In today’s digital era, the legal industry faces the critical challenge of managing financial transactions in a way that is both secure and compliant with regulatory standards. At the intersection of these needs lies the importance of trust compliance, a term that encapsulates the necessity for law firms to handle their financial operations with transparency, accountability, and adherence to legal requirements. One company standing out for its commitment to this principle is LexActum, a payment processing service tailored exclusively for the legal industry.

LexActum understands the intricacies of legal payments and billing and has built its services around the unique needs of law firms. From ensuring the separation of trust and operating accounts to offering secure and convenient payment processing, LexActum is fully committed to upholding the highest standards of trust compliance. This commitment is further cemented by its full compliance with IOLTA laws, an essential factor for any law firm considering a payment processing partner.

In the following sections, we’ll delve deeper into the importance of trust compliance, explore the specific ways in which LexActum meets these requirements, and discuss how partnering with LexActum can benefit your law firm.

Understanding the Importance of Trust and Compliance

Trust compliance plays a crucial role in the legal profession. The management of clients’ funds, whether it’s a settlement check, advance payment for court costs, or other expenses, is a routine part of the law practice. In managing these funds, law firms must adhere to stringent rules and regulations to maintain the trust and confidence of their clients and the judicial system. This is where trust compliance comes in.

At the heart of trust compliance is the principle that client funds are to be kept separate from the law firm’s own funds. This ensures that client money is protected, and there’s no risk of it being used inadvertently or deliberately for the firm’s expenses. The failure to separate these funds appropriately can lead to severe consequences, including disciplinary action from the state bar, loss of license to practice, and even legal action from clients.

In many jurisdictions, the Interest on Lawyers’ Trust Accounts (IOLTA) program is a part of trust compliance. Attorneys must place funds that are too small in amount or held too briefly to earn interest for the client in a pooled IOLTA account. The interest earned from these pooled accounts is then used to fund non-profit legal service organizations, increasing access to justice for individuals and families living in poverty​¹.

However, trust compliance does not end with the correct separation of funds. Attorneys must also abide by the rules regarding the reporting and monitoring of these accounts. In California, for example, any changes to an IOLTA account must be reported to the State Bar within 30 days. It’s also the responsibility of the attorney to comply with account terms and conditions and to monitor accounts for irregularities​².

Furthermore, trust compliance extends to tax considerations. There are no tax consequences to the attorney or the client for the interest or dividend remitted to the State Bar from an IOLTA account that bears the State Bar’s taxpayer identification number​². This ensures that the attorney isn’t burdened with additional tax obligations from managing these accounts, and the client’s funds are not diminished by tax deductions.

In sum, trust compliance is a vital aspect of the legal profession that promotes transparency, accountability, and the ethical practice of law. It ensures the proper management of client funds, the integrity of the legal profession, and access to justice for those who need it most. In the following section, we’ll look at how payment processors can help law firms meet these critical trust compliance requirements.

The Role of Payment Processing in Trust Compliance

In the context of trust compliance, payment processing plays a pivotal role. It’s not just about transferring funds; it’s about ensuring that the transfer of funds complies with all legal and ethical requirements. This includes the handling of client funds, which are often held in trust accounts, and the separation of those funds from the law firm’s operating accounts. A payment processor like LexActum, which is fully compliant with IOLTA laws and understands the intricacies of legal payments and billing, can provide invaluable support in this regard.

A key component of trust compliance is the Interest on Lawyers’ Trust Accounts (IOLTA) program, in which attorneys hold client funds that are too small in amount or held too briefly to earn interest for the client in pooled accounts. The interest earned from these pooled IOLTA accounts then benefits non-profit legal service organizations​¹. As part of this process, attorneys need to open IOLTA accounts at approved financial institutions and report any changes to their IOLTA account within 30 days​². Therefore, having a reliable payment processing solution that can easily handle these requirements and integrate with the relevant financial institutions is crucial.

LexActum: A Premier Choice for Law Firms

Payment processing plays an integral role in trust compliance, enabling law firms to manage client funds efficiently and securely. By offering secure and convenient payment solutions, handling chargebacks, assisting with compliance, reducing liability, and streamlining processes, payment processors can be instrumental in helping law firms meet their trust compliance obligations.

LexActum was founded with the intention of addressing the unique needs of the legal industry when it comes to payment processing. LexActum makes separation of operating and trust accounts easy for law firms and all of LexActum’s solutions include separation of operating and trust accounts. They offer a range of services, including billing and invoicing, third-party accounting and invoicing software integrations, and chargeback handling. Their services are designed with an understanding of the intricacies of legal payments and billing. LexActum provides fully compliant solutions for processing credit and debit cards, as well as ACH payments, offering a secure, integrated, and efficient means of handling transactions for law firms​.

Their pricing model is designed to be simple and transparent, with options that allow clients to choose the service level that best fits their needs. One of their popular plans, for instance, costs $29 per month and includes processing volume up to $10,000 per month, with a $0.25 per transaction fee and a $2.00 ACH fee. This plan includes the separation of operating and trust accounts, a virtual terminal, a payment page for your website, and accepts all card types.

LexActum also offers a cloud-based system that allows law firms to process payments, set up recurring payments, and run reports without storing client payment information. This feature helps reduce a firm’s liability and improves the overall security of the payment processing system. Furthermore, LexActum provides complimentary compliance assistance, helping clients obtain and maintain PCI compliance, thereby ensuring the highest level of security for all transactions​.

Their dedication to client satisfaction is evident in their policy of not requiring contracts and never charging cancellation fees, as well as their 24/7 support and industry-leading rates. With their secure and cost-effective solution, LexActum has made it easier for law firms to streamline their accounts receivable and improve their payment processing practices.

In Summary

In the modern era, maintaining trust compliance while efficiently processing payments can be a complex challenge for law firms. The need for strict adherence to IOLTA rules and regulations, coupled with the convenience and demand for electronic payment methods, has created a unique niche that requires specialized solutions.

LexActum, with its thorough understanding of the legal industry’s needs, has proven to be a trusted partner in this space. Their secure and transparent payment processing solutions help law firms maintain trust compliance, streamline operations, and improve client satisfaction. By offering features such as easy separation of operating and trust accounts, seamless integrations with third-party accounting software, and dedicated support for chargebacks, LexActum caters to the specific demands of law firms.

Moreover, the company’s commitment to transparency, as demonstrated by its clear pricing and non-binding contracts, sets it apart in an industry often characterized by hidden fees and complex pricing structures. The combination of these features, along with LexActum’s dedication to security and compliance, makes it an ideal choice for law firms looking for a reliable and efficient payment processing solution.

In conclusion, as the legal industry continues to evolve and adapt to the digital age, having a dedicated payment processing solution like LexActum can be a valuable asset for any law firm. Such a solution not only simplifies operations but also helps maintain trust compliance, ultimately contributing to a firm’s success and growth.

Sources:
¹ IOLTA Guidelines for Attorneys (ca.gov)
² Client Trust Accounts and IOLTA (ca.gov)