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American consumers have grown to expect convenience, and one convenience they appreciate is the ability to pay bills with credit cards. Traditionally, law firms rejected credit cards as “unprofessional” because of the notion that accepting credit is somehow undignified. But the current trend is clearly moving in the opposite direction, especially for lawyers with consumer-oriented practices such as criminal defense, family law, and estate planning. Indeed, things have changed: Today, most consumers deal with many professionals who accept credit cards, including dentists, doctors, and psychiatrists. These days, it’s rare to find a doctor that doesn’t accept credit. Clearly, the trend is for most professionals to do so. Consultants say there are solid financial reasons for making the migration to plastic. “Law firms, both small and large, are now finding that by accepting credit cards, they can better serve their clients’ requests for payment terms and reduce the time of collections of their accounts receivable,” states business consultant Marcia Watson Wasserman, president of Comprehensive Management Solutions Inc. in Los Angeles. “It’s a win-win situation.” At our firm, Feinberg, Mindel, Brandt and Kline, we found that Wasserman’s advice rings true. Based in Los Angeles, our firm has nine attorneys. We focus on litigation, business transactions, and family law. We began accepting credit cards about 10 years ago, when our typical accounts receivable collection time ran from 90 to 120 days. Today, our average is closer to 60 days. Considering that our total accounts receivable is usually around $400,000 at any given time, this means we bring in a significant amount of revenue more quickly. THE ADVANTAGES Accepting credit cards often helps as a last resort with “deadbeat” clients — we occasionally offer a discount if they pay by credit because this is better than not receiving any payment at all. There are a lot of reasons why credit cards are helpful. For example, it’s easier and quicker to take down a credit card number over the phone or in person than to wait for a check in the mail. Clients are less likely to delay paying when they can use a credit card, because it doesn’t force them to immediately account for how much cash they have on hand. But can accepting credit cards bring in more business? It’s true that advertising the acceptance of credit won’t likely have an impact on someone’s general decision to hire a law firm — first clients usually look for quality in an attorney and then figure out how they’re going to pay the initial retainer. But when a client doesn’t have enough cash, credit solves this problem right away. By accepting credit cards, a firm can hold on to a lot of potential business that might otherwise be lost. The only real downsides to taking credit are the processing costs and the risk of a client disputing the charge. But I believe most firms would gladly take on the added expense in exchange for quicker collections, and client disputes are more rare than routine. LOWERING CREDIT TRANSACTION FEES Traditionally, credit card processing firms charge service fees. The fees range from 1.8 percent up to 3 percent of each transaction for MasterCard and Visa payments. Processing charges are lower when a consumer physically hands over a card to be swiped. Other credit card companies, such as American Express, may charge up to a percentage point more. However, by carefully negotiating with your processing company, your firm can reduce the transaction fees. Moreover, you can reduce the fees you pay by changing the method by which you take your credit charges. For instance, accepting written authorizations — as opposed to phone authorizations — may reduce your processing fees. Another plus to credit transactions is that the entire process is very simple, so you won’t lose any significant time training staffers about the new procedures. CONVENIENCE TO THE CLIENT Anecdotally, lawyers report few problems. Scott Klopert, a family-law attorney and solo practitioner in Encino, Calif., points out that since he began accepting credit card payments, not a single one of his clients has disputed a charge. My own experience has been the same as Klopert’s. In fact, I’ve never heard of payment disputes arising with respect to a family law firm. Indeed, not only are billing fights rare, but also clients appreciate the way credit allows them to pay their attorney fees in installments over time. Firms that accept credit cards typically enclose a payment slip with a return envelope when they send out their bills. The client can then simply write his or her credit card number on the payment slip, sign the slip, and return it. This process makes it easier for clients to take care of paying their fees immediately, instead of waiting until the end of the month. This factor alone may decrease collection time for the law firms by as much as 20 to 30 days. In addition, credit card machines with the Visa or MasterCard symbol on them can also accept debit cards — adding that convenience for clients who prefer to pay immediately. Another point in favor of credit cards is that they’re often tied to airline miles and other benefits. “My clients like not only the convenience of paying by credit card but also the fact that they can receive bonus airline miles,” says Anne Kiley, a partner at Los Angeles family law firm Trope & Trope. “In short — get divorced and go to Hawaii for a vacation on your credit card company.” Clients also find credit payment useful when they’re not located in the same city or state as their law firms. For instance, many firms charge clients for the initial interview, and out-of-state clients can easily do the interview by phone and pay for it by credit card. Sometimes clients rely on friends or family members to pay their attorney fees, and it’s often more efficient and convenient to do this with credit. CHOOSING A PROCESSING COMPANY When choosing a credit card processing company, price is probably your most important consideration. The first place to find a processing company is through your bank. Through your existing relationship with your bank, your firm could obtain a lower processing rate. Aside from the savings, you might even find you can get additional benefits, such as free equipment or credit for equipment rentals. Our equipment costs less than $30 per month to rent; if we chose to, we could purchase equipment for $300 to $600. We had no difficulties implementing the system — our bank was very helpful with this. Our own processing fee is 25 cents per transaction. Yet since we rarely have a charge that’s less than $1,000 (and our average charge to clients is about $2,000), we find this fee insignificant. Many third-party credit card processing vendors may be able to satisfy your firm’s processing needs at a much lower cost. Large discount companies, such as the Costco Wholesale Corp., are now getting into the credit card processing business and offer reduced fees (up to a percentage point lower) for this service. Processing fees vary widely between institutions, so a little bit of research by your firm’s management may save you a substantial amount of money. Convenience to the customer, increases in collection of accounts receivable, faster collection, and ease of processing client payments are just a few of the many reasons why more law firms now accept credit card payments. The time has come for you to ride this wave and establish a credit payment system for your firm. Steven Mindel is the managing partner of Feinberg, Mindel, Brandt and Kline in Los Angeles. He can be reached at [email protected]. This article first appeared in the American Lawyer Media magazine Small Firm Business.

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