Compliance is a priority for law firms. And legal software can be a key tool in helping you meet your firm’s compliance requirements.

In this article, we’ll cover major compliance issues that law firms need to monitor and solutions that can reduce your risks.

What online compliance risks does my law firm face?

A primary compliance concern for law firms is staying on top of compliance related to both data and processes: for example, storing firm and client data safely in the cloud, managing online client portals, processing online payments, handling trust accounting issues, and following ethical requirements relating to online advertising and marketing.

In this section, we’ll go over a few major buckets of compliance risks in the digital world that your firm should recognize and address.

Ensuring cloud security

When it comes to storing data, security is the top compliance priority. Law firms must make “reasonable efforts” under ABA Model Rule of Professional Conduct 1.6 to prevent the disclosure of client-related information. That means law firms must understand what client data they store, where they are storing it, and what the potential entry points for data loss and disclosure are. Additional compliance requirements vary depending on the size and type of law that your firm practices, but it’s best practice to review applicable requirements and make sure that your firm’s cloud infrastructure has the robust protections necessary to safeguard your clients’ data.

Choosing a reputable provider of cloud-based legal platforms is the first step in ensuring compliance. The provider should have a proven track record and, ideally, have suffered zero data breaches in the past. Make sure that it offers robust security features like encryption and access control, such as password policies, two-factor authentication, and role-based permissions.

Sharing data in online client portals

Much like the cloud, client portals require firms to pay special attention to how they secure client information. Your law firm should implement strong access controls, such as two-factor authentication and secure file transfer protocols, to prevent unauthorized access to client data. Law firms that use client portals also must comply with the ABA Model Rules of Professional Conduct, which include requirements for maintaining client confidentiality (Rule 1.6), establishing competence (including with technology) (Rule 1.1), and keeping clients informed of matters (Rule 1.4).

Processing client payments online

There are a host of considerations when deciding how to accept online payments from your clients. Clients overwhelmingly prefer to have the ability to pay online and to pay with credit cards. Turning to legal software to do the behind-the-scenes work of processing online payments for your law firm is your best bet.

The right legal technology platform can ensure that all online payments accepted follow the ABA Model Rules, Interest on Lawyers’ Trust Accounts (IOLTA) guidelines, and Payment Card Industry Data Security Standards (PCI DSS). The right legal payment and accounting software will ensure that your legal team does not commingle client trust account funds with the funds they use for operations.

Following rules for online law firm advertising

Law firm websites must meet certain ethical requirements set forth by their state bars. For example, websites shouldn’t advertise a lawyer as an “expert” or as “specialized” in a particular practice area unless they hold a specific qualification permitted by their state. They should also not hold themselves out to be the “best” lawyer to handle a type of matter. Attorneys may also need to include a disclaimer noting that the information on their website should not be considered legal advice. Lawyers should check their state bar’s requirements to ensure compliance. In some states, the bar may require or permit the submission of the law firm’s website content for ethical review.

Additionally, prospective clients want to see that your law firm is capable of handling matters like theirs. One of the best ways to highlight your expertise is through the words of satisfied clients. But there are limits to what you can share online — and you also need to prepare for how to handle a negative review. ABA Model Rule 7.1 requires that all communications about a lawyer and their services must be true and not misleading. Marketing statements, such as testimonials, could be misleading if they set an expectation that a lawyer can obtain the same results as another client without reference to the specific factual and legal circumstances of each client’s case.

Finally, law firms should make sure that their websites meet the requirements of the Americans with Disabilities Act. That means your site’s design and visual and audio content need to be accessible to everyone, including people with disabilities.

A digital marketing company that focuses on helping law firms can help identify and avoid online marketing pitfalls and help you comply with your state bar’s requirements.

What other steps should my firm think about for compliance?

True compliance starts with your people. Your law firm should have a data protection plan (especially when it comes to client data) that outlines steps and safety procedures. It should include policies on who can access client data, how and when they can access it, and how data is retained and backed up. Also, make sure that your attorneys and staff are trained on how to handle sensitive data and best practices for compliance.

Legal software is critical to your law firm’s compliance

Legal software plays a critical role in helping law firms remain compliant with laws and regulations. As touched on throughout this article, the laws related to compliance are plentiful, and navigating those waters yourself is unnecessarily risky.

