Consider this common scenario: Sarah, a lawyer, is just happy about closing a complicated case for a satisfied client. She feels a wave of relief – it was a success! However, such emotion disappears once she gets the complicated pile of paperwork, including stacks of checks. Payment collection has always been a tedious process, full of chasing late payments, waiting for checks to clear and manual account reconciliation.
However, Sarah’s case is one of the many similar stories. An ABA study found more than 60% of law firms still use paper checks as their main payment method. This not only creates the problem of the administration but also the problem of the delay in the cash flow and the important business decisions.
Thankfully, there’s a solution. Legal industry is undergoing a digital transformation, within which electronic payment processing is a driving concern.
Key Considerations for Choosing a Law Firm Electronic Payment Processor
The choice of the electronic payment processor is one of the key decisions for your law firm. It can really affect your efficiency, client satisfaction, and financial security. Here’s a breakdown of the key factors to consider when making your choice:
IOLTA Trust Accounting Compliance (Mandatory):
Most states’ law firms are subject to IOLTA (Interest on Lawyers’ Trust Accounts) regulations, which are designed to protect the money held in client trust accounts. Such a rulebook guarantees that client funds held in trust are protected.
Select a processor that is designed to meet the needs of law firms and is IOLTA-compliant. Make sure that the certificates are there or at least there are clear explanations in their documentation to the effect that they have met the necessary requirements.
PCI Compliance (Mandatory):
Safeguarding private client information, especially credit card numbers, becomes the most important thing. Choose a processor that is PCI (Payment Card Industry) Data Security Standards compliant. This document includes specifications for thorough security procedures that will prevent data leaks and provide safe transactions. The best way to authenticate security is to look for certifications from independent security organizations like PCI SSC (Payment Card Industry Security Standards Council).
Features:
Accepted Payment Methods (Offer Flexibility):
Be mindful of your clients’ preferences and offer a range of secure payment options to the processor. These would include credit cards (Visa, Mastercard, etc. ), eChecks (electronic checks), and ACH transfers (direct bank transfers). Think of the amount of each payment type your firm usually gets and prioritize them in order.
Payment Plans and Recurring Billing Options (Enhance Client Experience):
Allow clients to have the option of larger invoices or retainer agreements with flexibility as well. Search for processors that offer features such as installment plans which allow clients to make payments.
Integration with Practice Management Software (Streamline Workflow):
Reduce time and eliminate mistakes by selecting a processor that is fully compatible with your current practice management software. This will replace the need for duplicated data entry and keep the financial information in a single centralized location. See that the integration runs smoothly by checking for existing connectors or compatibility lists from both the processor and your software provider.
Online Payment Portal (Convenience for Clients):
Simplify the process of payment for clients by providing a secure online payment portal that they can easily access at their own convenience. The portal must be convenient to use and available on different types of devices. Check for the existence of tools like customizable payment forms and data protection capability.
Reporting and Reconciliation Tools (Gain Valuable Insights):
Reporting features that are strong are necessary for tracking your finances and making decisions based on facts. Select a processor that gives a detailed insight into the transaction data, including the fees, chargebacks, and client payments. With such tools, reconciliation becomes even more streamlined when these tools automatically match transactions to your bank statement.
Cost Structure (Consider Transparency and Budget)
Monthly Fees (Understand the Subscription Model): Please be sure to clearly state the subscription fees of the processor. Some have flat monthly fees, others might have tiered structures depending on the volume of transactions. Consider your expected transaction volume to make a cost-effective choice of the model.
Transaction Fees (Be Transparent About Per-Transaction Costs): Compare the payment methods to know the processing fees charged per transaction. Usually, the credit card payments are charged higher because of network charges, whereas E-checks and ACH transfers often have lower fees. Make sure the processor includes these fees in the processing and offers volume discounts if there are any.
Chargeback Fees (Prepare for Disputes): Chargebacks are when a client raises a complaint over a particular transaction. Know the processor’s fees for handling chargebacks. Seek for processors that have features to help you to reduce chargebacks, such as the clear invoicing practices and the secure payment authentication.
Note that the “best” electronic payment processor is determined based on the specification of your law firm and budget. Through giving due regard to each of these variables, you will be able to make a clear decision that will boost your efficiency.
Ahead of us are the cutting edge electronic payment processing methods for law firms.
The process of choosing the correct electronic payment processor is a hard and long one. Below is a list of some of the top options, showing their main features and intended audience, to help you in making your choice.
LawPay (Industry-Specific, IOLTA Compliant): Among the leading choices is the one made for law firms. LawPay has a compliance feature that makes sure that IOLTA is up to date and that client funds are safe. They give a platform with a user-friendly interface for both lawyers and clients, with features such as online payment, recurring billing and in-depth reporting. The LawPay is the optimal option for the companies that are looking for a complete and secure solution, because it is focused on the legal field.
Stripe (Flexible, Developer-Friendly): A very strong and versatile payment gateway. Stripe offers a variety of payment modes, customized invoices, and a highly functional developer tools that together form a comprehensive set of options. Although it was not created for law firms, its flexibility enables the integration with the existing practice management software to be customized.
Despite this, one trust account compliance problem is that Stripe does not offer a distinct IOLTA solution. This may be the best choice for the firms that are innovative and have internal developers who are looking for a really customized system.
Billdu (Invoicing & Payment Processing Combined): This whole platform reduces the invoicing and payment collection for small businesses, including law firms, to the level of simplicity. Billdu enables users to generate invoices quickly, payment online and monitor some of the business expenses. As far as IOLTA compliance, it may have less features to satisfy the requirements of the big firms with complicated billing systems. Billdu is a good choice for the single practitioners or small firms that are in need of a simple and user-friendly invoicing and payment processing solution.
TrustPay (IOLTA Compliant, Transparent Pricing): Famed for its transparent fee policy and its dedication to the IOLTA compliance. TrustPay has a simple and easy-to-use interface and it offers functionalities like online payments, recurring billing, and detailed reporting. It is a wise choice for the companies which are looking for a trustworthy and secure processor with a clear pricing.
Zelle (Fast & Convenient, Limited Features): Zelle, even though it is not a normal payment processor, it is a fast and convenient way for customers to send payments directly from their bank accounts through the banks that participate in it. Besides, Zelle does not have invoicing and reporting capability, so, it is ideal for smaller transactions or as an additional payments option, together with a more comprehensive processor.
Summing Up
We’ve touched on the important factors that should be taken into consideration when selecting a payment processor and also looked at some of the trending options. Keep in mind, the “best” solution will vary from firm to firm depending on its specific requirements and the budget it has.
Start the process, do more research, compare the features and pricing, and select the processor that will help your firm to work more efficiently and to better serve your clients. The future is here, and it is legal payment, so embrace it and you will see your practice grow!
