Path To Profitability: 5 Compelling Reasons Law Firms Need An E-Payment Option

Written by Sarah Schaaf, CEO of

Here’s a simple question: how often do you pay for goods and services using an electronic payment versus writing out a check, stuffing it in an envelope, licking a stamp, and dropping it in the mail?  It’s likely safe to assume that, like most other consumers, the bulk of your transactions are digital.

Now more than ever it’s important for attorneys and law firms to remember that their clients are consumers, too. If you aren’t already offering clients the option to pay legal fees online you likely know you should but haven’t had a chance to make the switch. Or perhaps you’re avoiding offering online payment because you’re afraid of the transaction fees. Either way, there are some compelling arguments in favor of offering online payments, and we’ve listed 5 of them below.


Reason #1: Your clients are consumers and they want to pay you online

According to the World Payments Report 2017, global non-cash transaction volume has increased an unprecedented 11.2% from 2014 to 2015. In mature markets like the U.S., digital payments make up 70% of total payment volumes. The vast majority of consumers are transacting online for convenience sake –  it’s faster and easier for them. If a solo attorney or small firm wants to be modern, efficient and business-focused, offering online payment as an option to their clients is a no-brainer and effective place to start.


Reason #2: There is a direct correlation between offering online payment & client happiness (and thus your pipeline of new business)

Paying online is also what your clients (aka consumers) have come to expect. As attorneys know, getting a client can be tough, but keeping them happy and satisfied can be even more difficult. Anything you can do to make your client’s life easier and give them the best possible experience (from the work you perform on their behalf to the way you send them invoices) will reflect positively on you and your firm.

Offering online payment is no exception. In fact, a recent study showed 71% of consumers report higher satisfaction when given the option to pay online, and 36% were less likely to switch to a competitor if sent an electronic bill over paper.  If you’re really ready to run your law firm like a business, then maintaining client satisfaction should be your first priority so you ensure they come back case after case and refer you to others as needed. Giving clients an easy and positive payment experience is directly related to your firm’s pipeline of new business - law firms that offer online payment are more likely to have happy repeat clients and get more referrals.


Reason #3: You’ll get paid faster and make a huge improvement to your firm’s cash flow

Recall the scenario we touched on earlier about clicking a few buttons to make a payment in minutes in contrast to the check writing? Your clients want to save time just as much as you do and most prefer an online payment option. And if it’s easier for them to pay you, you’ll get paid faster. Sounds easy, right?

But do you really know how big a difference faster payment can make? Having money in the bank instead of AR (which is exactly what’s happening while you’re waiting for a check to arrive in the mail) certainly makes it easier to manage finances and grow your business. It takes money to make money, plus it saves you or someone on  your team a trip to the bank to physically deposit checks - that’s more hours you can spend billing, and more revenue in your pocket.

The time value of money is an important reason why you need to get paid as fast as possible, and one that you’ve probably already considered. One lesser known way fast payment can affect a firm’s cash flow is directly related to realization rates. As it turns out, getting paid faster also means you’ll get paid more as there is a direct correlation between the amount of time that passes and the amount you get paid on the dollar. Firms that get paid within the industry average of 60-94 days are only collecting $.86 on every dollar they bill due to non-payment and retroactive discounts. Speeding up the time to payment puts you closer to collecting 100% of your bill and has a direct affect on your firm’s bottom line.


Reason #4: You can automate non-billable AR work to take back your time (and make more money)

While we’re on the subject of doing more with the time you’re currently spending on non-billable work, let’s examine the options to outsource as much of that time as possible using technology. How much time are you currently spending every week keeping up with your firm’s outstanding AR? This includes keeping track of every payment outstanding or received, calling or emailing clients to remind them to make a payment, sending them notifications or receipts once payment is finally received, trips to the bank to deposit checks and then manually reconciling that information in your online accounting tool.

Let’s say that you’re spending even an hour a day on these types of task, and you normally bill your clients a rate of $300 an hour (and many readers are billing their clients much more). An hour a day spent on non-billable work like AR oversight and collections adds up to $6,000 you could have billed to clients during that time. That’s $72,000 a year of lost revenue!! Stop doing this type of manual, non-billable work yourself and start outsourcing it to technology ASAP.

