Many of us struggle with whether or not to use credit cards in our business. We say, why pay the processing fee? I can just wait a couple of extra days and get the check. But as I love to say, and I said during this podcast episode, a bird in the hand is worth two in the bush. So, how do we use it effectively? And how do we consider having as many options as possible for our clients in a way that is profitable as well as in a way that improves our relationships with our clients relative to money?
Dan Lear is the head of marketing and partnerships at Gravity Legal, an electronic payments and money management firm built specifically for lawyers and law firms. He has a unique approach to make getting paid easier and faster for you. I love that he’s a new player in this space, is making waves and getting some serious traction.
Tune in to this week’s episode for this valuable resource.
In this episode we discuss:
- Why spending money to collect money makes financial sense.
- The culture you create regarding money and your communication about payment methods you accept.
- Determining how to incorporate processing fee costs into your fee structure within legal guidelines.
- Researching different payment product costs to strategically determine what payment options you offer to your clients.
- How subscriptions can help even out your revenue stream creating predictability.
- Resources to determine what is allowable in your state.
Allison Williams: [00:00:11] Hi everybody, it’s Allison Williams here, your Law Firm Mentor. Law Firm Mentor is a business coaching service for solo and small law firm attorneys. We help you grow your revenues, crush chaos in business and make more money.
Allison Williams: [00:00:25] All right, this episode of The Crushing Chaos with Law Firm Mentor podcast, is going to feature my special guest, Dan Lear. And Dan is the, is the head of marketing and partnerships at Gravity Legal. And I’m going to tell you about Gravity. I’m really excited about this resource because I know a lot of us struggle with whether or not to use credit cards in our business. We say, why pay the processing fee? I can just wait a couple of extra days and get the check. But as I love to say, and I said during this podcast, a bird in the hand is worth two in the bush. So how do we use it effectively? And how do we consider having as many options as possible for our clients in a way that is profitable as well as in a way that improves our relationships with our clients relative to money? So Dan and I talk about that. We talk about different ways that you can use different types of electronic payment, including e checks and credit cards. We talk about the fact that you can pass along the fees to your clients in certain circumstances and whether or not you should do so. And so that was a particularly interesting conversation. And we talked about some different business models. We talked about flat fee versus billable hour versus subscription and different ways that you can consider changing up your business model in a way that is going to make getting paid easier and faster for you. So I love that Dan has a unique approach to this and that he’s a new player in this space, not brand new, but certainly is making some waves and getting some serious traction.
Allison Williams: [00:02:01] And so I had the pleasure of speaking with him on the Smith dot AI podcast with Maddy Martin. And as a result of that, connected with Dan, decided to have him on my podcast. And I’m also going to appear on his podcast as well. So just a little bit about Dan. He is a formerly practicing attorney who was most recently an independent consultant for technology companies in the legal space. And before that, he worked for an online legal marketplace, Avvo. Dan is passionate about leveraging modern business practices and technology to improve law firm performance and to scale access to legal services. Now, his latest venture, Gravity Legal, is the payments and money management platform for small, entrepreneurial, mission driven and consumer facing lawyers. Gravity Legal’s mission is to break down the financial barriers to lawyers, for lawyers to help them to grow and scale their firms. And most recently, Gravity Legal has recently rolled out a few different features that help firms to transform electronic payments from a largely undifferentiated necessity to a meaningful economic opportunity, specifically by strategically leveraging a variety of payment methods, shifting credit card processing fees to clients, which is something we talked about a lot in the podcast. And considering alternative business models such as flat fees or subscription payments can actually be a meaningful piece of your firm’s growth plan. So, Dan, gave us a lot of food for thought on that topic, and I’m really excited for you to share and hear our conversation. Dan Lear, thank you so much for joining us on the Crushing Chaos with the Law Firm Mentor podcast.
Dan Lear: [00:03:42] Thanks, Allison. It’s really a pleasure to be here. I’m excited to dig in. I am, I’m a fan. I’ve been listening to the podcast. I really like your content, so I feel really honored to be a part of it.
Allison Williams: [00:03:54] Thank you for sharing that. You shared that with me before we got started and I was, immediately put a smile on my face. And we know we have great conversations when we’re happy. So we’re going to talk about a topic today that you and I actually already have some degree of touch point on. When we shared a stage with Maddy Martin on her podcast and we were talking about paid consultations at the time. Yep. Money and law oftentimes become an adversarial relationship because of how lawyers handle them. So we know that we want to improve our processes in that regard. And you have so much to share on how lawyers can really revolutionize the way that they treat getting paid and how efficiently and effectively they can do that. So without further ado, I want to I want to dive into your thoughts about payment processing. So first, a lot of the industry leaders. I think a lot of us know Law Pay. A lot of people kind of know Stripe and Square is just general processors that are not necessarily law specific, but Gravity Legal has a completely different approach to this. And I think you can share a lot about that. So first, how much does payment processing cost and why should firms really care about that as a component of their system?
