When the Check Goes *Boing* – Lawyers and Credit Cards

Hey hey, it’s Wednesday here on Lawyers and Liquor and that means…what exactly does that mean anymore? I don’t know guys, I’m ankle deep in a ton of litigation stuff right now, and as I swim through the sea of stupid that is email and text message review in discovery, I find myself drifting back to a happier time. A nicer time. A more genteel era. I am, of course, talking about the time when your clients paid their damn bills in full and on time.

Alright, so, a little background here. My office, when I came into it, did not accept payment in any manner except check or cash. Now, because I have a bad tendency of representing people, and because people aren’t exactly known for their tendency to carry around thousands of dollars in cash, this meant the majority of my clients paid with a check. I know, there’s a younger generation of people out there going “What is a check? I just figured out those squares with the faces of dead guys on them last year, now you’re telling me there’s some other way of old-timey paying for goods and services?” Here’s the explanation: A check is like a paper version of a debit card that takes three-five days to hit your bank account. Of course, you have to make sure all the details are filled out correctly, deal with the Publix check cashing fee, and even then, it may bounce…

You may be familiar with these if you’ve ever worked for someone that feels Direct Deposit is a tool of the devil or you have a grandmother that refuses to send cash through the postal service.

Checks are the Devil.

Anyhow, the problem with paying by check is the perennial problem of all people who expect payment promptly: sometimes you need to be paid before the client has the money to pay you. And sometimes, especially in poorer areas, these same clients will not have overdraft protection or, if they do, the bank is in no way about to honor a check for $3,000 from McDonald’s Mike, the accused drunk driver with a checking account balance lower than Challenger Deep (like four patent attorneys with an interest in nerdy shit just came a little in their Brooks Brothers at that one). If he owned a business, it might be a different story since some banks allow overdraft protection to customers. You can even see what are Business Overdraft Services by visiting here. However, McDonald’s Mike wouldn’t get the chance and when that happens, the process in an attorney’s office is something like this:

  1. You deposit the check;
  2. The check appears to clear your account so you pay shit with the check;
  3. Several days after you pay shit with the check, your bank yanks the funds back out of the account and promises to mail you a copy of the check.

This leaves you with an unpaid bill and, frankly, a lot of goddamn stress about how the fuck you’re going to cover the fees that have been incurred or the operating expenses, because like a true dumbass you started calculating that check into your operations budget and overhead before waiting the requisite two fucking weeks banks have to actually process the transaction and get back to you on whether the check is good or not. Because you’re a dipshit.

Of course, if the client is still a client it’s a fixable situation: you bill the costs of any fees you incurred through to the client, tell them it’s cash or money orders from now on, demand payment before you get on down the yellow brick road of withdrawing representation, and that’s fucking that. Sure, if they run off into the night screaming “FREE LEGAL WORK FOR ME!” you have to wrestle with the concept of whether or not you want to sue a client (we’ll talk about that next week!), but otherwise the client foots the bill in a reasonably short period of time and it’s back to business as usual. But if they’re done with your ass, then what? Maybe they don’t give a fuck that lawyers have to eat too, and often times have to eat shitty, overpriced food at their desks from the gas station because the goddamn client doesn’t understand dropping off four bankers boxes of discovery the day before the production deadline isn’t fucking helpful. Maybe, just maybe, a guy nicknamed “Bad Check Barry” shouldn’t have been a client choice in the first place. But none of those help you get paid.

So how do you get paid?

Credit Cards.

Listen, some of you right now are waving your Visas and saying “No shit, Sherlock!” but you gotta hear me out on this. There is a not-insignificant number of lawyers who either a) don’t accept credit cards or b) don’t accept credit cards correctly. And why? Why in the era of “plastic rules the world” are there attorneys turning off their hearing aids and going out for the mid-afternoon “powernap” during Matlock anytime a LawPay representative rings them up? Because…

Credit Cards Can Be Problematic for Lawyers

See, there are really specific ethical concerns about the taking of credit cards. Like, you know, client confidentiality. Nobody ever talks about that shit, but yeah, you can violate your client’s confidentiality by taking a credit card payment. I mean, the credit card company is going to see the charge and be able to assume that you’ve been retained for a legal matter, the amount of the fee, and, if you’re a really specific asshole, even what you put in as the reason for the charge. Ain’t that fun, having to get a client’s authorization to run the card before you do it because otherwise you may be breaking an ethical canon? Of course, one could argue, in my opinion very easily, that the client is aware the credit card company will get this information and therefore, by choosing to pay with credit card, they are implicitly authorizing the disclosure as a necessary part of representation. Credit cards are always complicated and if you do come into some financial difficulty because of them then you should read some information online to help you such as Yahoo! Finance – helping you sort through your finances!

