[Clarification: Although this post described LexCharge as having “spun off” from Rocket Matter, I did not mean to suggest that the company was formed within Rocket Matter and then sold off in some way. Rocket Matter’s CEO Larry Port and LexCharge’s CEO Jeff Shavitz together conceived of the company and it has been a fully separate corporation from the start, with different management and ownership structures. I regret any confusion my wording may have caused. I have changed the original headline, “Rocket Matter Spins Off Its Own Payment Processing Company for Credit Cards,” to the one you now see, and also clarified the text below.]
Accepting credit card payments is becoming increasingly common among solo and small-firm lawyers. Contributing to this trend are credit card processing companies that specialize in handling payments for lawyers and therefore in understanding the ethical and bar requirements for processing payments.
The most prominent of these companies is LawPay, which boasts on its website that 46 state bars and 50 local bars exclusively approve it as the payment processing solution for their members. LawPay also has integration partnerships with a number of the leading law practice management platforms. Other payment processors serving law firms include Lex/Actum and LawCharge.
Now, one practice management company is taking a different route. Larry Port, CEO of Rocket Matter, has helped launch a new payment processing company for law firms, called LexCharge. LexCharge is an entirely separate company from Rocket Matter, with its own CEO, Jeff Shavitz. Port was instrumental in forming LexCharge and he has an untitled position as part of the LexCharge management team.
LexCharge will be fully integrated with Rocket Matter Payments, Rocket Matter’s feature that automates collection of fees by credit card and e-check. Rocket Matter users will have to have a separate LexCharge account in order to accept payments through LexCharge.
But lawyers need not be Rocket Matter customers to use LexCharge. They can set up accounts and accept payments directly through LexCharge. In addition, LexCharge hopes to integrate with other partners, including other practice management platforms, and says it will offer them a more competitive revenue sharing arrangement than its competitors.
Shavitz is a veteran of the credit card processing industry. In 2002, he cofounded a national credit card processing company, Charge Card Systems, which he sold in 2012 to Card Connect, owned by private equity firm FTV Capital. He stayed with Card Connect for another two years as a consultant. He has also written a number of business books, one of which, Size Doesn’t Matter — Why Small Business is Big Business, was at one point the top-ranked book on Amazon in the business and entrepreneurship categories.
In a recent interview, Shavitz said that the biggest advantage LexCharge offers lawyers over its competitors is better pricing.
“There are a lot of hidden fees and bullshit fees in our industry,” Shavitz said. “It’s like trying to read a telephone bill. What we’ve been doing for all our clients is a simple cost comparison. We can show you’re paying X dollars in fees with their company and we’ll save you 20 percent.”
That 20 percent is just an example. In fact, LexCharge does not state its fees on its website. This is in contrast to LawPay, which offers three plans, each with its own subscription and fee schedule. (You can see these fees on LawPay by clicking the New Account button on the homepage.)
Shavitz prefers to work individually with each firm to customize a plan. That is how he saves them money on processing and transaction fees, he said.
“If you take a B2B transaction, there are ways to lower the rate from 3 percent to 2 percent by getting certain information,” Shavitz explained. “What we care about is what’s their effective rate. They might say your rate is 1.5 percent, but the effective rate is 3.5 percent. We focus on the effective rate.”
(Shavitz wrote about all this in an article on Law Technology Today, The Hidden Fees of Credit Card Processing.)
Another advantage his company offers, Shavitz said, is faster funding. The company says it will have the funds in your account within 12 hours of a payment.
“Some providers won’t deposit the funds for 2-3 days,” he said. “We guarantee that if the payment is settled by 6 p.m. Eastern time, we’ll have the money in your account by the next morning.”
As for why Rocket Matter decided to spin off its own processing company rather than continue working with existing ones, Shavitz said it was driven in part by concern that some of the processing companies did not fully understand the nuances of the rules governing lawyers’ trust accounts. There was also concern that other companies were not paying a fair share of revenue back to their integration partners.
Both Rocket Matter’s Larry Port and Shavitz thought they could build a company that would have expertise in handling lawyers’ accounts, that would offer customers better rates, and that would offer integration partners better revenue share.
But Shavitz, who also works as a coach to small businesses and entrepreneurs, said that the part of the business he likes best is helping lawyers grow their law practices.
“This is all about how to grow a law practice,” Shavitz said. “For me, the exciting part is helping law firms save on expenses and grow their revenue.”