Dan Lear: [00:05:08] Yeah, so let’s, I’ll get to the, to the boring economic business part in a minute. But I want to actually and I’m turning this back on you a little bit, Allison. But but and I’m thinking thinking this is a softball that I’m that I’m teeing up for you. But like a lot of times we hear a lot of objection. And this is maybe even true to investing in your business generally or investing in technology generally. But, you know, I think some firms who get really wrapped up with the cost of payment processing are frankly being penny wise and pound foolish. And we can talk about this a little bit. But like, you know, it seems to me that you want to make it as easy as possible for your clients to pay you. Like for a variety of reasons, which I’m sure you’ve discussed. I know that I and I know that I heard on some of your podcast episodes, but like, these are folks who want to give you money. And so, like it seems to me and again, like, of course, I’m sitting here shilling for my business. Right. And trying to justify the cost for for why you should work with me or someone else. But like, you know, and again, I’m thinking your aligned, but maybe you have some thoughts on this. Like, why would you make it harder for someone to pay you?
Allison Williams: [00:06:25] Yeah. So I’m glad that we’re kind of dialoging about this. There’s, I think a lot of a lot of times lawyers don’t even think of it as making it harder. I think lawyers think about risk mitigation probably more than most professions and more than most individuals, because we’re in a highly regulated profession. And every time that we even conceive of doing things, the quote unquote, normal way, the way a business that does not have a professional license, we have our ethics background with the people that are kind of in the in the shadows lurking, ready to file a complaint against us or take our license away or make our lives miserable out there policing us. And so I think a lot of lawyers think, if I have a payment processor, that’s more fees. What happens if the client if the client pays with a credit card? What happens if they try to do a charge back then? I’ve got to defend myself. What happens if they they file a complaint based on the fact that they were charged fees in a certain way? Like I would rather just have it more simple and have a check. And of course, on the flip side, I’m sure you know, and I’m sure you would advocate this, that getting paid faster, a bird in the hand is worth two in the bush, right? Yeah. So I would rather get my money today, even if I have to discount it by a processing fee rather than wait to get paid. Wait for the client to send a check. Wait for the check to clear. And all of that time when I’m still working a case and the fees are mounting and I don’t even know if I’m going to get paid for the work that’s already been done.
Dan Lear: [00:07:53] Yeah, no, absolutely. And actually, I know this is your podcast and you’re the one who’s supposed to be asking the questions. But let me let me just drill down a little bit more like, do you do you think that that sort of the the the risk or the reward outweighs the risk of kind of like like if you had a law firm that came to you and said, hey, I’m thinking about payment processing, like my system works pretty well without it. Like what? I’m just curious, like, what do you generally tell your audience or what’s your philosophy? Because that will help me sort of tailor what I want to say to your folks.
Allison Williams: [00:08:27] Yeah, well, so for all of the clients of Law Firm Mentor, we haven’t had anybody that does not have credit cards. Right. OK, and I think credit cards are one thing. There’s other forms of electronic tender. There’s E checks. There’s a you know, there’s different forms. But the goal really is to get paid as soon as possible. And I and I always advocate getting paid before you’re owed money. So in particular, we talk about evergreen retainers where the client pays a retainer to start the representation if you’re billing hourly and then ultimately they have to replenish that retainer before you get to zero so that in the event they don’t replenish that retainer, if there is a breakdown in the attorney client relationship, if there is an inability for the client to come up with the money, you can get out before you’re at zero or God forbid, working against yourself and not getting paid at all. If it’s a flat fee, oftentimes you don’t have that issue because you’re getting it all up front. But there are some flat fees that are paid in stages. So you can have stage one done and stage two is due soon. And the client has a change of circumstances or a change of heart. And if you didn’t have an arrangement whereby the processing could be kind of running on automatic such that you’re just going to have a card charge or, you know, an account debited or what have you, then again, you’re waiting for that check to come in and work goes on while you’re waiting and having to constantly police when the check is going to come in. You know, that tends to to delay the inevitable payment and sometimes frustrate the relationship with the with the client. So we highly recommend payment processing.
Dan Lear: [00:10:04] Totally. And I’ll even, you know, in light of… I mean, covid adds a whole other layer of complications to this that we haven’t even discussed. So I’ll I’ll skip over that. But that’s I think I think that’s helpful context. And I you know, like I try to be kind of pragmatic about this and like, listen, if you’ve got a system in which you’re getting paid and your your collections are low or high, whatever the term is, if you’re collecting everything that you’re billing out, however you want to think about it like, you know, I don’t need to disrupt that system. If your business is working and running like that, then great. But but I, I really do think that a lot of times lawyers get intimidated and and it’s fair. And I think a great point that you bring up sort of the ethics issues, because that is often the first place that a lot of lawyers minds go, particularly when they’re trying something new. And so, like, that’s a totally fair point. But the other piece I would just add in, too, is spending time on collections is also a cost. Right. And the amount of money that you don’t collect. Right. If I told you that I could shrink your collections from from 10 percent to three percent. Right. Or your uncollected percentage from 10 percent to three percent like, you pay me three percent, you’re still you’re still money ahead by four percent. Right. So, like, I think sometimes there’s just not as sophisticated an analysis about sort of how to think about that stuff as as I think there might be. But I also, again, totally respect that. Like, if you can build a system where that’s taken care of and then there’s lots of ways we can maybe talk about this later, to lots of ways you can structure your fees and set things up, you know. Good on you. You should totally stay with that.
