A new world of client behavior is emerging, and law firms are finding that they must keep up with the latest preferences to remain competitive. With the collapse of Silicon Valley banks that led to a global financial crisis and a possible recession around the corner, clients are looking for innovative payment plans that will help them.
Law firms that have implemented these payment plans see a boost in revenue. Recent studies from the American Bar Association confirm that flexible payment plans increase law firm profitability by 10% and payment collection rates by 32%. It is a lucrative strategy because online payments and payment plans reduce the size of hefty fees. From a client perspective, this also offers them flexibility and control in scheduling these payments.
Besides seeking flexibility and control in scheduled payments, the payment method of choice is shifting. An Accenture survey revealed that digital wallets are used 48% more than credit cards. Digital wallets outperform credit cards because they allow clients to make quick payments without entering their credit card information on the website. Modern clients want an all-inclusive system that provides convenience.
Payment plans are helpful for the clients, and law firms benefit too. We explore some of these benefits below:
- Increases your client base and boosts revenue with payment plans.
Instead of requiring a lump sum payment of $50,000 for your fee, clients can spread out payments over ten months of $5,000 each. This makes your law firm more accessible and attracts more clients, leading to increased legal services renewal.
- Stay a step ahead of your competitors
Today, clients expect firms to provide payment plans for all types of transactions. Firms that fail to offer payment plans risk losing clients to competitors who do. Therefore, payment plans have become a basic necessity for firms rather than just an optional feature.
- Clients Spend More
Clients using payment plans may be more likely to spend more money than they would if they had to pay upfront. This is because payment plans give clients more flexibility with their cash flow. Using payment plans may help increase clients spending over time.
- Controlled cashflow
By offering payment plans, you can have a more controlled cash flow, similar to a recurring revenue business model. This will help you plan for slower stretches, have steady revenue, and provide a sense of security.
- Increased chances for providing supplementary legal services
By offering payment plans to your clients, you can persuade them to purchase additional legal services throughout the plan. Clients already on your payment plans are more inclined to obtain supplementary legal services from firms that offer them. Therefore, the focus for most firms should be on how to provide payment plans effectively rather than whether or why to do so.
Are payment plans the right way to go for law firms? Accepting online payments is relatively safe as long as law firms comply with ethical and legal regulations. However, law firms may need help to distinguish between client and third-party funds and their own. To ensure compliance with payment regulations, we recommended using legal-specific software like CoreMatter to help manage all financial transactions in a systemized, compliant, and orderly manner.
With CoreMatter, you can also reduce the time spent on administrative tasks such as chasing clients for payments, even if they are late. This is possible because the system allows you to set up automatic reminders to request payment from the client on a predetermined schedule.
Before setting up payment plans at your law firm, it’s crucial to understand your client’s financial situation and preferences. It’s best to have an open conversation with them to gauge their interest in a payment plan. This way, you can ensure it’s a valuable option for them.
Additionally, evaluating if your law firm can remain financially stable with payment plans is crucial. Offering extended payment periods with lower installments may challenge sustaining your firm’s financial well-being. Therefore, it is essential to consider your law firm’s financial status when creating payment plans.
In a nutshell
When adequately evaluated and implemented, payment plans can help your law firm improve client relationships and boost overall revenue. Payment plans can be a valuable tool for law firms to enhance their financial stability and make their services more accessible to clients.
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