OSB Professional Liability Fund

Electronic Payment Processing Software for Law Firms

June 28, 2019
by Rachel Edwards

Payment by cash and paper checks is becoming a less common form of payment. Providing clients with the ability to pay electronically using a credit or debit card or an eCheck is now standard business practice. Many clients assume that a law firm will offer these types of payment options, and setting up an electronic payment system can provide for faster payments and simplify your billing process.

Before discussing the software programs available to law firms for processing payments electronically, it is important to understand the various types of electronic payments:

  1. Credit or debit card payments- A credit card allows for borrowing money against a line of credit, whereas a debit card draws money directly from a checking account. In terms of the software I’ll discuss below, credit and debit cards are processed in the same way, but the processing fee may differ depending on the type of card. Debit cards typically have a lower processing fee. The payment processing software program contacts the card issuer to verify whether the card is valid and has enough available credit or cash in the checking account to cover the amount and provides receipt of the payment to the payee.

  2. eCheck payments- An eCheck is an electronic payment funded by the payer’s checking account and moves funds electronically between bank accounts, also referred to as an Electronic Funds Transfer (EFT). It is just like a paper check in that it is a promise to pay requiring a checking account number and routing number, except it is not printed on paper, and business owners must use payment processing software to accept eChecks. The Automated Clearing House (ACH) is the network that connects all banking and financial institutions in the country and allows for processing of eChecks. Money is withdrawn from the payer’s checking account, transferred over the ACH network, and deposited into the payee’s checking account. The payment processing software program submits the information to the ACH network and provides receipt of the payment to the payee.
The payment processing software programs discussed below allow your law firm to accept credit or debit cards and eChecks from clients or third parties. See OSB Formal Ethics Opinion 2005-172 for information regarding your ethical duties as they apply to accepting credit card payments. Payment processing software built for lawyers ensures that any processing fees will be taken from your operating account rather than your trust account. So you can deposit unearned money into your trust account without having to first move the processing fees into the trust account to cover those charges. You can also choose to deposit earned money into your operating account. Payment processing software programs not built for law firms instead deduct processing fees from the account where the funds were initially deposited. Many different law firm-specific software options are available. Keep in mind this is not an exhaustive list, and pricing may change.
  1. Standalone. These types of payment processing options are standalone programs, meaning they do not integrate with other software programs, such as billing or case management software.
    1. HeadnoteYou are charged processing fees per transaction (2.9% for each card payment; 1.9% for each eCheck payment). They also provide custom pricing with potential discounts for larger firms and those that process high volumes of payments.
    2. Lex/ActumThis program offers a tiered pricing structure based on the amount of money processed per month, starting at $29 per month for up to $10,000 in transactions per month, and up to $99 per month for $60,000 or more in transactions per month. You are also charged processing fees per transaction, which decrease as you move up the tiers. At the lowest tier, you are charged 25 cents for each card payment and $2 for each eCheck payment. At the highest tier, you are charged 10 cents for each card payment and $1.50 for each eCheck payment.
  2. Standalone that also integrates with billing and case management software. If you use or plan to use billing or case management software, these payment processing programs create a streamlined process where an invoice is sent electronically from the billing or case management software program to the client or third party. They can then pay online and payment is recorded automatically. Pricing may differ depending on whether the program is used as a standalone product or you choose to integrate with a billing or case management software program.
    1. LawPay
      1. Pricing. Subscription fees are $20 per month or $180 per year. You are also charged processing fees per transaction (1.95% plus 20 cents per transaction for standard cards or 2.95% plus 20 cents per transaction for specialty cards, such as American Express; 0% plus $2 for each eCheck payment). Other card network fees may apply to some transactions and are automatically added to your processing fees.
      2. Integrations. The full list of billing and case management software programs that integrate with LawPay can be found here.
    2. LexCharge
      1. Pricing. You are charged processing fees per transaction (ranges from 1.5% to 2.5% plus transaction fees of between 20 and 30 cents, depending on whether a card or eCheck is being used, the type of card, and the amount being processed).
      2. Integrations. LexCharge integrates with RocketMatter, a case management software program.
    3. ClientPay
      1. Pricing. You are charged processing fees per transaction. Contact the company for more information about pricing.
      2. Integrations. ClientPay integrates with case management software including Thomson Reuters, Rippe & Kingston’s Legal Management System, Develos’ Soluno, Select* Associates, and Aderant’s Expert.
  3. Case management software with built-in payment processing. Some case management software programs have built-in payment processing software.
    1. MyCaseYou are charged processing fees per transaction (3% for each card payment; no charge for eCheck payments).
    2. Abacus Payment Exchange. Abacus offers the Abacus Payment Exchange, which integrates with various Abacus case management software programs, such as AbacusLaw and Amicus Attorney. You are charged processing fees per transaction (3% for each card payment; no charge for eCheck payments.)
Before choosing any particular software program, be sure to thoroughly vet the vendor. See OSB Formal Ethics Opinion 2011-188 for more information.

Resources

www.osbplf.org > Practice Management > Forms > Trust Accounting > Accepting Credit Cards
www.osbplf.org > Practice Management > Forms > Trust Accounting > Frequently Asked Trust Account Questions
www.osbplf.org > Practice Management > Forms > Engagement Letters and Fee Agreements > Fee Agreement- Authorization to Charge Credit Card
www.osbplf.org > Practice Management > Publications > Books from the PLF > A Guide to Setting Up & Using Your Lawyer Trust Account (2018)