Best Practices for Enabling Surcharging Fees for Law Firms

As a law firm, it’s essential to maintain a healthy cash flow to ensure that your practice remains operational and continues to thrive. Considering the costs associated with running a law firm and providing legal services, though, it can be a challenge.  

One approach that can help bolster your law firm’s financial stability is the implementation of surcharging fees.  

However, it’s important to understand the best practices for surcharging fees in order to remain within the bounds of the law and maintain good client relationships. 

The benefits of surcharging for law firms 

Surcharging allows law firms to offset the cost of credit card processing fees by passing them on to clients. This practice can lead to significant cost savings, especially for firms that process high volumes of credit card transactions.  

Adding a small percentage to each transaction allows you to recoup these costs without significantly impacting the client’s overall cost.  

Surcharging can also help promote transparency in your billing practices. When clients understand that the surcharge fee is directly related to credit card processing, they can appreciate your firm’s efforts to maintain fair pricing by externalizing this often overlooked cost.  

Legal and compliance considerations for surcharging 

While it is generally legal to impose credit card surcharges, the practice is regulated and the rules vary by state. A class action lawsuit in 2013 marked a turning point, allowing merchants in certain U.S. states to introduce surcharges.  

Note that surcharging is still prohibited in several states, including Connecticut and Massachusetts, along with Puerto Rico. Therefore, law firms must be cognizant of their state’s regulations before implementing surcharges. 

Furthermore, rules set forth by the major card networks (Visa, Mastercard, etc.) require merchants to disclose any surcharge fees at the point of sale and on the receipt and limit the surcharge amount to their own discount rate or 4%, whichever is lower.  

Five tips for implementing surcharging in your practice 

As a law firm looking to offset the cost of credit card processing fees, implementing surcharges can be an effective strategy. However, it’s essential to approach this with caution so that your practice remains transparent and client-friendly.  

Here are five essential tips to help you seamlessly integrate surcharging into your billing processes.  

1. Determine appropriate surcharge fees 

Once you’ve understood the legal landscape, the next step is to determine the surcharge fee amount. The key here is to strike a balance that allows your firm to recoup processing costs without placing an undue burden on your clients.  

Typically, surcharge fees are a small percentage of the total transaction, typically in line with the fees charged by the credit card processor. This fee cannot exceed the above-mentioned discount rate or 4%.  

It’s advisable to work with your payment processor to determine your surcharge fee accurately. 

2. Do not apply surcharges on debit card transactions 

While credit card surcharging can be an effective strategy for offsetting transaction costs, it’s essential to note that this practice should not extend to debit card transactions.  

The rules set forth by card networks prohibit merchants from applying surcharges to debit and prepaid card transactions, even if they are processed “as credit.” 

3. Communicate fees and explain the process to clients 

Transparency is critical when implementing surcharging fees. Clients should be made aware of these fees before they’re charged, and the rationale behind the surcharge should be clearly explained. The key is to make sure that clients understand the surcharge, why it’s being applied, and how it will affect their total cost. 

If you’re going to begin implementing surcharging fees for existing clients, you might consider sending multiple reminders in addition to the initial announcement—the last thing you want to do is surprise your clients with unexpected fees.  

Communications around surcharging practices can also be built into your overall client experience strategy for your billing processes. Providing clear expectations for billing—from payment terms to invoicing timelines, and, yes, surcharges—allows your clients to feel confident each time they settle a bill.   

4. List surcharges as separate line items 

Another best practice when implementing surcharging is to list surcharges as separate line items on your invoices or billing statements. This approach helps meet the disclosure requirements of card networks and enhances transparency in your billing practices. 

By itemizing the surcharge, clients can clearly see what they’re being charged and why. This can help reduce potential confusion or dissatisfaction that could arise if clients perceive their bill as higher than expected. (After all, transparency is key to fostering a strong client relationship.) 

A legal-specific payment processor can simplify this process by automatically calculating and applying surcharges and presenting them as separate line items on invoices. This approach ensures consistency and accuracy while saving your firm valuable time and resources. 

5. Evaluate surcharging fees 

Once you’ve implemented surcharging, it’s important to evaluate this policy regularly. Review your new policy based on client feedback, its effect on your firm’s bottom line, and changes in the legal or regulatory environment. 

You should pay close attention to any negative feedback from clients regarding surcharging. If clients believe the fees are unreasonable, it could harm your relationship and possibly lead to a loss of business. If this happens, you may need to reconsider your surcharging policy or find better ways to communicate the reasoning behind the fees. 

TimeSolvPay makes surcharging painless 

Adhering to surcharge compliance can be complex and is often subject to change. Yet, this challenge can be effectively managed with the help of a legal payment processor like TimeSolvPay.  

TimeSolv is committed to guaranteeing secure and ethical credit card processing for law firms, ensuring that all transactions abide by the rules and regulations of card networks, and maintaining compliance while reducing the administrative burden on your law firm. We’ll also provide detailed reporting, allowing you to evaluate your surcharging practice effectively and make data-driven decisions. 

Navigating the intricate world of law firm surcharging doesn’t have to be overwhelming. By partnering with TimeSolv, you can focus on your core competency—providing excellent legal services—while we take care of your surcharging needs. 

Ready to implement surcharges efficiently and effectively? Schedule a demo today and let us guide you through this complex landscape to keep your firm compliant, competitive, and client-friendly. 

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