Allison Williams: [00:11:51] Yeah, so Dan I think you raise a very valid point. But I think you are grossly understating the numbers because, you know, we know that the American Bar Association approximates that about eighty two percent of all fees that are generated are going to ultimately be paid. Right. So, you know, and that that is the average across the legal industry so that there’s 18 percent that is off the table of every dollar that you’re getting, 18 cents is not collected. And that, of course, we know that the better run firms, they collect at a higher rate. We know that it actually is not true, that it’s larger firms that are collecting more statistically. But the M Law five hundred, the M Law one hundred. They have collections issues as well. But when you factor in flat fee and contingency and you still include in there, there still is a great amount that’s on the table that’s not being collected. And if we can compress that, even by virtue of paying a a percentage, like if you look at how much you’re not collecting when you’re just accepting checks and cash. Relative to whatever percentage would be a cost associated with a processor to be able to help you to collect faster, you have a lot of things that you save, including the interest on money that you ultimately don’t have access to when you are not being paid on time.
Dan Lear: [00:13:07] Totally. Growth capital, like however you want to think about it.
Allison Williams: [00:13:11] Yeah. So, I mean, what are some of the, what are some of the rules about this is this is one of the things I know a lot of people have a big question about, because you referenced this when we were speaking with Maddy and I think it just kind of got glossed over because we just moved so quickly to another topic. But what about the idea of shifting credit card fees to your client so that you aren’t the one that’s bearing that two point three percent up to three point eight percent, depending on the credit cards? That ultimately is a burden on the client by virtue of having the convenience of using a credit card.
Dan Lear: [00:13:41] Sure. And if it’s all right, Allison, I’m going to walk back and pick up just one thread from what we were saying before and then kind of walk into that discussion, if that’s all right, because I I do want to answer your question about what is this cost, because I think it’s relevant. And so typically and you and I have been tossing around the number three percent, and that’s typically what most law firms will pay for, for processing. I want to just call out one one thing. A number of processors that I’m familiar with. Well, there’s a number of different ways and actually step one, one step back further. So payment processing is largely a commodity. It’s the fees are largely baked in. They all get pushed down through Visa and MasterCard and whatever other cards folks use. And so there’s really sort of it’s it’s pretty hard to push those numbers down, particularly talking about the types of processing that we’re talking about, where you’re doing it online, or you’re you’re sort of processing in other ways, like it’s pretty hard. And again, this is where I’m going to get to the shifting fees part. It’s pretty hard to push those numbers very, down much further than they already are. Now, one point I want to quickly make is there’s a bunch of different ways that processors charge. And I’m getting really passionate about this because there’s a pricing model called tiered pricing where processors basically put cards into different buckets. And it can be a little bit manipulative for for merchants, for law firms, frankly, because it’s the processor who chooses what bucket they put the cards into.
Dan Lear: [00:15:19] And so, like, they can often say, like, hey, for your lowest cost bucket, I’m only going to charge you two percent. But they get to choose which cards they put in there. And often none of the cards that you use or that your clients use fall into that bucket. So like we personally have tried to to make our pricing more transparent and again, don’t want to shill for us. But that’s one of the things I wanted to flag, is just that you can see a lot of fluctuations in that pricing because because some processors are not as transparent about kind of how to how to charge. And so I just wanted to flag that for for lawyers who are thinking about this. But one meaningful way to get to your question, one meaningful way that you can again, if we look at processing largely as a commodity that you can reduce your cost is to think about whether or not you can charge those processing fees to clients. And again, this might be a good place for me to pause. I’ll dive in on the rules in a minute. But like I know some lawyers and frankly, some folks who give lawyers advice in this space have strong feelings about this. And I don’t know where you fall on that spectrum, Allison. And I’m I’m happy to launch into my diatribe again about how I feel about it. But just curious what like, you know, whether you teach one way or another at Law Firm Mentor, whether the firms that you work with fall into a certain category, kind of what experiences you’ve seen.
Allison Williams: [00:16:41] Yeah. So the one thing that I will say is that here at Law Firm Mentor we teach all of our clients that everything should have a system. Right. So you can’t consider an isolated I bill for this, I don’t bill for that or I pass this along to my clients or I don’t pass along to my clients in a vacuum because the entirety of your financial system has to be fair and it has to be profitable. So you should be thinking about if I’m going to pass along this fee to my client, what will that do in terms of a client relations matter? Right. So there are some people that would say, you know, I’m going to feel bad if I if I have to pay an extra three percent on my on my attorneys bill rather than have them eat that as the cost of doing business. But then you can look at the other ways in which you bill and maybe some other ways you cut a client a break where another law firm would not. So, for instance, there are some law firms that have kind of like a client services fee, quote unquote, that a client pays every month and that takes care of your photocopies and your your parcel deliveries to the courthouse and your filing fees and things like that.
Allison Williams: [00:17:48] There are other law firms that itemize everything. The cost of the FedEx, the cost of the postage. The cost of the gasoline reimbursement to the attorney to get to court like everything, right. And I don’t know that there is a right way or a wrong way. I think everything with money really is based in how you communicate with your client about the value that you are providing and the investment that they are making to get their problem solved. And if you don’t have a very positive foundation and relationship to money, then when you talk to your client, there’s going to be this energy. If I’m doing something to you by charging you or I’m doing something against you by virtue of expecting you to pay something that I’ve charged you that I’m now seeking to collect. And that dysfunction comes through and creates antagonistic attorney client relationships. And once you resolve your issues around money and can talk about it freely and candidly with your clients, give them realistic expectations and be firm and fair with them. I don’t think it really matters whether you’re passing along this fee or that fee or if you’re doing it in bulk versus itemized.
