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Accept the plastic, but forget the fee

Lawyers who accept credit cards grapple with issue of passing swipe fees to clients

In the wake of a proposed settlement between credit card-issuers Visa and MasterCard and merchants that would allow vendors to pass along “swipe fees” to their customers, lawyers who accept “plastic” are grappling with the issue of whether such up-charges are a good practice.

Previously, merchants were unable to recoup the fees — typically 1 to 3 percent of the cost of purchases — from customers.

But under the terms of the settlement, the fees could be passed along as long as notice of the surcharge is posted and included on the billing statement and receipt. The fees can’t be passed along selectively and must be applied across the board.

Still, many legal practice management consultants frown on the idea of passing swipe fees to clients.

“Don’t nickel and dime your clients to death,” says Laura Calloway, director of the Law Office Management Assistance Program in Montgomery, Ala. “Just charge a reasonable fee.”

Lawyers Weekly columnist and legal coach Edward Poll suggests that clients expect things like swipe charges to be covered by the lawyer’s fee, as they are part of the cost of doing business. He warns that attorneys who decide to pass along the fees run the risk that clients may choose other firms that don’t.

Nancy Hendrickson, who operates a three-lawyer firm in Chicago, agrees that clients likely wouldn’t react well to the additional expense.

Poll says that having to explain the surcharge “adds one more element to the fee conversation, which is a conversation you want to keep simple. The more you load it up with gobbledy-gook, the more problems you have collecting fees.”

Calloway recommends approaching the issue from the other side; that is, offering a discount for paying cash or paying promptly.

“I used to offer clients a 2-percent discount if the invoice was paid within 10 days,” she says of her days in private practice.

Poll cautions lawyers who want to add a swipe fee to check with a local ethics authority or bar association to ensure that such a surcharge doesn’t violate their ethical responsibilities.

A Virginia advisory legal ethics opinion, LEO 1848, approved Virginia lawyers passing along merchant fees as long as the processing fee is explained to the client who uses a credit card.

“Obviously, you can’t take a credit card payment from a client that you are preparing a bankruptcy filing for,” Calloway says by way of example.

Lawyers who decide to upcharge for swipe fees need to be careful to spell out what the fee is in the engagement letter, Poll says. That can eliminate any “he said, she said” arguments with clients later on.

Even better, have a client “initial the margin [of the retainer agreement] where the discussion of fees appears,” he suggests. “That highlights that a specific conversation took place about the fee, and the client indicated that he or she understood.”

While passing along swipe fees may not be advisable, accepting credit cards is clearly good business for sole practitioners and small-firm lawyers.

“We live in a society rapidly moving toward almost exclusively using electronic forms of payment,” Calloway says. “Why would you not want to be paid?”

Accepting credit card payments allows lawyers to be paid immediately, and it’s also attractive to clients, according to Ellen Freedman, law practice management coordinator for the Pennsylvania Bar Association.

“It’s more convenient for them, and they can pay it off on their own terms,” she says. “It’s a win-win for lawyers and clients.”

Hendrickson says she began accepting credit cards after a client inquired because he wanted to get the reward points for his fee.

And technology has made it increasingly easy to accept payments by credit card. Freedman points out that lawyers can now purchase a credit card reader to attach to their smartphone, which allows them to accept payments anyplace, anytime.

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