With advanced legal software, your firm can ensure data security through the cloud, keep client information confidential, and process online payments both quickly and while fulfilling your legal and ethical requirements. By leveraging legal software, your firm will streamline compliance processes, reduce the risk of data breaches and other violations, and ultimately protect your law firm’s reputation.

Almost nine in ten Americans use some form of digital payment. It’s no wonder, then, that law firm clients expect to be able to make payments online. Not only does this make handling bills easier and faster for your clients, but it’s also good for your law firm’s cash flow. Online payments close the gap between the time a client is billed to when that client makes good on payment.

In this article, we’ll cover how your law firm can accept online payments while remaining compliant with applicable law and ethical guidelines. We’ll also note some of the best features to look for in your payment solution software.

Do clients expect online payment options? 

Yes! Clients expect law firms to deliver a memorable client experience, which includes making payments quick and easy by offering a variety of payment options. Clients want the flexibility of making payments via credit cards, e-checks, and digital transfer services like ACH. In fact, a recent study found that 40% of clients would never hire a lawyer who didn’t take credit or debit cards.

This variety of payment options is also good for your firm and its bottom line. By offering several convenient payment methods, law firms incentivize their clients to pay invoices faster and completely. When you expand your firm’s acceptable methods of payment, you’ll likely find that you spend less time waiting for checks in the mail, less time hounding clients for late payments, and more time on billable work.

Is accepting online payments complicated?

Accepting online payments isn’t complicated, but it does require planning and a little help from technology. It’s not inherently risky for your law firm to accept online payment. Nearly every jurisdiction in the United States has given the green light for law firms to accept credit card payments for legal fees and expenses. But, as with all legal fees, your firm must comply with applicable legal requirements and ethical responsibilities.

In broad strokes, your firm must comply with the rules requiring the separation of client and third-party funds from your law firm’s operating funds. What is the best way to do this? Use payment software developed for attorneys with this exact ethical issue in mind. Without it, your firm might not be compliant.

While your law firm accepting online payment isn’t dicey, using a non-legal payment solution is. These software options often fail to properly handle law firm transactions according to the trust accounting principle noted above as well as Interest on Lawyers’ Trust Accounts (IOLTA) guidelines. The result can be noncompliance, which is bad for everyone — including your law firm’s reputation. The right technology ensures that your law firm has separate operating and trust accounts and ensures that processing fees are deducted from your operating account only.

If you set yourself up correctly, your firm will never have to worry about an inadvertent ethics violation and can focus on delivering exceptional client work.

What makes online payments compliant or noncompliant? What can I do in my firm to ensure compliance?

With the various rules and regulations regarding legal payment, fee collection comes with a host of unique considerations, especially when accepting credit card payments. The right legal payment processing platform will do the behind-the-scenes work for your law firm, ensuring that all online payments accepted comply with the ABA Model Rules of Professional Conduct and IOLTA guidelines.

When picking a payment solution, we recommend looking for the following four features to ensure compliance and improve ease of use.

1. Manage multiple trusts/retainers under a single matter

Not only do clients expect to be able to pay online, but they also expect that your firm will manage their multiple trusts and retainers. Rather than falling short of their expectations, with the proper tools, you can easily manage multiple trusts and retainers under one or many matters and even track them at the client level.

By having the power to track both your firm and client finances in one central place, you can keep an eye on money moving in and out of your firm with complete faith in your firm’s compliance.

2. Separate earned revenue and unearned revenue

Under most state laws, law firms must keep earned revenue and unearned revenue separate. The right payment tool recognizes when payment revenue is unearned (that is, applied to a trust replenishment) and when it is earned (applied to a billing entry) and deposits it accordingly.

You need a legal technology platform that can take an invoice payment and split it between two accounts, keeping your firm in compliance, saving your accounting team time, avoiding mistakes, and raising your collection realization rate. Avoid tools that require you to have either a trust account or an operating account and then require a bookkeeper to determine whether and how to apply and move the funds. That’s asking for human error and compliance woes.

3. Easily manage your IOLTA accounts

You need an efficient way to track multiple IOLTA accounts. With a robust legal platform, you can automatically assign accounts for each client trust so that you can track the flow of money, giving you visibility into where your firm and trust money meet at all times.

4. Apply available funds to pay off client bills automatically

Instead of waiting for that check to arrive in the mail, you can sweep through accounts to find matters with accounts receivable balances and available funds. With this information, your firm can quickly create bill payments and then write checks from your IOLTA account to an operating account. This way, you’re always efficiently applying your client’s money (and making them happy).

