From an e-mail exchange with a Coaching Client:

Sent: Monday, December
25, 2006 2:12 PM


Subject: Credit
card fees


Say we wanted to use a credit card as a vehicle for clients to pay for legal services.

If there is about a 3% per credit  card charge from the credit card company.

How do we pass this added charge onto the client. 

1. Do we have to say, there is this added charge as a service if they want to “charge it”?

2. Do we say “only office visit charges” at $275 an hour can be charged, and for that we charge $5 extra. The separate retainer fee (which can run in the thousands, be only paid via check?)

3. Lxxxx is now lets say retainers (in the trust account) of $15,000 for construction cases. $2500 to $3000 on estate plans. On that amount it is a significant “add on” cost if the fee is charged via credit card.  We are aware that large law firms are allowing clients to charge a significant fee on the credit card.  How do they do it and NOT lose money?

4. Is credit card use by “law firms” shown to produce more revenue and/or cash flow?

FYI::: In our area, most clients have “no limits” to their credit cards.

Thanks so much for your prompt response…we are trying to improve…..


Sent: Friday,
December 29, 2006 4:36 PM

Subject: Re: Credit
card fees


Sorry for the delay. We’ve been swamped with end of the year stuff. I replied to Lxxxx’s e-mail yesterday to suggest that we schedule a call for the first week of the year to discuss what he’s looking to accomplish and some options.

Also, I saw the e-mail about the issue of accepting credit cards. Suggest you look at a site I’ve
contributed some articles to called Long story short, when you consider the
hassles and expenses associated with trying to collect past due accounts receivables, not to mention factoring-in the ones that “get away” and must be written down or abandoned entirely, credit cards start to make a whole lot of sense and as you’ll see I’m a big advocate.

As you mentioned, you certainly could charge extra to cover the cost you incur for the discount rate but I’d discourage you from doing so to avoid pissing off your clients over what amounts to a cost of doing business that we all expect our vendors to absorb. Plus, in the big scheme of things, it’s not a lot of money anyway.

For example, you have a client who is willing to save you the hassles of having to send them a reminder bill (or two, or three), and then interrupt your day to call and remind them about the outstanding bill of let’s say $5,000 by charging the whole amount to their credit card.

Figure that each time you prepare a bill, reminder, carry it on your books to the next month, and then make the phone call, you’re going to waste 15 minutes of your time. And let’s say you use a bookkeeper who charges you $30/hour. You’re talking about at least an hour of the bookkeeper’s time, plus your time to supervise the bookkeeper, plus Lxxxxx’s time to worry about it instead of cultivating a stronger relationship with the client. Weigh that against the $150 in discount points you have to eat to collect $5,000 up front and have that peace of mind and working capital.

I know $150 seems like alot when you look at it by itself, but wouldn’t you take $150 off the bill three months down the road if that’s what it took to get the client to pay it? I would expect that you probably talk yourself into writing down much more than that on most of your bills right now, either before you even give them to your clients or afterwards in compromise to get them to pay.

Being good at the business of running a law firm is less about being “tough” and more about knowing where the leverage points are to maximize the value of your time. And at the end of the day, it’s much easier and healthier for the long-term financial well being of a law firm not to mention the peace of mind of the owners, to focus on leveraging your time with positive things that cultivate better relationships with clients, initiating welcomed communications with clients that demonstrate value to them, and using your limited time and energy reserves to perform great services that get talked about, rather than looking for ways to save a few percentage points of expense.

Put another way, in the hour or so that it would otherwise take for you or xxxxx to have to work yourselves up for the call to a client whose bill is delinquent, make the call, negotiate the bill down anyway, and then recover your energy and state of mind to a point where either of you can
be productive again, you’d be better off to use that time marketing to get another $4,850 client.  In other words, you could spend ten  miserable hours chasing down ten bills, and save yourself $1,500, or use that same ten hours to do some positive Rainmaking and sign-up ten new clients who will contribute another $48,500 to your firm’s revenues. See what I mean?