Dan Lear: [00:18:53] I love that. That is that is so awesome. And and it’s and it strikes me I won’t I won’t call them out, but there’s a firm that we work with and then I’ll dive in here quickly to the rules that again, that’s a good question. But there’s a firm that we work with, a decent sized firm with fairly sophisticated clients who has opted to pass their fees along. And they say, hey, listen, we are the the high quality kind of low cost efficiency firm. And we have been very intentional about building a firm that cuts out a lot of the excesses and a lot of the inefficiencies of typical law firm kind of overhead. Right. Mahogany. Back in the day, Twentieth, twenty fifth floor out of forty fifth floor, depending on the city you live in offices. Right. Like we don’t do any of that because we want to provide you the highest quality service at a very reasonable price. And for them, surcharging makes a lot of sense because they have kind of set the expectations about how their firm operates and what the firm can, or what the clients can expect to pay for such that I think that’s a very comfortable exchange. So I, I love that answer.
Dan Lear: [00:19:59] That was a very nuanced answer. And I think it was I think it’s the right one. But just to I guess quickly to dive into to some of the rules pieces. So I wanted to mention, like, first of all, any time you want to discount someone for just paying you in cash or paying you with the check, that’s totally permissible. There’s there’s no restrictions on that whatsoever. We see that all the time at a gas station. Right. You can always often and we talked about this to you and you talked about a bunch of different ways to do this. You can also just like raise your fee. Right? Like, you can just increase your fee by whatever percentage you decide. Doesn’t even have to be the cost of the processing. And like that problem solved as well. One thing that is absolutely prohibited and this makes a lot of sense, and this is true, legal or not, is profiting from surcharging. Right. So if you want to if you want to say I’m going to charge you five percent for the privilege of using a credit card and it only costs you three, then then that’s not that’s not permissible regardless. But then…
Allison Williams: [00:20:58] Can we pause there for a sec?
Dan Lear: [00:20:59] Oh, please. Go. Yeah. Yeah.
Allison Williams: [00:21:01] So I want to follow up on that, because I mentioned earlier, there are some firms that I know of that have a client services fee and that is inclusive of the average of the cost of these activities per file. But if you think about it, it’s undercharging some people and overcharging others. (Right.) It have. I’m just going to use my practice area of family law. So you have a divorce where the client services fee includes the average amount of filing the complaint for divorce charge, serving your adversary, serving your papers at the courthouse and mailing things back and forth in correspondence during the case. Right. And if we look at that average, the person who’s very vexatious and litigious is being undercharged because they’re they’re generating far more billable events, far more mailings that would have to go out versus the client who is very settlement minded, doesn’t want anything filed until the end. And you’re going to file and serve everything all at once because everybody’s on the same page. And in that scenario, technically, the firm profited off of the less litigious client. How would you… But there are some states where that’s ethically permissible. So how does it fit with your description that it would be inappropriate to profit off of. And I’m using profit in air quotes, and you guys can’t… (Yeah) But how does it fit with the idea of profiting off of a client if the percentage that you charge is one percent or half a percent higher? Obviously a larger bill, that can add up. But for the most part, that could also be thought of as this is the flat percentage that’s being charged. And for somebody who on your bill, it’s a little bit lower. Right, because let’s say you’re running yours on American Express and I charge a three percent and Amex may charge three point two versus Visa that charges two point six and I’m charging three, so I’m profiting to the extent of point four percent. How do you, how do you reconcile that?
Dan Lear: [00:23:00] Sure. So I don’t think that the payments regulators have gotten, like, so specific as to sort of dictate how it might look if you’re averaging those fees across a whole slate of different services. They just want to be sure that you’re not overcharging someone for the privilege of using a credit card more than what you’re actually charging. And so, like, what’s that?
Allison Williams: [00:23:24] Like usery like 15…
Dan Lear: [00:23:26] Exactly. Yeah, exactly. So if you’re if you’re building it in as a part of a broader fee and I’ll be honest, I’m not familiar even if there’s been any regulatory or litigation action around this. But like I think if you can with a straight face, justify sort of, hey, across this bundled service fee that we offer, our payment processing costs come out to roughly what it is that we’re paying ultimately out of pocket back to our processor, then you’re probably in a pretty good place.
