According to the 2021 Legal Trends Report, the ability to accept online payments has become a standard feature legal clients are looking for. With the tools that facilitate these payments becoming increasingly ubiquitous across the legal sector, it’s important to understand the important differences between payment processors. Not all third-party processors offer integrations with practice management software. Not to mention the charges incurred for accepting payments can also vary significantly. 

Legal payment processing software like Clio Payments makes it easy to pay and get paid by streamlining the payment process. Your clients can pay electronically using a credit card, debit card, or eCheck, getting you paid faster. 

What is a payment processor?

A photo of someone using a credit card to pay for legal fees made possible by payment processing technologyA photo of someone using a credit card to pay for legal fees made possible by payment processing technology

Legal payment processors allow lawyers to accept credit and debit card payments. When a client presents their card to pay a bill, the payment processing software contacts the card issuer to verify whether the card is valid. If there is enough available credit (or cash in the checking account) to cover the cost of the transaction, then it proceeds and the payee receives a receipt of the payment. 

Electronic funds transfers (EFT) or eChecks are similar to a paper check, and work by promising to pay a specified amount from a connected checking account. Unlike a paper check, eChecks are processed electronically through the automated clearing house (ACH) network using a payment processing software solution. 

In addition to providing clients credit, debit, and eCheck/ACH online payment options, firms using a legal payment processing solution can offer flexible payment plans, accept trust payments, and be confident that they’re compliant with trust accounting rules. 

Online payment systems also enable passive bill collection. This feature allows legal clients to pay remotely at their convenience, and removes the need for someone at the law firm to be physically present to process the payments. 

Picking the right payment processor

Collecting payment for the work you do is integral to the success of your business, so, choosing the right legal payment processor is critical. For lawyers, this means ensuring that you choose a payment processor that is not only safe and secure, but also handles IOLTA (interest on lawyers’ trust accounts) trust compliance. 

Maintaining IOLTA trust compliance is imperative since you must keep earned and unearned funds separate in accordance with trust accounting rules. Accordingly, the legal payment processing software you use must accept client trust payments and retainers and keep them separate from your firm’s operating funds. The trust account should also be protected from all third-party debiting, including processing fees and chargebacks.

The cost of your payment processing solution is another important factor to consider. Enabling your clients to pay their bills is the lifeblood of your firm’s success, and the cost of collecting these payments can add up over time. Even small differences in the fees that processors charge can have a major impact on your bottom line. 

Find the best legal payment processing provider—4 steps

A photo of a female presenting lawyer on the phone while using a laptop to research the best payment processor for their law firmA photo of a female presenting lawyer on the phone while using a laptop to research the best payment processor for their law firm

1. Understand the different types of fees

Multiple fees are often accompany every transaction process. Per-transaction fees for credit cards are typically 1.5-3.5% of the transaction, though some cards may charge higher fees. Fees for eCheck/ACH transactions are typically lower, and may be up to 1.5%. Monthly fees will vary between providers, so ensure you factor this cost in when making your decision. 

2. Avoid using a processor which charges extra fees

Some cards will charge an additional fee on top of per-transaction and monthly fees. These might be charges for processing minimum penalties or for having additional trust accounts. PCI compliance may also incur additional fees from some providers. 

To avoid the cost of a payment processor holding you back, you should compare pricing plans between providers. This will support you getting the best return on your investment and avoid being locked into expensive plans. Since multiple fees are often involved, look for legal payment processing tools that offer full transparency. That way, you can make the best decision for your firm. 

As a baseline, expect any credit card transaction fees to be between 1 and 3.5% of the transaction. Though some cards will have higher rates. eCheck/ACH fees are typically lower (up to 1.5%). 

3. Look for simple, transparent pricing plans

With all the possible fee variations, it’s helpful to look for legal payment processing providers with transparent pricing plans. Clio’s plans are straightforward since you pay one flat and simple rate regardless of the card your clients choose to pay with, making it easy to compare against other plans. If a pricing plan seems convoluted, it’s probably best to avoid that provider. This will help ensure you’re not hit with unexpected or hidden fees. 

4. Ask questions

The choice of a legal payment processing provider is a major decision. It’s one that will impact your business well into the future. As you go through the process of selecting a tool, ask lots of questions. This will ensure you understand what you are—and aren’t—getting. 

Does the payment processor in question integrate with your legal practice management software? Does it allow for pricing plans and trust accounting? Do you feel assured this solution is safe and secure for your clients? These are all important questions for legal professionals to ask when choosing a provider. 

Getting out of a plan with hidden fees

If you find yourself using a legal payment processing solution that’s costing you more than you expected, you can switch to Clio Payments quickly and easily. You can set up your account and start accepting payments in minutes, ensuring there’s no interruption in your firm’s operations. Book a consultation now to learn more.