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How to Protect Your Law Firm from Chargebacks

A chargeback is a credit card processing term for a transaction that is processed successfully but is later reversed. This article is focused on how to limit chargebacks before they occur. If your law firm has already received a chargeback notification, see How to Dispute a Chargeback for Law Firms.  

A chargeback can occur for several reasons, including a firm accepting a fraudulent card or a client disputing a charge with their credit card issuer. The latter is most common among law firms and the subject of this article. 

Chargebacks for Law Firms

When a client disputes a charge with their card issuer, the issuer refunds the amount to the cardholder and the money is automatically deduced from the law firm's bank account. The card brands (Visa, MC, American Express etc.) then initiate an arbitration process. The law firm has as few as twenty days to respond in the case of American Express or as long as 45 days in the case of Mastercard. A response should include documentation to show that the client actually initiated the transaction and that the services associated with the payment were clearly outlined. If the firm wins the chargeback dispute, the money will be returned; if the firm loses the dispute, the money will not be returned. 


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Why Do Clients Initiate Chargebacks against Law Firms?

Chargebacks in the legal community are exceedingly rare, but they do occur. As much grief as we give the billable hour, there is a low likelihood of a chargeback under this fee structure, because the firm sends an invoice after legal services are provided. As lawyers well know, a client typically voices any disputes they have with the bill prior to paying. 

So what situations generate chargebacks? Flat fees. Since flat fees are typically considered earned on receipt and are paid prior to the work, this structure is great for cash flow but increases the risk of a dispute. Clients who feel they didn't receive the services for which they paid have the option to dispute the charge with their credit card issuer. The risk is amplified with paid initial consults where there is likely no prior relationship, and a client may not like the advice they receive (whether or not it's true). 

What Can a Law Firm Do to Reduce Chargeback Risk?

  • Have clear fee agreements and a scope of work for flat fee services
  • Maintain access to evidence demonstrating that at client understood what they would receive from a paid initial consult
  • Maintain an email or paper record of receipts sent to the client after payment
  • Require the client to enter their card's 3 or 4-digit security code at the time of the transaction

As a lawyer, chargebacks shouldn't keep you up at night. They are rare, and a few simple steps can protect your firm against losses.

For Gravity clients, our support team is a call away to help you collect the materials necessary to respond to a chargeback. It's also important to note that although chargebacks are automatically deducted from your firm, the money is removed from the operating account even if the chargeback was initiated from a transaction deposited into your trust account. This allows you control over how and when this money is debited from your trust account. 


If your firm is processing payments through Gravity Legal, our support team can help you limit chargebacks. In the event you do receive a chargeback, we will reach out to you within 24 hours of chargeback notification. We will then help you decide whether to dispute the chargeback, compile and submit the documentation, and keep you up to date on the status of the dispute. 

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