Allison Williams: [00:23:56] Yeah, well, you know, it’s interesting. Ironically, today, I recorded several podcast episodes, so I had the pleasure of interviewing someone earlier today. We were talking about flat fees in litigation. And I know that that’s something that your your service also helps with. But one of the things I thought was remarkable about our conversation is we talked about how when you are charging a fee, the fee is not just the time it takes you to do something right. So like this this idea, like you’re talking about transactions in particular, but in the business of law, there are transactions and then there’s value that’s in excess of a transaction. Right. Because the person does not buy a transaction from a law firm, they buy the outcome. So in some ways, if you think about everything that goes into the entirety of your purchase of the service, you’re buying the reputation of your lawyer. You’re buying the the time and attention that they take to draft documents to advise you to deal with adversaries. You’re buying the extent to which they think about your case on the weekends. Right. You’re getting kind of all of that service together to come up with a fee and you’re charging that across the board. So it’s ten thousand dollars for a divorce of this type. Twenty five thousand dollars for a divorce of that type. Fifteen thousand dollars for a commercial transaction of this type and so forth. But when you start breaking out the actual cost of of of the the servicing the processing fees, it becomes very granular and very specific. So, is there kind of a disconnect of I’m paying for a value in total, but in this transaction I’m paying for a very specific two point eight percent processing fee versus what I’m what I’m globally looking at in the in the receiving of services from my lawyer. So, so the whole idea is when we look at when we look at what you’re buying from a lawyer, you’re buying the service. Sure. A lot of little transactions. A phone call, an email, a letter, a plea, a pleading, a piece of legal advice. And you’re also, that processing fee is a part of the cost of doing business to facilitate.
Dan Lear: [00:26:11] Yep. Yeah. Yeah.
Allison Williams: [00:26:12] If we look at the service in its entirety globally, the service is what they’re paying X thousand dollars for. But when we look at the processing fee, we’re looking at a certain percentage of that cost being either added on or excised out. However you look at it, it becomes a very minute thing as opposed to a big picture analysis. So how do you in your service, help, help lawyers to kind of, you know, take it out of the transactional, having that that nickeling and diming relationship with the client where they’re getting kind of a piece of the puzzle, which is the processing fee, instead of getting the entire landscape of the forest, which is all of the things that go into representing them.
Dan Lear: [00:26:56] Yeah, yeah. And I was, it’s funny, as you were talking, I was thinking like, the other thing you’re buying are the processes that make it easy to transact or work with this lawyer or this law firm. You’re also buying the expertise in, well, and the customer service experience. Right. The regular updates that they’re giving you, the information that they’re sharing with you. As you were talking. And this is a little bit of a tangent, but there’s an old story, I think, about Henry Ford or some consultant who who came in. This is like back in the Industrial Revolution, came in to to assess why a piece of machinery wasn’t working. And again, I think it was Ford and he walked around the machine a couple of times, made a white mark in one place, came back and and gave them a bill for like, you know, I don’t know, five thousand dollars. And they were like, what? Like what? What did you what’s this? Five thousand dollars. Like, you walked around and made one white mark with chalk. Like what’s that. What’s that. How can you justify that. And he I think that later itemized the bill and it was like one dollar white chalk, four thousand nine hundred and ninety nine dollars, knowing where to make the mark. Right. And and I think that’s really a fascinating story about like all of the expertise and all the value that you buy when you work with a service professional like a lawyer. And so, like I mean, I would. And again, I think I think it really comes back to this discussion we were having earlier about like, what type of a relationship around money have you set up with your client.
Dan Lear: [00:28:39] But like, you know, I don’t I don’t know that we’d have a strong position or even advise clients one way or the other about like should you surcharge in light of a flat fee or shouldn’t you? It would more be a question of like, again, like what kind of relationship have you established? And do you feel comfortable sort of folding this in as part of your broader price? Or do you feel like this is something that you feel comfortable kind of shifting to the client? One thing I will say that we were just going to touch on, and you mentioned this earlier on, is there are also different types of electronic payments that you can offer your clients. And that’s one thing that we’ve really tried to to double down on is debit cards and particularly credit cards can be very expensive. Like… Turns out those airline miles, like somebody is paying for those, right? Whether it’s you or whether it’s the law firm or the service provider that you’re purchasing from like, believe me, those aren’t just being manufactured out of thin air. And so one of the things that we’ve really prided ourselves on and tried to do is we’ve really integrated and this is getting really granular. But like we’ve integrated E-Check really tightly into our product and it’s dramatically cheaper than a credit card. So that’s another option that sort of as firms think about strategically how they want to build their systems and how they sort of want to deploy these systems in light of the experience they want to create. One thing they can do is in certain circumstances, say, hey, you know, for certain types of matters or certain types of clients or even certain practice areas, we’re only going to accept an electronic check.
Dan Lear: [00:30:17] Right. And that may, to my point earlier, fly a little bit in the face of my argument that, like, you should make it easier for your clients to pay. But again, like going back to your great point, if you can build a system and sort of a culture and really a marketing engine around how you communicate about who you are and what you do, that that mild discomfort with not being able to pay with your Chase rewards card or your Amex is going to be offset by a realization and an understanding about, oh, no, wait, this is the type of firm like, I was thinking about this as we were preparing, like… There are little hole in the wall restaurants here in Seattle where I live that take cash only. And I love that food so much. And I know that’s how they roll, but I’ll drive out of my way to go to the ATM to get cash and pay that way. And yes, is it mildly inconvenient for me that I can’t pay with a credit card? It is. But I also understand, like, that’s how these folks roll, right. And and I think I think it really comes back not necessarily to whether you should or shouldn’t surcharge, but like what kind of a firm have you set up? What kind of a culture have you set up? What kind of an expectation have you set with your marketing? And are you violating that with one decision or another as it relates to these fees?
