Payment Plans

What are the benefits of offering a Payment Plan?

For many lawyers, collection is an issue. According to the 2020 Legal Trends Report, law firms achieve a collection rate of 88, which means that they end up missing a total of 12% of bills. You understand that collecting your fees on time ensures proper cash flow and, eventually, a sustainable and successful business, right?
That is why including payment plans in your legal practice can benefit both your clients and your law firm.

Since your client’s financial situation may vary, offering them payment plan options can ease their financial burden, which is a way of fostering a stronger client relationship and even ensuring customer loyalty.

That way, you will not only be providing a flexible, thoughtful form of legal assistance — and thus, excellent client service — but you will also be on the receiving end of the benefits of keeping your clients content: an enhanced, good reputation, a sustainable cash flow, and a proper financial business situation.

Let’s delve a bit into the benefits of adopting payment plans:

• ✅Promoting Accessibility: By implementing flexible payment plans, lawyers can serve a wider range of clients who may not possess solid funds. This inclusivity will not only help you expand your client base but also foster trust and loyalty among clients who appreciate your understanding and helpful approach.
• 💰Enhancing Affordability: This method of payment allows customers to break the overall fee into more manageable instalments, making legal services more affordable. For people with more limited budgets and financial means, this means that they have greater access to legal assistance and, overall, justice.
• 🤝🏻Building Client Relationships: Your relationships with your clients will be stronger if you offer more flexible payment methods. By implementing payment plans, you will show a willingness to work with your clients and accommodate their financial struggles. This gesture demonstrates basic empathy and care for them, leading to improved client satisfaction, referral rates, reviews, and potential clients coming back.
• 💸Minimizing Non-Payment Risks: By securing a payment plan, lawyers reduce the risk of encountering clients who will struggle to pay their legal fees. When you offer them accommodations, you make it easier to manage your cash flow while minimizing the chance of non-payment, which could strain your resources and negatively impact your business’ sustainability.
• 📈Increased Revenue: By having a payment plan, you can ensure that your law firm gets paid on time and without trouble. As stated above, this means minimizing non-payment risks, but also that you spend less time dealing with collections. Since you will also increase affordability and inclusion for clients, you will elevate their experience. This will lead to better reviews and referrals, which in turn will get you more clients, increasing your firm’s revenues and growth.

How can I set up a Payment Plan?

If the pros have convinced you, here are some steps for setting up payment plans for your law firm:

1. Define your Payment Terms and Conditions
   Before anything else, make sure you have previously determined your payment terms and conditions. These will avoid confusion and discussions further up.
   Some things to take into consideration for this step: total fee amounts, duration of your payment plan, possible interest or late fees
2. Assess your Client’s Financial Situations
   If your clients show interest in some alternative payment options, try to assess their financial situation. How? You can request financial information such as income verification or credit checks, thus assessing their ability to eventually fullfill the payment terms. This will allow you to determine whether a payment plan is sustainable and establish fair payment amounts, keeping in mind their financial capabilities.
3. Offer Multiple Payment Options
   Your clients will manifest varying preferences when it comes to payments. Consider offering various payment options, such as monthly instalments, quarterly payments, or a combination of upfront and scheduled payments. You can ease potential payment burdens this way, providing your clients with flexibility and accommodations.
4. Draft a Payment Plan Agreement/Template
   Your clients should sign an agreement before you accept a payment plan. This will help streamline the process of setting up clients on payment plans. Try to include all relevant details, such as — Schedules and due dates (when will you collect your payments?)
   - Payment methods: (will you accept credit cards or cheques? Also, an interesting fact: According to Clio, Law firms that accept payment via credit card get paid 39% faster, and clients increasingly value this payment option).
   - Penalties for missed payments (what happens if a client is late on a payment? (Make sure you check your state’s ethics rules before you decide how you’ll handle possible interest on late payments.)
   Once everything is settled, have your clients sign the agreement to ensure mutual understanding and accountability. Everything needs to be clear.
5. Leverage Technology to Make Payments Processes Easier
   As we have said before, clients increasingly value other payment methods. Implementing a secure and user-friendly (that is, easy to use and understand) online payment system can help make the payment easier for both parties involved. Besides, this option is becoming increasingly popular in the legal field, as it gives users and clients more flexibility and accessibility. Ensure that your payment processing platforms offer automated invoicing, payment reminders, and real-time transaction tracking, which will allow for transparency and convenience.

What do I need for a Payment Plan?

According to MyCase, lawyer payment plan options are much easier to execute with software tools.

Payment software allows for a more manageable financial planning, besides making legal invoicing and payment collection easier.

Some software features that will make the process of payment more easy are:

• Financial Reporting: This tool helps you gain insight into the amount of payment collected vs. billed and the performance and frequency of payments based on all current payment plans.
• Invoicing: With an invoicing feature, you can automatically send out invoice reminders to do the follow-up process and save time for other work that needs attention. According to the 2021 Industry Report, 21% of surveyed legal professionals say their firm saves 6–10 hours a month by using software with invoicing features.
• Online payment options: These make it easier for your clients to pay you. In the legal field, the number of firms that allow clients to pay for their legal services online — with credit cards or other methods — is increasing; thus, by using this feature, your firm will remain competitive (crucial in legal marketing). In fact, according to the previously mentioned report, 77% of surveyed legal professionals stated that their firms use online payment software.

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