Clients care about affordability, and lawyer payment plans prioritize just that. In the 2021 Legal Trends Report, consumers ranked affordability factors—including payment plans—as the most important determinant (aside from positive reviews) for lawyer hireability.
When lawyers offer payment plans—for example, through online payments in Clio Manage—clients can pay on a schedule that works for them. It takes the stress out of the payment process, resulting in faster-paid bills.
How lawyers win by embracing payment plans
Continuously playing phone tag and following up with clients for payments eat up lawyers’ hours. Not to mention missing monthly revenue targets due to unpaid bills and other setbacks stemming from scant payment structures. By introducing and communicating payment plans centered around the client and their experience, law firms can avoid chasing clients for bill payments.
According to the 2021 Legal Trends Report, 81% of consumers prefer to pay their legal fees via a payment plan. Payment plans also make legal services more affordable to clients who would otherwise be unable to pay. If a client can’t pay, they either won’t seek legal services or won’t pay their bill. This holdup means firms leave money on the table and don’t get to help as many clients as they otherwise could. Lawyers have just as much to gain from payment plans as their clients do.
How to start implementing payment plans at your law firm
Know when to offer payment plans. While your law firm has much to benefit from offering payment plans, there may be some situations where payment plans may not be appropriate. Create a process for when to offer payment plans and make sure everyone at your firm understands that process.
Ask your clients about what works best for them. Chances are when clients sit down with you, their adrenaline is high, and stress is looming. A client could hastily agree to pay an amount of money that isn’t possible in one transaction. And yes, this will most certainly hurt your bottom line if you’re planning operations around securing this revenue. One alternative is to ask questions. Find out more about your client and their financial situation. Encouraging stress-free payments of $100 a month is better for your business than the alternative—your team spends hours a week chasing substantial unpaid invoices with little knowledge of when checks will clear.
Create a templated agreement. This agreement will help your client and firm align on the payment plan terms, to avoid any potential confusion and misunderstanding. Clearly state details like when and how you’ll be collecting payments, and how you’ll manage late payments.
Develop a clear system for billing and collecting payments. Ideally, you already have an established billing and collection system at your firm, and you simply have to add payment plans to it. Instead of dealing with paper bills and chasing clients for payments, take advantage of cloud-based practice management software like Clio Manage. Legal software like Clio Manage makes running your firm and collecting payments a lot easier, allows your clients to pay via online payments, and lets you offer automated payment plans.
Offer payment plans that work for your firm. If your alternative payment plans don’t cover monthly costs, suddenly, your clients are without legal help. For a payment plan to work, it has to be mutually beneficial. Understanding your cash flow and knowing what number you need to bring in every month to keep business going is a good place to start. If possible, creating a law firm budget and getting your finances organized before introducing payment plans will benefit you in the long run.
Understanding the benefits of payment plans and thinking critically about how they might work at your firm is half the battle. Now, you can learn more about setting up payment plans.