For many law firms, the “client experience” is simply about results: if lawyers win a case or close a deal, they consider that a positive experience. Resolving a problem is  offering good client service. There’s more to creating a great experience.

Meeting basic client expectations for good service won’t be enough to stand out to new clients among your competitors. Instead, law firms need to find new ways to deliver a holistic client experience — spanning from first contact through the final bill — that will help you be distinctive from other firms, keep existing clients, and help your law firm weather a market downturn.

What does an exceptional client experience look like that will help you reach new prospective clients during an economic slowdown? Let’s take a look.

Make a great first impression on clients with a fast, efficient client intake process

The client intake process is likely your firm’s first substantive communication with a new client. And it’s a reputation-altering opportunity.

Your client intake process should be quick and painless. An automated process can collect all the information you need and populate it into other forms and systems so there’s less lag time while your staff manually enters client information. It can also schedule appointments and route people to the right contact so there is less friction for prospective clients. Advanced intake technology can also sift through leads to determine which are worthy of pursuit so you can prioritize them before they look elsewhere for help.

The right system will also allow your team to complete a thorough conflicts check quickly. It should also capture your clients’ concerns so you can understand their goals and tailor your services to meet their needs. Whatever system you use, collect information about how clients find out about your services so you can focus your marketing dollars on those channels.

A smooth intake process is the first way that you can showcase to clients that you’re able to meet their expectations. The longer and more painful your intake process, the more likely clients are to choose a different law firm.

Engage in regular client communication

Communication is the foundation of a positive client experience. No one likes to be left in the dark, wondering about the status of their case. And no matter how busy you are, clients don’t like to hear that their call or email went unanswered because you were working on a different client’s matter.

Clients expect regular communication, and they expect that communication to be thoughtful. (This means that your lawyers and staff should communicate with clients in plain language instead of legal jargon and offer clear explanations of what your clients can expect.) Whenever there’s a development in your client’s case, you should let them know about it in a timely fashion. And if your client emails or calls with a question, you should quickly acknowledge their concern, even if you don’t have an immediate answer. Responsiveness can avoid conflicts and misunderstandings and strengthen the client relationship. You should also touch base regularly with your clients even if you don’t have any significant news to report, so they know that their case is still on your radar.

But all of this communication can become tedious in a lawyer’s busy day. Back-and-forth status emails and calls take a lot of time away from pressing legal work. Fortunately, there’s an easier way to keep clients apprised of their case status.

A secure, cloud-based client portal makes it easier than ever to stay in touch with clients. An online portal allows clients to access the information they need at their convenience, whether it’s a deadline, a document, or a bill. For example, an online portal allows clients to log in to view their current billing status and share and view documents. Some portals also offer a chat function that delivers automatic text notifications when new messages or other updates arrive, improving lawyers’ responsiveness and raising client satisfaction because they won’t have to play phone tag or go back and forth over email.

Ensure your billing processes are predictable and transparent

Transparency builds trust and strengthens the client relationship, which is essential when creating a client-centered practice. To deliver a good client experience with regard to billing, you need to explain your firm’s rates up front. You should also set a budget that includes all anticipated fees so your client fully understands their potential financial outlay.

Many clients also prefer to understand their billing status before they receive a surprise in the mail. An online billing portal keeps clients updated so there aren’t any unexpected expenses that can damage your relationship with clients.

You can also improve the client experience by offering a variety of payment options. Many clients enjoy the flexibility of making online payments through credit cards, eChecks, and digital transfer services like ACH. An online portal makes it easy to take these payments while expediting the firm’s receipt of funds — you won’t have to wait months for a check or hound clients for overdue payments.

Embrace legal technology now to improve your firm’s performance in a recession

Your law firm should set a perpetual goal of improving your clients’ experience — regardless of how the market is performing. And one of the easiest ways to increase your clients’ satisfaction is by adding client-centric legal technology.

When the market is tight, law firms may initially question the expense of adding new tools. However, tech tools should be delivering savings in the short and long term. They can reduce manual work, improving employee satisfaction and reducing turnover. They can streamline the intake process so prospects don’t have to wait as long for an initial lawyer contact. And they can ensure clients are always kept up to date about the status of their matters and bills.

Legal technology tools make it easy for clients to work with your law firm — and to share their positive client experience with others.