Accepting electronic payments can improve client satisfaction and grow your law firm’s revenue. With the right legal payment processing software, electronic payments for law firms can be safe, secure, and compliant with ethical rules.
See how Orion simplifies secure legal payments — Schedule a personalized demo today.
Why Law Firms Are Switching to Electronic Payments
The top two reasons for switching are client preferences and internal efficiencies. Meeting clients’ expectations accelerates collections, and making payment processing more efficient has immediate and long-term benefits.
“Electronic payments” means ACH (e-check), credit card, and debit card payments.
Legal Clients Want Electronic Payment Options
The evidence is clear: businesses and individuals want the option to pay electronically. In 2024, consumers chose electronic payments 78% of the time, and nearly three-quarters of B2B transactions were completed electronically. Clients value electronic payment options because they allow clients to:
- Pay easily and know the payment will clear quickly.
- Use a process they trust and feel comfortable with.
- Automate recordkeeping (for business clients with a bank interface).
Electronic payments also enable fully digital bill payment workflows. Law firms can embed a payment link in an email invoice, and the client can pay the invoice in just a few clicks.
Electronic Payments Make Law Firms More Efficient
Processing checks is labor-intensive. It requires manual data entry, which leads to higher error rates. Waiting for checks to clear can cause cash flow problems. Law firms that enable electronic payments:
- Spend less time correcting errors and reconciling trust accounts.
- Track the status of payments easily with secure bank connections.
- Get access to payments quickly, sometimes within 24 hours.
- Reduce their exposure to data breach risks, because confidential financial information is stored by the payment processor, not the law firm.
Top Benefits of Electronic Payments for Law Firms
For law firms, online payments are a revenue multiplier. Law firms can realize rapid ROI on their investments in electronic payment acceptance with the following benefits.
- Increased client satisfaction. Meeting clients’ expectations better is a major driver of ROI for electronic payment platform investments. When clients are happy, they are more likely to leave positive reviews, bring their next matter to the firm, refer new clients to the firm, and pay their bills (on time and in full).
- Reduce payment processing labor. Law firms need to control labor costs to scale. Reducing repetitive tasks like processing checks by hand also frees up professionals in the accounting function for more complex and satisfying work. When more clients pay electronically, everyone in the firm benefits.
- Accelerate revenue. When partners spend otherwise-billable time on collections, it doesn’t just slow down the firm’s revenue cycle. It reduces billable hours, period, and therefore revenue. Partners earn less, and the firm is less profitable. Offering electronic payment options can result in faster collections with less partner intervention.
- Mitigate check fraud risks. Of all payment methods, checks are the “most vulnerable to fraud.” Check fraud reports increased 90% between 2021 and 2023, and law firms are frequent targets of check scams. One recent case left a law firm’s trust account overdrawn by over $75,000. The more payments you handle electronically, the less exposure you have to check fraud risk.
- Improve compliance with all-electronic workflow. Trust accounting requires extensive record-keeping. By accepting more payments electronically, you can take advantage of software integrations that can greatly reduce the workload and the risk of error.
Ready to streamline your firm’s billing? Get started with Orion and experience faster, safer, and compliant payments.
How to Handle Security and Compliance in Legal Payments
Lawyers have special duties around technology adoption (see Comment 8 under ABA Model Rule 1.1), confidentiality, and trust accounting. With those duties in mind, below are four steps to take when making decisions about electronic payment security and compliance.
1. Choose a PCI-Compliant Legal Payment Processing Platform
Payment card industry (PCI) compliance refers to a set of standards developed by the PCI Security Standards Council. It lays out requirements for digital and physical security that apply to all companies that process, store, and transmit credit card information. Companies that handle credit card information without maintaining PCI compliance are subject to fines and are more vulnerable to theft, fraud, and data breaches.
Law firms should conduct due diligence to make sure that any legal payment processing platform they implement is PCI compliant. They should also consider contract clauses that allocate liability in the event of a data breach.
Typically, a law firm that accepts electronic payments will not process, store, or transmit credit card information. Those actions happen inside the payment processor’s systems, and no credit card data is passed to the law firm. Thus, the firm itself may not need to be PCI compliant.
2. Make Sure the Legal Payment Processing Platform Is Trust Compliant
Since electronic payment processing platforms move funds directly into law firm accounts, money must be deposited into the correct account. This is a straightforward process when a client is paying a bill and fees already earned; funds can go directly into the operating account.