Allison Williams: [00:31:31] Yeah, well, I think E-Check is kind of the the the polestar of being able to use creative solutions that benefit both sides. If you think about it, the credit card, if you’re using a credit card, the client has the credit, has the credit card fee, they have the interest if they don’t pay it off right away and sometimes they have a per transaction charge depending on the nature of the credit card. And then the the law firm has that the processing fee, so there’s fees all around. But with E-Check, typically it’s a lower amount. Usually it’s like a couple of dollars that you’re going to be paying for a particular check, which is far less than what you pay in percentage fees of the merchant services fee. And then the processing for the law firm could be the same or it could be lower. But either way, the client is ultimately saving so the client then is incentivized. And you can get an E check payment as fast as you can get a credit card payment now.
Dan Lear: [00:32:25] Yep, no, absolutely, I think it’s again, we we think, and again, I’ll go back sort of and just reiterate what I said a moment ago. A, as… The best thing you can do is offer your clients as many different options to pay as possible and then be, again, depending on what kind of an expectation you set, you can deploy those payment methods strategically either to your economic benefit to the clients or to some kind of mutual benefit that you’re able to drive. So, yeah, where, we think ACH is a really, E-Check is a really valuable tool and one that that firms can certainly be smart about how they use and leverage.
Allison Williams: [00:33:06] Yeah. So then I want to, I want to shift our focus a little bit and talk now about different payment methods. So you talked about the idea of having different payment methods and making it as easy as possible for your clients to pay you. I want to ask you, how can firms strategically deploy different payment methods to be more effective in managing the cost of the processing and while still ensuring that the clients are paying quickly and easily and keeping your accounts receivable low?
Dan Lear: [00:33:34] Well, sure. So we’ve already and I think we already sort of, this is a great segway from from where we were. I think one thing that I want to just call out, like right off the top is bankruptcy attorneys cannot accept credit cards. So one of the one of the things that we’ve done and…
Allison Williams: [00:33:52] No brainer, right?
Dan Lear: [00:33:53] No, it totally…
Allison Williams: [00:33:55] One of these people that’s coming in to discharge your credit card debt. I don’t think I’m going put myself in the category of something you’re going to discharge.
Dan Lear: [00:34:02] Totally, totally. It makes, it makes a lot of sense. But I can see how that might scare some bankruptcy attorneys away from any kind of electronic payment. And we’ve built some technology that enables firms to deploy either debit card only and or E-Check or ACH only. So, like, just right off the top, like there’s a great example of of a practice area where you really need to be able to be selective and strategic about what types of payment methods you accept and how you do it. I think other than that, like really goes back to what we were saying is, you know, if you can build a firm or an expectation around, hey, these are the types of payment methods I accept. Again, a classic example is E-Check again. And we, and we already sort of hit this. But like when we see firms just just as an example, since since we’ve got E-Check integrated really tightly with our system, we see firms that have around almost well, it’s now approaching 30 percent of their volume going through each week as opposed to cards. And that can lower your payment processing monthly cost from like three percent to around two percent. And like, you know, one percent of revenue is a meaningful chunk. Right. That for a firm of a decent size like that, that’s good money. So so that’s that’s one thing is just like ensuring that you have that integrated and available, I think is one option. And then I think we’ve also seen firms just shift entirely or again, like I was saying. For different practice areas or different matters, saying, hey, we’re just not going to accept cards for this. We’re only going to do ACH or E-Check. And we’ve had, we’ve seen firms have a lot of success with that.
Dan Lear: [00:35:46] So, again, I think and you’ve teed it up so nicely, thinking about this kind of, what are the expectations you set, what is a culture you build? But there are lots of different ways that you can strategically deploy these resources. On the flip side, just to sort of take the opposite argument, you can also and this is something that we’ve enabled, you can also only enable credit cards and only surcharge. And so in that case, like you’re paying almost nothing for processing, because if firms are only or if clients are only using credit cards and they’re picking up those fees, again, that’s that’s a cost that that you don’t have to bear. So it really just comes down to, again, sort of how you want to strategically deploy those. But I’d love to encourage firms to think about that and again, fold cash and paper checks into the discussion. Like I remember talking to a criminal lawyer and they said, listen, I work with criminals. I get paid cash up front. Like that’s how I roll.
Allison Williams: [00:36:47] Alleged criminals.
Dan Lear: [00:36:49] And I was like, I respect you know, it’s kind of like your point about like not letting bankruptcy clients pay with credit cards, like, you know, it makes sense. (Yeah.) So so I you know, I think that firms can be strategic about how they deploy these types of methods in order to bolster the economic and kind of financial health of their firms.
Allison Williams: [00:37:15] Yeah, and I think it’s all about having flexibility, like you said, because there may be some firms that are used to having a per transaction amount of somewhere between five and ten thousand dollars. And maybe they have that one big fish that walks in and it’s like, OK, this is a fifty thousand dollar case and I’m taking it up front, putting the money in trust and and the client, you know, you don’t want to have that kind of payment on a credit card, even if the person does have that amount of credit, because they if they do a charge back, God forbid, then you could have a major issue while you’re fighting to have had that fee, either not disgorged or to be able to retain it. So I want to I want to talk about business models a little bit, because I know that one of the things that Gravity Legal can help with is the idea that there’s lots of different ways to get paid, whether you’re doing it in a flat, in a flat fee firm, in an hourly firm or a contingency fee firm. But what other business models can firms experiment with to improve the financial health of their business?
