Should Lawyers Embrace a Cashless Future and Accept Credit Cards?

As discussed over at Mashable, a new MasterCard poll reveals that nearly three out of four Americans (73%) say they use less cash today than 10 years ago. Which really shouldn’t come as much of surprise. However, when it comes to lawyers accepting credit card payments for legal services, there seem to be some serious obstacles, as described by at the Andrea Goldman and John W. Marshall at the Massachusetts Bar Association:

For lawyers, it does not feel entirely professional or dignified to reduce one’s payment to such an obvious process. Most of us do not like asking for money. It’s more comfortable to work on retainer or send out a bill with the hope of getting paid. There’s also the issue of ethics. How does one handle credit card payments when processing them through IOLTA and/or operating accounts? What is the proper procedure? How does one avoid running afoul of ethics rules?

Is cash somehow more dignified than credit? I don’t think so. Perhaps lawyers shouldn’t accept currency at all and just use bartering of services. For better or worse, credit cards are now the most common source of financing for America’s small-business owners.

In fact, especially if you serve small business clients, there’s likely an expectation that you will accept payment by credit card.

I get it, lawyers are different. They serve a profoundly important role in our society. But just like everyone else, lawyers gotta eat. If you don’t ask for money, you’re less likely to receive it. Sure, there are better and worse ways to approach the topic, but simply ignoring fees, or only taking cash because it makes you feel better, is pretty limited thinking in my humble opinion.

Credit Card Legal Ethics

Since 1974, The American Bar Association has accepted the propriety of attorneys accepting credit card payment for attorney fees. However, acceptance of credit cards for legal services is not without limitation.

There are a variety of potential ethics pitfalls related to accepting credit cards including:

  • Maintaining a Client’s Confidences and Secrets
  • Issues Presented by Accepting Credit Cards for the Payment of Advance Fees and Expenses.
  • Depositing Advance Fees into Trust Accounts

Here are some resources for your consideration:

Of course, you should check with your state’s current rules regarding acceptance of credit cards for legal services.

Credit Card Processing

Once you’ve gotten over the indignity and understand how you can ethically accept credit card payments, there’s the issue of actually processing credit card payments:

What’s your experience with accepting credit card payment? Do you find it undignified for the legal profession? Do your clients expect you to accept credit card payment? Which credit card processing services have you used?

(Photo by: http://www.flickr.com/photos/brettlider/214337536/)

Practice Management

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  • http://www.practiceprocedure.com Andrew Nettleman

    I can’t imagine not accepting credit cards. The minuscule cost associated with the processing is more than made up for by the utility of getting paid right now.

  • http://consumerlawyer.mn/cgi-sys/suspendedpage.cgi Randall Ryder

    I use PayPal for flat fee or unbundled service retainers and it works great. My clients seem to prefer that over bringing cash.

  • Wes

    @Andrew, what seems to be the most efficient manner of accepting credit cards. I’m a Mac user and i’m looking to get something streamlined to my equipment?

    • http://phillylawblog.wordpress.com/ Jordan

      Square. It’s free, they send you a card reader, and it works with your iPhone or iPad.

      If you’re on a Droid operating system, you can also check out Intuit GoPay.

      • Brian

        I use Square. It is amazingly streamlined and user friendly. I send clients email receipts while they sit in my conference room.

    • http://www.nettlemanlaw.com Andrew Nettleman

      We use an online portal that I set up with a local provider and Elevon is the processor. We have a USB swiper if they are paying in the office or my paralegal keys the information in if it is over the phone.

      The only real issue is the fee for credit card processing. Basically I have it set up where the full amount is deposited in my both accounts and processing fees and service charges all come from the operating account at the end of the month so the trust account isn’t debited for the fees.

      The other thing to remember is that if you want same day deposits you will have to go with your bank. Otherwise it normally takes about 2 days to show up.

      Remember, this business is highly competitive. You can get all sorts of concessions from service providers to earn your business.

  • http://smartbusinessrevolution.com/ John Corcoran

    I’ve been using LawPay.com for the past 4-5 months and it’s worked well. It’s great for slow payers – you can send them a link via email and suggest they pay and they have no excuse not to. (Unfortunately, that doesn’t mean they pay immediately).

    Their URLs are pretty ugly, but I used the pretty link plugin via wordpress to create a more attractive URL that I can email clients (you can check out what I mean by clicking on here: http://www.johncorcoranlaw.com/pay).

  • http://blog.simplejustice.us shg

    I see no indignity in getting paid, no matter what the medium. I do, however, see a chargeback problem, as recently experienced by a friend of mine at the cost of about $100,000. You see, services, unlike goods, can’t be seen, so when a client pays by CC and later denies receipt of the services (or quality of services), the nice person at the credit card company tells you to prove you delivered to their satisfaction. Easier said than done.

    As the merchant agreement provides that if they decide you lose, you lose, and that’s that. Not everyone wants to find themselves in such an awkward position.

    • http://www.nettlemanlaw.com Andrew Nettleman

      What a problem to have. I don’t have very many clients that have a CC that can absorb 100k in fees so that isn’t a problem, but I see your point in general.

  • http://www.coyelaw.com/ Wade Coye

    Another example of the difficultly of striking a balance between, the fast-paced modern world, and the traditional conservatism of the legal world. I certainly don’t think cash is considered more dignified than plastic, I would argue the opposite if anything.

    • http://www.nettlemanlaw.com Andrew Nettleman

      Credit Cards also help with some of the tricky “suspicious transaction” requirements of the IRS, depending on your practice area.

  • Zanne

    I won’t accept credit cards exactly because of the chargeback issue described by shg above. We, too, were hit with a chargeback after services were rendered, some 11 months after the charge was made. The credit card holder can call and have you charge backed for years after the services are rendered. Most people either don’t know it or don’t do it, but the lawyer is always on the hook for it. The chargeback comes with NO notice to you. I have visions of a chargeback hitting my trust account, and this just gives me nightmares. As this is all part and parcel of being a merchant who accepts credit cards for payment, I can’t see a way around it. I don’t not get paid either, as my clients have to pay a retainer up front, and keep up with their deposits for future fees, or I withdraw. They are fully aware that I will do that, so they pay their retainers as we go along. (If they don’t have money to begin with, my theory is that they can get a cash advance from their credit card – this means I get paid and am not at risk for a chargeback.) Neither of these practices have anything to do with the inherent dignity of being a lawyer and thinking money is somehow crass, as I render services worthy of the prices I charge.

  • http://www.lawworcester.com Gregory

    I have accepted credit cards for several years and have had very few problems, none that could not be solved. My cc company caters to attorneys by depositing to my IOLTA and taking fees from my Operations accounts.