. Venmo is up-and-coming,” Shavitz says, noting that $10.4 billion was transacted through Venmo in the last quarter of 2017.
Today’s newest payment options are sky-rocketing into prominence. According to Shavitz, “in 2011, only $1 of our every $17 was collected online, whereas in 2014, $1 out of every $6 was collected online. And it likely has increased today.”
Law Practice Magazine is a publication of the ABA Law Practice Division.