Dan Lear: [00:38:14] Yeah, so and we already hit flat fees, I think, pretty extensively in our conversation. And I am excited for this upcoming podcast with your unnamed guest about flat fees, because it sounds like there’s a lot of value there. But obviously, I think firms should be thinking about flat fees. That’s a that’s a super obvious one. And for all the reasons we discussed, I’ll just make a quick mention. And this is a little bit of a business model tweak. And it really keys off of something you said earlier that I am remembering sort of philosophically, but not remembering in specificity. But another thing that we’ve seen a lot of firms do is we have a technology that enables firms to save a payment method on file and they don’t necessarily have access to, like, the whole credit card number or the they don’t have access to the whole credit card number or the whole bank account number. But it enables firms and we’ve seen firms do this who say, hey, listen, this is the evergreen retainer point you made earlier. Hey, like at the end of the month, I’m going to send you a bill for services rendered. And if I don’t hear from you by the 5th or the 10th of the month, I have your saved payment method on file and I’m just going to hit it for that amount of money for which I billed you. And we’ve seen that just radically change firms financial profile because they’re not chasing clients for money anymore. Now, again, this may only work in certain firms. It may only work with certain clients. It may only work in certain practice areas. But that’s one kind of not quite a business model tweak, but certainly a tweak that I think firms should be thinking about kind of from a collections perspective. The other thing that we’ve spent a ton of time and content talking about and then also built some technology around is subscriptions.
Dan Lear: [00:40:00] And this is probably a whole conversation in and of itself. I’m sure you have some thoughts on this. But like this, I’m really interested in this in this model. And I think for for a couple of reasons. Like, obviously, one is collections. And we’ll come back to that later. But like I’ve done an interview on on the podcast that I host with a bunch of folks who do subscription legal services. And one of the main things they say is how dramatically and for the better it changes the their relationship with their clients, where the client isn’t constantly worried about whether they’re going to get nickeled and dimed for quick conversations. The firm, frankly, even if they’ve got a great flat fee mentality like, the firm isn’t worrying about whether these ongoing conversations are going to to hurt their bottom line. And it really makes the relationship much less adversarial and much more sort of collaborative and consultative. So like I think that’s one huge win that firms can get from moving in this direction. The other thing that it does is a lot of firms see, and again I’m sure this is something that you try to help coach firms out of or at least help them coach them to to be more comfortable with is, you see a lot of spikey revenue with a lot of firms. Right. Like, hey, we got paid this month, but it’s now going to be another three months before we get paid a bunch again.
Dan Lear: [00:41:18] And subscriptions create just a nice, steady stream of revenue coming into the firm on a monthly basis, like almost like a SAS business. And that’s that’s a that’s a really powerful thing. Again, I’m sure you can speak to this about if you know you’re you have this much money coming in, you can begin to make a little bit better, longer term plans about how you want to grow and scale your firm. And then finally, obviously, it can help with with collections as well, because once you use a technology that sets up a situation in which you’re getting paid a flat fee every month consistently and again, it’s a much longer conversation, you’ve got to be really sure that you’re good at carving out what’s kind of what we say sort of in the box versus out of the box for a subscription. But if you can do that, like it can be, again, a really great economic opportunity as well. So, you know, those are just a couple of ideas. And again, I think we’ve covered the territory for flat fees really nicely already. So rewind the podcast and listen to us talking about that or listen to Allison’s upcoming episode on that topic, because I think there’s there’s lots of good stuff we could dive into there.
Allison Williams: [00:42:29] Yeah, well, I think a lot of it is, you know, choosing what is going to work best for your practice, but also looking for ways to be creative, to be intuitive and to be client and customer service oriented all in one. And I think programs like Gravity Level really help you to get there all in one fell swoop because you’ve recently rolled out some different features that will actually help transform electronic payments. And a lot of the ways that that happens comes from leveraging the payment methods that you use, shifting credit card processing fees to clients which we talked about, and considering alternative business models and really thinking about. Are there ways that I can do this that increase the likelihood of me being paid in full, that improve the relationship that I have with my client and deal with money in a way that’s just more consistent and recurring for my law firm.
Dan Lear: [00:43:24] Yeah, no, absolutely, and just to sort of as we round things out, one of the things we didn’t hit and I won’t dive into it now is there are some nuanced rules about where and when and how you can surcharge. They’re not complicated, but there’s a couple of state rules and there’s a couple of ethics opinions about from bar associations about when you can and can’t do this. We’ve built a whole matrix. You can find it on our website that tells you from a state by state basis whether or not this is OK or kosher in your particular state. So for folks who are really interested in that and again, as we round out, I’ll probably have a chance to tell people how to get a hold of me. But you can find that information on our website. I just wanted to make sure I hit that because it can be a little nuanced and I want to make sure folks do it right so that they can keep practicing law and keep helping clients.