But what about those transaction fees? Credit card companies charge a percentage of each transaction, but lawyers, in general, can’t allow that on some transactions…like say trust account payments on retainers. Think of it like this: if you take a $100 retainer on a credit card, can you ethically justify only depositing $98 in the IOLTA account? No. Because they client gave you $100, not $98, and you’re holding it in trust. So you have to work it so the IOLTA percentage comes out of your operating account, and then we have a whole other question on can you charge the client for you paying their transaction fee for them. Which is a point of contention, as there are definitely states where the lawyer bears the entire burden of the transaction fee and cannot surcharge it back to the client, meaning the attorney is paying a 2% convenience fee (if that’s what the processing charge is) for every credit card payment, even if it’s for an earned fee. For, like $100 that isn’t a big deal. But for, like $100,000? Slightly larger, because by just accepting a card the lawyer would be taking a $2,000 pay cut.

Further, and not insignificant, is the fact that no matter what, some shitheads are always gonna be shitheads and an unhappy client could, in theory, pay you and then initiate a chargeback for the payment. This gets you into a whole fucking mess of fighting your client for the money and delays your payment until the whole thing is resolved…and they can do this shit on IOLTA payments too, meaning that the lawyer has to make sure there’s enough in the operating account to cover a chargeback from IOLTA. Which doesn’t seem like a big deal until you realize that the chargeback can happen within four fucking months of shit being paid, so maybe you’ve earned every penny of the retainer, moved it into your operating account, used it to pay bills, then the shithead initiates a chargeback that rips the retainer amount right out of your trust account from the money you’re holding for other clients.


Still, even with all of that said

There are huge benefits to taking credit cards.

First, it gets your ass paid faster. Someone may not have $4,000 sitting in the bank account waiting for you to invoice them with, but they sure as hell have $4,000 of availability on the AmEx. And, thanks to companies like Novecredit, even people with a bad credit score are able to get an AmEx that will let them pay big bills or fees (be sure to check out this Novacredit review if you want to find out more) so you won’t have to worry about clients turning around and saying they aren’t able to pay up. That means you can get your bills paid. True Story Time! When I finally beat the older members of my office into submission with their own comically oversized 1980’s cell phones and got them to start taking credit cards, the number of invoices we had paid within 10 days of submission fucking skyrocketed. Money started coming in faster from some accounts that were previously getting a month or two behind on payments, resulting in a steadier income stream

Second, it entices new clients to sign on the spot. Like the above current client, a lot of prospective clients don’t have a shit-ton of cash sitting around just to hire a lawyer. This means you consult, you quote a retainer, they pay for the consult, and they leave. They need a month, maybe two, to get the money together to give you to start work. A lot of shit can happen in a month or two. They can find another lawyer. They can resolve the case on their own. A statute of limitations can run. Like I said, a lot of shit can happen. But if you have that magical device that lets them act like a District Attorney in an election year and scream “CHARGE IT, BITCH!,” the chances are they’re more willing to pay the retainer immediately up front.

Third, the funds are available or they aren’t. Either a credit card will be rejected when you try to run it, or it won’t. If they hand you a card and it comes back declined, you can immediately turn to the prospective or current client and say “Well, what’s this now? Trying to pull a fast one, eh? Now I have to beat you to death with your own shoes.” Or something to that effect. No more of this “take the check and pray it doesn’t bounce, fucking up your books for the next month” bullshit. You either get paid right then or there, or you don’t.

But, there is at least one con.

You Can’t Just Square Reader That Shit.

With all the special ethical shit surrounding lawyers, bank accounts, and credit card payments, you can’t just say “Paypal me the retainer, bro. It’s [email protected]” That’s not okay, unless it’s just for, like, fully earned fees. You have to use a service for credit card processing otherwise, like…LawPay. That’s a pretty well-respected one that I think most state bars have approved for use. I mean, there are others, that’s just the one I use and I’m not going to bother researching the others because a million other people have done it.

And those services? Well, they cost money, too. Lawpay, for example, charges monthly fees and a portion of each transaction in return for getting you money and getting it to you now.

But that’s the way of the world, right?

Nothing’s free.

So, that’s all this time, my little legal stains on the backside of Daddy Boozy’s underpants. Next time we’ll be getting into (leather) gear with Fetish Friday, and then next week we’ll talk about the benefits and disadvantages of suing your goddamn clients.