Need an example? If you choose the right online payment tool for your firm not only will you get paid faster and collect more on outstanding AR, but you’ll also get that hour a day back that you’ve been wasting. A tool like Headnote automates the AR tracking process by keeping track of the status of all your firm’s outstanding payments and updating your firm’s AR dashboard in real time. Additionally, you get updated via email whenever there is a status change to an outstanding invoice, and the system automatically sends your client a receipt so you don’t have to do so. You can also use Headnote to automate your follow up and collections process using the Automated Reminder feature. You decide the cadence and personalize the content, and your client is automatically emailed reminders until your invoice is paid in full.

What you do with the time you save it up to you, whether you want to find more business, bill more hours, hire more employees, or take that long-awaited vacation (aloha Hawaii). In any case, no one in your firm (especially you) should be doing these types of non-billable tasks and if you are it’s money that’s coming directly out of your pocket.


Reason #5: You can turn a sunk cost into a profit center like that (*snap*)

Most firms have at least some support staff either in-house or working remotely, and most business owners think of these team members as a sunk cost. But the smartest firms have figured out that if they combine an online payment system with their current team a cost center can become a profit center with a few easy changes.

Take for instance your front office staff. Whether you have an in-house or outsourced receptionist or phone answering service, you should be using these team members as more than just an inbound call center. By adding the right online payment tool to your practice and ensuring you get the correct authorized consent from your clients, you can start accepting on-demand payments over the phone for callers that want to book a paid consult or have an outstanding bill.

Even better, start using your team member that answers calls to start making  polite outbound follow up calls to clients with past due bills to ask about their satisfaction with your services, then ask them if they’d like to make a payment over the phone. You’ll start collecting more outstanding revenue and you’ll show your clients that you care about the level or service you firm is providing. And bonus, the attorneys at your firm have even more time to do great work and provide exceptional service to your clients.


But what about transaction fees associated with getting paid online?

Let’s be honest, the first thought most lawyers have when considering online payment is, “but what about the fees?!” It’s true, the fees associated with enabling online payment, particularly credit card transactions, aren’t insignificant. Most charge 3%-5% of the transaction amount. That’s between $30 and $50 for a $1000 transaction. While these sorts of fees aren’t trivial, they’re a relatively small price to pay to get paid remarkably faster than with offline methods like paper check. Let’s think momentarily about the $6,000 a month ($72,000 a year!) you’re leaving on the table by if you aren’t using technology to get paid  and track your AR online - the fees you’ll pay for your firm to update this part of your process is far less than what you’re losing by putting it off.

Most attorneys agree that the time value of money and what they could do to grow their firm with the money they’re waiting for in AR is worth the transaction fees. But there is a way to pay less than traditional credit card processing fees for industry-compliant online payment. Headnote has blazed a train in Financial Tech to help reduce transaction fees for law firms by creating a IOLTA and American Bar Association (“ABA”) compliant eCheck payment process. Although Headnote also offer credit cards, their exclusive eCheck option allows you to offer client-friendly online payment but at a fraction of the price of credit cards, only 1.9% for both trust and operating account transactions. You get all the direct and indirect benefits of online payment but at a much lower fee.


Can I pass the fees to my clients?

Some states have recently updated their rules to allow attorneys to pass off transaction and administrative fees for processing online payments to their clients under certain circumstances. For instance, some states allow attorneys to pass fees to clients if they are within reason and clients are given advance notice and consent; other states allow firms to charge clients a universal flat fee that can go towards offsetting transaction fees. In general, the ABA recommends attorneys increase their billable rate by a few dollars to cover fees as a cost of doing business. Check the rules in your state to confirm whether you can pass fees onto your clients.


Aren’t there ethical implications to accepting online payments?

Receiving payment online isn’t inherently risky for attorneys, but all of the same legal and ethical requirements around handling client money still apply. Using a legal payments platform like Headnote, made specifically for attorneys and the legal industry, is the best way of keeping your transactions centralized and above board. We’ve included some info below, but be sure to conduct your own due diligence before jumping in.

