Mobile Payment Apps to Collect Legal Fees: How to Get Started
Here are a few practical and technological considerations for using mobile payment apps in your practice.
New credit card payment systems typically require mobile device, such as a smartphone or tablet, so if you are one of the last remaining human beings in California who doesn’t yet have one or the other of these devices, this requirement will push you over the technological edge. Some of the systems will work on a computer without a smartphone or tablet, but to my mind you are sacrificing the full convenience of the system if you don’t make use of the smartphone or tablet version. Square has an app that you install on your phone or tablet, as do most of the systems, and it links up to a website you can access from your computer. Generally speaking, you use the app on your device to process the charges, and then turn to the website on your computer for setting up your preferences, analyzing your accounts, and verifying that payments have been made.
Setting up the system can be done in about an hour. You enter your information on the company’s website, and they will set up the account for you. No doubt, a fair amount of trust is involved, as you are giving them your bank account number. Square tests the accuracy of the account number by sending you a tiny amount of money one day and withdrawing it the next day. If you are using a system that comes with its own hardware, such as Square, they will send you the card reader device within a few days, at no charge.
You are then ready to roll. I found the tutorial for Square to be incredibly simple to follow. It is truly “credit card systems for Dummies.” The protocols are very simple. You can set up multiple categories of charges—in my simple office, it’s either mediation services or legal services. You can have multiple users, if more than one lawyer is using the system in your office. If you want to be really elaborate, there are some systems and some programs within most systems that allow you to customize the receipts, and organize the revenue in various schemes. Without any doubt, this is clearly best suited for solo practitioners or those in small offices, or where there is a single bookkeeper who is handling all billing. Again, trust is essential: if you have any doubt as to the veracity of the employee who is handling your business affairs, you will have to do this all yourself. Your card processing account is password protected, but if you give someone else the password, you’ve abandoned your security protection.
You will also need to think anew about how you are processing your billings. If you are using this system to collect a retainer, then you will need to have the ability to deposit the funds into your client-trust account. My attitude towards retainers has loosened up for clients who provide a credit card number, though there is always a risk that the card will not be valid by the time you pay the invoice. In the past two years that has not been a problem for me, but in my practice I regularly bill in the midst of the work—so the client has every incentive to honor the invoice. Every so often the card is declined, but usually it’s for an innocent reason, such as a new zip code for the billing address or an expired card. In every such case the client has provided me with a replacement card number promptly.
Most of these systems, including Square, charge a slightly lower fee if the card is swiped at the time of the transaction, with a higher fee if you enter the card number yourself. That’s because there’s a higher rate of fraud when the number is entered without the card. And, some clients prefer to swipe their card but not leave you the number for a later charge. These options require some clear thinking about the right protocol, which can be different for each type of case and client. When I do a one-time mediation, without the likelihood of much follow up work, I will swipe the card and enter the charge at the end of the mediation session. Same goes for a one-time consultation. If the work is ongoing, whether it’s the drafting of an agreement or representation in a lawsuit, I ask for the card number and charge the card at the end of each month, after the invoice has been sent to the client.
You will also need to rethink how you collect the required information from your clients. They are giving you their credit card number and security code, so you want to be sure you can trust any employee who has access to this information. You will want to be clear about who is paying the bill, and whose funds are coming into your account. If you are charging the client at the end of the month, you may face some embarrassing moments if you have mis-transcribed the account number or the security code, or entered in the wrong amount of the charge.
Lastly, make sure you check with your client to see if there is a limit on the charge that can be placed on the account. Some debit cards have per-transaction limits, and some credit cards have rather low limits. Take the time to ask your client about this detail, so you don’t find yourself in an embarrassing situation where your charge is declined. It’s a new world for many lawyers, but mobile payment apps offer a remarkably efficient way to get paid on a regular basis.
Frederick Hertz, an attorney and mediator based in Oakland, has managed his practice for more than 25 years.
"The Art of Getting Paid" is a one-year series of blog posts that provides a comprehensive training to lawyers on how to get paid.
We welcome your questions and comments – and of course, your suggestions on how to master this insufficiently respected aspect of practicing law.