Faster payments, happier clients: the case for online payments in law firms

By giving clients the payment options they want, you can offer a better customer experience.

This can lead to higher client satisfaction and loyalty, as clients appreciate the convenience and flexibility of online payments.

And, when clients are satisfied, they're more likely to recommend your firm to others, helping you attract new clients.

Online payment methods encourage faster payments by reducing friction for paying clients.

The Legal Trends Reports revealed a significant financial advantage for firms using online payments: they received payments more than twice as fast, leading to increased profitability.

Of course, if your firm has yet to offer clients online payments, there are certain factors to consider before jumping in.

While online payments can unlock numerous benefits, it’s also crucial you choose a secure provider that can help you stay compliant with any applicable rules and regulations.

The benefits of online payments for solicitors

Streamlined billing and payment processes

Clunky billing and payment processes are more than just tedious.

When firms are stuck navigating inefficient, manual billing and payment methods, they are more likely to spend more time, money, and effort on billing and collections.

You can streamline workflows by moving to an all-in-one billing and payment solution, like Clio Payments, that allows your firm to offer online payments. In turn, this can lead to:

1. Faster payment cycles

Using a payments solution that allows clients to receive and pay their legal bills online can set your firm up for faster payment cycles and improved revenue collection and cash flow.

When clients can pay bills online from anywhere, they’re more likely to do so with less delay.

The 2023 Legal Trends Report found firms that use online payments have significantly shorter periods of “lockup” — the period in which billable work has either not been invoiced or collected.

Firms using online payments to collect money from clients had a lower realisation and collection lockup by two days' worth of revenue and a lower total lockup by four days.

2. Increased convenience

Convenience and efficiency are primary benefits — both for clients (when making payments) and solicitors (when enjoying the advantages of streamlined law firm billing and payment workflows).

When firms offer a variety of payment methods — particularly methods that make it easier for clients to pay how and when they want to, like online payments — this added convenience can spur faster payments (and, in turn, the potential for a boost in revenue).

Firms using online payments collect, on average, 50% of their bills within seven days of issuing them and 80% within 49 days.

Conversely, firms not using online payments took twice as long to collect 50% of their bills (15 days) and 70 days to collect 80% of bills.

3. Reduced stress and time spent chasing payments

Most solicitors would agree time spent reminding clients to pay legal bills could be put to better use, but ultimately, it’s crucial for revenue that those bills get paid.

By using online payments to streamline billing and payment processes, solicitors can save time on admin and non-billable work.

When considering the average lawyer spends just over five hours in each eight-hour day on non-billable work, it’s clear using online payments could unlock a valuable benefit.

Gain a competitive edge

Offering the option of online payments can be a difference-maker when it comes to attracting — and retaining — clients.

Today’s legal clients prefer a greater variety of payment methods. Firms that offer more flexible, modern, and convenient payment options may be more attractive to potential clients.

Offering online payments not only improves the client experience but also positions your law firm as a modern and forward-thinking business.

This strategic move can give your firm a competitive edge, attracting and retaining clients who value convenience and flexibility in their payment options.

Getting started with legal payment processing: essential considerations

If the potential benefits of online payments are of interest to you and your firm, there are a few crucial factors to consider before getting started.

Different types of online payments

If your firm wants to get paid faster and improve cash flow, consider offering a variety of payment methods.

With Clio Payments, for example, clients can pay online using debit or credit card, Apple Pay, Google Pay, or bank transfer.

Additionally, Pay by Bank is a secure electronic payment system that provides clients with another quick and convenient way to pay.

With Clio’s Pay by Bank solution, Pay by Bank payments are now free, having previously been 0.5%.

Ethics, client accounting compliance, regulations and restrictions

Firms must exercise caution and adopt new tools and technologies responsibly — including online payments.

Before accepting online payments, make sure you are familiar with and stay up to date on relevant regulations and compliance guidelines.

This is crucial as the exact rules and regulations may differ by jurisdiction, situation, and type of payment method.

In the UK, credit card surcharges (when a law firm passes the credit card processing fees on to a client) are prohibited.

With this in mind, it’s always best practice to research and learn any rules that apply to your firm and jurisdiction. As a starting point, some factors to bear in mind include:

Solicitors Regulation Authority (SRA) Accounts Rules

When dealing with money belonging to clients, such as trust money and operating client accounts — including when accepting online or card payments — law firms must follow the SRA Accounts Rules.

Following SRA Accounts Rules when accepting online payment methods is crucial for staying compliant and keeping client money safe from potential misuse.

Clients’ own accounts

Clients’ own accounts, or the separate bank accounts that a law firm holds on behalf of a client for specific matters or transactions, require special care when law firms consider accepting online card payments.

This care includes following SRA rules to ensure compliance, such as:

• using secure, payment card industry (PCI)-compliant payment processing systems
• ensuring transparent client communication regarding payments and transaction fees
• monitoring and reconciling transactions
• documenting and providing access to relevant information related to bills and card transactions

Third-party managed accounts

Third-party managed accounts (TPMAs) can provide a secure alternative to accepting card payments into traditional client accounts.

However, law firms must ensure they follow the SRA’s guidelines when working with TPMAs.

Anti-money laundering (AML) regulations

When implementing payment processing systems, the SRA’s AML regulations, which require firms to adopt a risk-based approach that matches compliance efforts to identified risks, are an important consideration.

The SRA offers more information about how to stay AML compliant when accepting payments.