  1. Payment gateway: This is where the client enters their credit card or banking information. A payment gateway can be a physical card reader or a form on a webpage. The information entered in the gateway is then transferred to an intermediary account (merchant account). All of this takes place behind the scenes, so from your client’s perspective (and yours) they simply click a button and payment is initiated seamlessly.

  2. Merchant accounts: Most credit card or eCheck processors will briefly hold a client’s money in a merchant account established with a FDIC insured bank while verifying the details of the transaction, then transfer the money to your firm’s operating account. This is completely standard practice in all banking and online purchase relationships whether paying via credit card or eCheck. Headnote’s flow of funds separates earned from unearned fees at all times even within the merchant account, so your clients funds are completely protected at all times.

  3. Ethics and trust accounts: It’s important to ensure that credit card or eCheck fees aren’t taken from trust accounts and that there is no 3rd party access to these funds at any time. Most online payment platforms prohibit attorney’s trust accounts. However, using a processor like Headnote made specifically for the legal industry will help you make sure that funds, including trust funds, are protected throughout the transmission process and never co-mingled. Any transaction fees are taken from the firm’s operating account so the entire amount of the trust deposit is protected every step of the way.  

  4. PCI compliance: Any organization that facilitates the online transmission of funds and payments must adhere to the Payment Card Industry Data Security Standard (PCI DSS). The standard is intended to protect consumer data. Accepting online payments requires the transmitter to collect, process, and transfer data. Attorneys must use an online payment platform that is PCI compliant, like Headnote.

Online payments are a modern eventuality that nearly everyone prefers, so attorneys should prioritize offering this option to their clients and utilize every member of their team to help drive profits. Your clients will thank you by paying you faster and wanting to work with you over and over again. Most importantly, Headnote will help make sure you are totally compliant in how you accept online payments.

Why should I choose Headnote to be my firm’s online payment partner?

Headnote is the easiest payment tool on the market made specifically for law firms and is 100% compliant with lawyer’s rules regarding online payment including IOLTA and the ABA Model Rules of Professional Conduct. You can sign up in just a few minutes with zero commitment - you don’t need to pay set up fees or monthly fees, and you don’t need to switch any of your current systems to start using Headnote.

Headnote allows firms to start easily generating secure payment request links that you then add to your current invoicing process, including legacy systems, cloud-based practice management, or billing or accounting software. You send the Headnote payment request link however you currently send invoices to your clients, whether it’s via existing software, email or PDF.

When you sign up for Headnote you get all of the following at no additional price:

  • Unlimited payment request links (both OneLink and Custom Link payments)
  • Unlimited “seats” for as many firm members as you’d like
  • Credit card transactions and complaint eCheck payments
  • 1 day payment processing for eCheck payments (faster than any other method)
  • Branded payment page on your website
  • Ability to run payments in-office or over the phone on your client’s behalf
  • Logo design or redesign to make your branded payment portal modern and professional
  • Automated reminders to put your collection efforts on autopilot
  • The most client-friendly payment experience on the market
  • Real-time instant tracking of the status of all your AR
  • Instant notifications when your client submits a payment
  • Compatibility with your current software, billing, or practice management platform
  • 100% compliance with IOLTA and the ABA Model Rules of Professional Conduct
  • PCI compliance
  • 24/7 support from our entirely US-based customer success team
  • No contracts, setup fees, monthly fees, hidden fees or additional fees of any kind

Get $50 in transaction fee credits to try Headnote totally risk-free.

To get started, go to and claim your $50 in transaction fee credits and request your free 10 minute demo or training session. There is no easier way to modernize your firm’s payment process to start generating more revenue and happier clients.


About Sarah Schaaf


Sarah Schaaf is the CEO & Co-founder of Headnote, the new standard in legal payments. Sarah is a “reformed” attorney licensed in the State of California. After practicing at multiple firms and an in-house role at Google, Sarah founded Headnote in 2016. She lives in San Francisco with her husband, children, and rescue pup and loves the podcast More Perfect about the US Supreme Court. Sarah can be reached at



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