But legal payment processing platforms must also be able to handle unearned retainer deposits, chargebacks, and fees appropriately. If an unearned retainer is deposited in the operating account or a chargeback is deducted from the trust account, your firm will be out of compliance.
Thus, when you are assessing potential electronic payment solutions, seek out solutions built for law firms and make sure to get detailed answers about how they handle trust accounting.
3. Research Local Ethical Rules and Choose Compliant Implementations
The overwhelming majority of states allow lawyers to accept ACH, credit card, and debit card payments. A few have restrictions about payment methods or advertising related to credit cards. Some states also limit or prohibit surcharging (passing electronic payment fees along to clients).
Even if your area has rules about law firm online payments, likely, you can still accept electronic payments in some form. Once you know the relevant rules, you can implement electronic payments in a compliant way, like turning off surcharging if your state doesn’t allow it.
Rules and laws can change; always check with your local bar association for the most updated information.
4. Audit Internal Procedures for Compliance
Accepting payments electronically may require some minor changes in your existing policies and procedures. For example, you might need to shift how you handle cross-checking and accounting controls, since money will be coming directly into your firm’s accounts. It’s a good idea to look through all of your current procedures, update them as needed, and make sure that all staff are trained on the changes.
How Orion Software Simplifies Secure Legal Payments
Orion’s electronic legal payment processing platform, Orion ePay, is fully integrated into Orion’s secure client billing software modules. It offers the tightest integration available with your Orion software, streamlining even tricky processes like issuing refunds. Other benefits include:
- Bank-grade security and full PCI compliance.
- Trust compliance built exclusively for law firms.
- Fast payment clearance (usually within 24 hours).
- Robust dashboards and analytics with real-time payment information.
- Faster billing cycles, including integration with ePrebill Manager.
Clients value Orion ePay too. They get to choose their preferred payment method every time, and you can offer email invoicing through the Orion E-mail Bill Delivery Manager, including one-click payment links embedded in invoices.
Frequently Asked Questions
Should our law firm accept electronic payments?
Yes, if you use a safe and compliant platform and have secure client billing software. Both individuals and businesses prefer electronic payments by wide margins: 78% for individuals and 74% for businesses. Allowing electronic payments (credit cards, debit cards, and ACH) can be more efficient internally, and it also reduces your exposure to check and wire fraud.
Is it more expensive to accept payments electronically?
Not necessarily. There are payment processing fees, but those should be considered in light of the costs of not accepting electronic payments:
- Clients want to pay electronically. If your firm doesn’t offer that option, clients will likely be less satisfied with your services.
- Clients can pay faster when they pay electronically. That can speed up your revenue cycle.
- Electronic payments can clear within 24-48 hours. Checks take 1-7 business days, which impacts your firm’s cash flow.
- Law firms are frequent targets of check fraud. Reducing check usage limits your exposure to that risk.
Finally, surcharging can be an option for controlling costs.*
*Surcharging laws vary by state, and are subject to change. Always check with your local bar association for the most updated information.
Is electronic legal payment processing secure?
Yes, if you choose a reputable payment processor and follow robust security procedures within the firm. Look for payment processors that are PCI-compliant with bank-grade security.
Is it risky for a law firm to accept electronic payments?
If the firm is using a secure, reputable, and compliant payment processor and following standard security procedures, the risk is limited.
When you must transfer money electronically, ACH (e-check), credit cards, and debit cards are much less risky than wire transfers. That is because wire transfers cannot be reversed. ACH, credit card, and debit card payments can be reversed in appropriate circumstances.
Are electronic payments for law firms ethical?
Generally, yes. There are a few things to be aware of:
- Law firms must conduct due diligence about the security of the payment processor.
- Law firms must ensure that the payment processor complies with trust account rules. That includes depositing earned and unearned fees in the correct accounts and making sure that fees and chargebacks are handled appropriately.
- A few states restrict surcharging and/or have special rules for accepting credit cards. Always check with your local bar association for the most updated information.
Can my firm accept retainer payments online?
Yes, if your software is set up correctly. It’s important to distinguish between earned and unearned retainers so that deposits go into the correct account.
Modernize Legal Billing with Orion’s Integrated Payment Tools
Electronic payments benefit both law firms and legal clients. Clients get to choose preferred, trusted, and convenient payment options. Law firms get more satisfied clients and significant internal efficiencies that boost revenue, cash flow, and profitability. Want to see how Orion’s secure cloud-based legal payments solution could benefit your firm? Schedule a demo today.