Lawyer Payment Plans: How and Why to Implement Them in Your Firm
When law firms provide payment plan options, it can make legal assistance more affordable, expand the firm’s client base, and even help lawyers get paid. According to the MyCase 2021 Industry Report, which surveyed over 2,000 legal professionals, 73% of respondents stated that getting paid was a challenge for their firms.
In this article, we will go over what a lawyer payment plan looks like, its potential benefits, and what you should consider when creating one.
Can Lawyers Accept Payment Plans?
Law firms can accept different types of payment plans. Payment plans allow clients to pay for legal services through installments instead of one upfront sum. Some law firms have specific payment plan options (for example, charging half the amount upfront and the other half later), while others are willing to customize a plan with their client. It all depends on the firm.
With the right tools, payment plans can reduce overhead for law firms and help them expand their client base.
How Do Lawyer Payment Plans Work?
The most effective lawyer payment plans are those tailored to your firm and clients. When creating and discussing payment plan options, there are several things to consider:
- Determine how to bill and accept payments
As the foundation of your payment plan, set up a system for the entire process of billing clients and accepting payments.
Begin by answering the following questions:
- Will you have an employee manually create and send out invoices and invoice reminders?
- Will you send bills in snail mail or via email? Will you accept credit cards? Will you charge a retainer fee?
- How will you keep track of multiple payment plans and client balances?
- Will you use a tool to automatically populate, send out, and track invoices for you? (See the tools section below)
Answering these questions will help you build a system and templates for the types of payment plans your firm will accept.
- Come to an agreement with the client
Before finalizing a payment plan with the client, ensure that they can afford to pay the determined installments and that it works for your firm’s payment needs. Engage in an upfront conversation with the potential client during consultations to come to an equal understanding. Have a payment plan template in place beforehand to streamline this process. - Confirm with a signed agreement
Once you and the client are in sync, have them sign a payment agreement confirming that they can pay according to the determined payment plan. - What to do if a client doesn’t pay on time
Will you charge interest or late fees if a client doesn’t pay on time? Will there be a grace period allowed? Be sure to check with the bar association in your state—they may have ethics rules on this matter.
Benefits of Offering Payment Plans in Your Law Firm
Including lawyer payment plan options as part of your practice can benefit your client and law firm.
For clients, payment plans provide an excellent form of legal assistance, easing their financial burden. Your firm can also set up automated payment reminders so your client can efficiently and conveniently pay their bill.
For law firms, payment plans can increase revenue. Having a plan in place can ensure that firms get paid more frequently and on time—spending less time dealing with collections. It can also enable firms to take on more clients who might not otherwise be able to afford their legal services. In addition, the flexibility of firm payments may elevate the client experience. This can lead to better online reviews and more referrals—leading to more business.
Essential Tools for a Payment Plan
Lawyer payment plan options are much easier to execute and benefit from with software tools. Payment software makes legal invoicing, payment tracking and collection, and financial planning more manageable. Here are a few specific payment software features that will improve the process of running your firm’s finances:
- Financial reporting
Help your firm make the best final decisions based on data. With this tool, you can gain insight into the amount of payment collected vs. billed and the performance and frequency of payments based on all current payment plans. - Invoicing
Auto-populate invoices based on billable work performed to eliminate the last-minute scramble of tracking your work. This feature can automatically send out invoice reminders to streamline the follow-up process and save your team time from non-billable admin work. According to the 2021 Industry Report, 21% of surveyed legal professionals say their firm saves 6-10 hours a month using software with invoicing features. - Online payment options
Online payment options make it easier for your clients to pay you. Adopting these payment methods will keep your firm competitive. According to the 2021 Industry Report, 77% of surveyed legal professionals stated that their firms use online payment processing software. - QuickBooks integration
This integration allows your firm to track time, billing, and expense entries while keeping all information in one place.
MyCase and LawPay have recently joined forces to create the most comprehensive legal practice management and payments platform. Streamline your billing and collections with payment software used by more than 50,000 law firms.
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