Whether it's originated as a matter of curiosity or from the request of a client (or potential client), most law firms have been confronted with a common question in the legal profession:

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	Should accountants advise law firms to accept credit cards?

''Should law firms accept credit cards?''

Several law firms—and solo attorneys—do accept credit cards for their services. Their opinion is usually that providing the option of paying with a credit card is an effective means for accommodating and retaining clients while simultaneously simplifying their front-end cash management and collections process overall.

(In addition, some law firms have lost clients to other competing firms that offer credit card processing in the past, which obviously motivated their decision.)

Several others, however, fall somewhere in between being opposed to the idea and simply not being informed enough to take a definite stance on the issue. Most in this category haven't accepted credit cards in the past and want to know more about both the ethical position and technical considerations of using a merchant account to accept payments from legal clients.

This article will attempt to shed light on the issue from an objective standpoint, so as to assist anyone who might be unclear on the ethical, technical, and legal factors concerning the employment of a merchant account in a law firm or one's solo practice.

So let's deal with the most obvious concerns. Is it ''kosher'' to accept credit cards as a lawyer? Is it even legal?

The short answer is ''yes.''

To verify that statement, one can refer to the American Bar Association's official stance on the issue. In Formal Opinion 338 (Nov. 6, 1974), the ABA condoned the practice of accepting credit cards for legal fees. Further, most law practice management advisors (employed by state bars) will recommend that attorneys accept credit cards as a way to improve, simplify, and, in some cases, increase their revenues.

However, a more realistic response to this concern is to consider whether or not the use of a merchant account is ''kosher''—or relevant—to your specific practice area and the types of clients you serve. And obviously you only need to consider accepting credit cards if you're billing your clients directly (by the hour).

For example, if you deal mostly with larger corporations, insurance companies, or significantly larger transactions in general, it might not make too much sense to provide the option of paying by credit card, as the processing fees (on your end) and specifically the discount rate (usually about 3% to 4% per transaction) will needlessly cut into your profits. Additionally, that sort of clientele is typically not high-risk or problematic when it comes to paying their bills on time.

However, if you're dealing with ''regular'' clients who get billed by the hour, then it only makes good business sense to accept credit cards as a form of payment—especially if they retain you with an upfront deposit.

More than that, you'll be able to help more potential clients, as an increasing number of people generally prefer to use their credit cards for larger-ticket purchases these days and for a variety of reasons. For some, it's as simple as the fact that it's ''easier'' than writing checks, while for others, it's because they collect rewards points with an almost religious fervor. And for still others, it's because they may simply be cash poor at the time.

Whatever the reason, it makes no sense to lose these types of potential clients over the fact that you don't accept credit card payments.

Let's progress to the next potential concern that some attorneys might have about this type of payment method...

Technically speaking, are merchant accounts ''law firm friendly'' when it comes to conforming to standards regarding trust accounts, commingling of funds, and so on?

Again, the short answer is ''yes.''

While you should consult with your local bar about any specific recommendations it might have, most merchant account providers will allow you the flexibility to allocate monies to appropriate trust accounts and firm operating accounts, as necessary.

Additionally, any merchant processing service that caters directly to attorneys will very likely be configured to operate in this manner already.

Now, technically speaking, you'll need to consider what type of merchant account your firm—or practice—requires. If clients pay the firm directly, and if multiple transactions are anticipated on a daily basis, then in most cases it makes sense to choose a traditional ''swipe'' merchant account, through which payments are processed using a terminal.


However, if attorneys are paid directly—or if you have your own practice—then it might make more sense to consider a more fitting type of merchant service. For example, you can process credit card payments over the Internet using a web-based merchant account.

And perhaps better yet, there is even a service that operates solely by phone; the minimal monthly fees and the ultimate mobility of the service make it ideal for solo practitioners or attorneys who only need to accept credit cards occasionally.

The bottom line is that there are enough options available to you these days that accepting credit cards is no longer applicable only to one ''style'' of business or practice. As mentioned above, unless your practice area is irrelevant, there's no reason you shouldn't be accepting credit cards as an attorney.

Conclusion

If you serve a client base that would occasionally opt to pay legal fees with their credit cards, then in your case, the benefits of accepting credit cards will far outweigh any of the hassles of setting up the process.

Here's a brief overview of why it simply makes sense for attorneys who bill regular clients by the hour to accept credit cards for services rendered:

• You can increase cash flow and make deposits more quickly.
• You can prevent losing clients to competing law firms.
• It is often more convenient for both the client and the attorney.
• You can cut down accounts receivable and simplify collections.
• You can accept retainers more quickly, on the spot (if using mobile merchant solutions).
• You can cater to clients who prefer to pay for larger-ticket items on their cards.
• You can avoid complicated payment plans by simply charging clients' credit cards.

Again, the options abound regarding choosing a merchant account that is catered directly to your needs. And while some due diligence is required (such as reading the company's terms and conditions), setting up a merchant account is fairly straightforward.

Look for a service that has a clear fee structure, and don't be swayed by the discount rate alone, as these are often ''introductory rates'' subject to change without notice or aren't necessarily the only transaction rates/fees. Another thing to examine is the company's cancellation policy, as some are outright ludicrous.

So shop around, ask around, and invest a bit of time in choosing the best possible merchant account for your law firm—or your solo practice. Doing so will pay off down the road, substantially.

In closing, I hope this article has aided in clarifying the topic of accepting credit cards as an attorney or at least contributed to your perspective on the matter. I would encourage you to consider this as a realistic option for your practice, even if you've never accepted credit cards previously.

You may be surprised at how profitable a decision it could become.

About the Author

Chris Rempel is the marketing director for Accept by Phone, Inc., which provides credit card processing services that have been specifically optimized for attorneys who bill their clients by the hour or on a project basis. Because the service can be remotely accessed from any touch-tone phone, the majority of expenses associated with traditional credit card processing have been bypassed. Attorneys only pay a $5 monthly fee and receive a discount of 3.95% per sale. More details are available at
www.accept-by-phone.com/attorneys.html.

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