Allison Williams: [00:44:12] Yeah, well, when we were talking here about customer service and of course, it’s an excellent customer service benefit that Gravity was actually already compiled this information for you and it is available on their website. So I actually do want to give people now an opportunity to learn more about Gravity Legal and how you are helping to transform the way that law firms are getting paid, the way that they look at money and the way that they can be more effective and getting paid faster through the various different methods that we talked about today using Gravity Legal. So for someone who’s interested and really wants to know more about how they can first consider your service, but also learn how to be more effective at credit card processing and payment processing in general, where should they go to learn more about you and your company and where should they go to schedule some time to talk to you?
Dan Lear: [00:45:00] Sure. So gravity dash legal dot com is our website. You can find us there. You can schedule a demo right there on the home page so you can you can go there and find us pretty easily and get time with us right away. Any folks who are listening, you can feel free to reach out to me. I’m d lear, D L E A R at gravity dash legal dot com. You can also, I spend most of my social media life on Twitter. I’m at right brain law so you can catch me there as well. And I guess I just want another couple of quick shout outs. Most of our content aimed at lawyers is on our financially legal blog. So that’s gravity legal, dotcom slash financially legal. And there you’ll find a bunch of content. We just dumped a bunch of content about how lawyers can use Zapier to automate and streamline their payments. We’ll be coming up in the next little while, releasing a bunch of content around surcharging. So, folks, who really want to dig in on that can learn more there. We’ve got a bunch of content beyond The Matrix, which is already out there, and you can find all of that at gravity dash legal dot com slash financially legal. And finally, I have a, if I can shill my podcast really quickly. I have a podcast called Financially Legal where we talk about this stuff and you can find that on that on that blog as well. So that’s where folks can learn more.
Allison Williams: [00:46:15] All right. So a lot of great resources there. Dan Lear, thank you so much for being here with us on the Crushing Chaos with Law Firm Mentor podcast. Everyone, we will have the contact information in our show notes. So please check that out, learn some more information about how you can be more financially successful in your law firm with the assistance of all the great resources that Dan referenced. Again, Dan, thank you for being our guest on the podcast. Everyone, I am Allison Williams, your Law Firm Mentor have a great day.
Allison Williams: [00:46:50] Thank you for tuning in to the Crushing Chaos with Law Firm Mentor podcast. To learn more about today’s guests and take advantage of the resources mentioned, check out our show notes. And if you own a solo or small law firm and are looking for guidance, advice or simply support on your journey to create a law firm that runs without you, join us in the Law Firm Mentor Movement free Facebook group. There, you can access our free trainings on improving collections in law firms, meeting billable hours, and join the movement of thousands of law firm owners across the country who want to crush chaos in their law firm and make more money. I’m Allison Williams, your Law Firm Mentor. Have a great day.
Dan Lear is head of marketing and partnerships at Gravity Legal, an electronic payments and money management firm built specifically for lawyers and law firms. Prior to Gravity Legal, Dan worked as director of industry relations for the legal market place Avvo and, before that , as a technology attorney with both Fortune 500 and startup clients. He has a JD and an MBA from Seattle University. He is based in Seattle, Washington.
Financially Legal Blog & Podcast: https://www.gravity-legal.com/financiallylegal
YouTube Channel: https://www.youtube.com/channel/UCEravxZKM7M4irjk8ZCYojg/featured
Allison C. Williams, Esq., is Founder and Owner of the Williams Law Group, LLC, with offices in Short Hills and Freehold, New Jersey. She is a Fellow of the American Academy of Matrimonial Lawyers, is Certified by the Supreme Court of New Jersey as a Matrimonial Law Attorney and is the first attorney in New Jersey to become Board-Certified by the National Board of Trial Advocacy in the field of Family Law.
Ms. Williams is an accomplished businesswoman. In 2017, the Williams Law Group won the LawFirm500 award, ranking 14th of the fastest growing law firms in the nation, as Ms. Williams grew the firm 581% in three years. Ms. Williams won the Silver Stevie Award for Female Entrepreneur of the Year in 2017. In 2018, Ms. Williams was voted as NJBIZ’s Top 50 Women in Business and was designated one of the Top 25 Leading Women Entrepreneurs and Business Owners. In 2019, Ms. Williams won the Seminole 100 Award for founding one of the fastest growing companies among graduates of Florida State University.
In 2018, Ms. Williams created Law Firm Mentor, a business coaching service for lawyers. She helps solo and small law firm attorneys grow their business revenues, crush chaos in business and make more money. Through multi-day intensive business retreats, group and one-to-one coaching, and strategic planning sessions, Ms. Williams advises lawyers on all aspects of creating, sustaining and scaling a law firm business – and specifically, she teaches them the core foundational principles of marketing, sales, personnel management, communications and money management in law firms.
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00:37:01 Dan Lear (36 Seconds)
I think that firms can be strategic about how they deploy these types of methods in order to bolster the economic and kind of financial health of their firms.
00:37:15 Allison Williams
Yeah, and I think it’s all about having flexibility, like you said, because there may be some firms that are used to having a per transaction amount of somewhere between five and ten thousand dollars. And maybe they have that one big fish that walks in and it’s like, OK, this is a fifty thousand dollar case and I’m taking it up front, putting the money in trust and and the client, you know, you don’t want to have that kind of payment on a credit card.