Financially Legal

One of our most popular blog posts is a post about how lawyers can realize the benefits of a retainer without a trust account.  By storing a client payment method and subsequently charging the payment method in accordance with the attorney/client engagement agreement, firms can get the benefits of having access to funds on hand without the burden of trust account compliance.

Do you have practice management or accounting software that does your trust accounting? Great. This post is NOT for you.

Let's face it. Most bankers have no idea what an IOLTA account is. These types of accounts are an afterthought - one of those banking products that gets little attention. We hear horror stories of banks regularly debiting fees from IOLTA accounts or sending erroneous overdraft notifications to the Bar. We recently spoke to a firm that had to call their bank to speak with a real live human being every time they wanted to check their IOLTA balance. 

We believe lawyers and law firms have the power to change the world. Every day we interact with lawyers making positive change, sticking up for the underdog and expanding access to the justice system. But we recognize there can be tradeoffs between pursuing these aims and paying the bills. 

Millions of business use QuickBooks as their accounting platform. From sole proprietors to large corporations, from cobblers to manufacturing firms, QuickBooks users come from all corners of the business world. With QuickBooks serving such a diverse set of clients, there are certain industries and business types with unique accounting needs that QuickBooks doesn't fully support out-of-the-box. Law firms fit into this category.  

Trust or IOLTA accounts evoke feelings of fear and frustration. Untangling trust accounting mistakes can devour precious hours, and the risk of running afoul of the rules of professional conduct is constant. Yet for all the bad, retainers (in particular evergreen retainers) are one of the top ways to improve your firm’s collection rate. With collection rates averaging around 85% according to the 2021 Clio Trends Report, collections is a major financial drain on the legal industry.  

Whether a client unilaterally decided not to pay your firm, or you made a legitimate mistake in your billing process, disputes or chargebacks on credit card transactions do occur. The card brands have processes in place for settling these disputes, and this article outlines the actions your firm can take after receiving notice of a chargeback. For information on how to avoid chargebacks, see How to Protect Your Law Firm from Chargebacks.

Vetting, deploying, and managing new technology takes a lot of time and can be expensive. More to the point, while much of today’s cloud computing technology uses some common technologies, the implementation can vary significantly even in the cloud. This can be a real headache for law firms who not only often deal with sensitive information but have specific rules and heightened standards regarding how confidential and privileged information must be protected. 

You can’t really blame consumer bankruptcy attorneys for being finicky about how they get paid. After all, would-be clients wouldn’t be knocking on the door if the those debtors had managed their money well and been able to regularly pay their debts. As a result, many bankruptcy attorneys do way more gymnastics than other lawyers to ensure they get paid. For example, insisting upon upfront payment, payment by the debtor’s friends or family, automated payments that fall a debtor-client’s payday, or even the development of a new type of bankruptcy, bifurcated bankruptcy, that changes how clients pay in order to improve their odds of getting paid (we won’t get into bifurcated bankruptcy here but watch this space for a subsequent post on the topic). You’ve got to hand it to them.

Listen, we here at Gravity Legal work hard for the money we get paid. Payments isn’t as mentally straining as rocket science or physically demanding as coal mining but it is a fairly complex regulated business and we work really hard to try and make things great for our law firm customers. And while there are still a handful of bar associations that want to make it harder for law firms to accept electronic payments (we’re looking at you Indiana, Iowa, Mississippi, Nebraska, West Virginia, Alabama, and Michigan), today most law firms are largely free to take advantage of the collections and convenience benefits that accepting electronic payments offers.  

Small law firms live or die by cash flow. A few extra percentage points on revenue can help a firm make payroll or pay rent (hopefully not, but “gulp!”), buy software, hire, experiment with a new practice area, or even innovate on a new product or service. But extra revenue rarely comes easy. What if you had a way—using existing systems—to immediately find additional revenue for your law firm?

Though lawyers are a solitary profession - they spend a surprising amount of time in their own heads - they’re also remarkably social. We made a cursory count recently and came up with 103 state, regional, local, and specialty bar associations. And we feel fairly confident that the total number is certainly double or even triple that. Feels like as long as there have been lawyers, there have been bar associations.

Although electronic payments are not relevant for every firm, most law firms do at least a portion of their business by issuing ongoing invoices. For these firms, the data is clear: Electronic payments matter.

Here's our nearly 20 page white paper on law firms shifting processing credit card processing fees to clients.

Every year, to much fanfare, The American Lawyer releases a list of the largest law firms in the world, also known as the AmLaw 100. 

I recently joined another attorney Dan, Dan Jaffe, from LawLytics for a great conversation that, yes, touched on Gravity Legal and on Dan's business, LawLytics, but was mostly focused on a favorite topic of mine, legal technology. On the Gravity Legal side we covered Gravity Legal's credit card fee shifting technology and integrated ACH features, the Gravity Legal Zapier integration, and the forthcoming Gravity Legal Quickbooks integration. 

I’ve been working in legal technology for a while. I’ve been thinking about it for even longer than that. And I worked at Microsoft before that. And, if there’s one thing that I know about lawyers - even today - it’s that Lawyers. Love. Microsoft Office. Practice management systems come and go, accounting software ebbs and flows, some lawyers try document automation. But just about every lawyer and law firm uses Office.

Subscriptions were the name of the game when Dan Lear recently chatted with Houston Estate Planning attorney John Strohmeyer, the namesake of Strohmeyer Law, on John's podcast, Five Star Counsel.

Here on Financially Legal we recently wrote about the three main ways payment processors rip lawyers off: tiered pricing, monthly fees, and limiting available payment methods. You can read that article for the higher-level discussion but, as we mentioned, tiered pricing deserves its own discussion. We dig in on that here.

We legal folks are hardly unbiased about the good that we think we do in the world but there’s little doubt that lawyers really do play an important role in our society. In fact, one of the interpretations of the famous line from Shakespeare’s Henry VI “The first thing we do, let's kill all the lawyers” is that killing all the lawyers is the fastest way to societal chaos, not societal improvement. Lawyers are the bulwark against tyranny and government overreach and the defenders of the rule of law.

Accepting electronic payment is table stakes for most lawyers and law firms.

The Clio Trends Report has been fairly explicit about the benefits of electronic payments:

• The 2019 Clio Trends Report stated that 57 percent of electronic payments get paid the same day they are billed, and 85 percent get paid within a week.
• The 2018 Clio Trends Report found that 38 percent of consumers prefer to make payments electronically via email, online portal, or on the web.
• Finally, that same 2018 report indicated that 50 percent of consumers are more likely to hire a lawyer who takes electronic payments, or, stated another way, 40 percent would never hire a lawyer who doesn’t take credit or debit cards.

There’s a lot to think about if your firm is considering shifting credit card fees to clients - is this practice right for our firm? How should we communicate about it to clients? Is it permissible in our state? Do our local rules of professional conduct permit it? What method should our firm use?
The good news is that it’s not that complicated. You’ll likely be good to go if you adhere to some simple best practices. Below we’ve compiled a list of best practices for two of the most common ways that merchants implement shifting credit card fees: cash discounting and surcharging. We’ll start with discounting:

Although you've probably been charged a separate fee to use a credit card with a given business you may not know that businesses haven't always been able to do this.

Allison Williams, the Law Firm Mentor, helps law firms grow and reach their full potential. Her podcast, Crushing Chaos, tackles all sorts of issues lawyers face while working to grow their firms. 

Even with the effects of COVID still lingering, we as attorneys have an opportunity to make 2021 our firms' best year yet. Join Gravity Legal and law firm financial consultant Devon Thurtle Anderson of Skepsis Technologies as we explore the unique opportunities 2021 offers for law firms. We'll discuss how firms can seize these opportunities to realize both short and long-term growth. Spoiler alert: Our strategies don't require raising rates or working more hours! In fact, we specifically recommend against that.

Some of the topics we'll cover include:

One of the most important things about law practice is getting paid. With the advent of electronic payments technology, the process of getting paid can be easier than ever. Some of you may be saying "Advent?!?!? PayPal is more than 20 years old!" But research suggests that fewer than 25% of lawyers actually use some kind of  electronic payments technology. The vast majority of lawyers are still getting paid by some combination of cash, checks, and wires. But I digress.

Zapier is really powerful. Some law firms struggle to get the most out of it not because they don't know how to use Zapier but because they don't know about everything it can do.

Zapier is a no-code platform that helps businesses and individuals automate work by connecting different applications. But don't let "no-code" fool you. There is a learning curve associated with Zapier. This post explains the basics of Zapier and how it works with Gravity Legal. If you want to go one level deeper and see some examples of legal-specific Zaps as well learn more about the "why" of Zapier, check out our recent longer-form post on automating legal payments with Zapier.