How Lawyers Get Paid
Law firm profitability depends on receiving prompt payment from clients. When clients fail to pay their legal bills, it can be incredibly frustrating, especially as you’re working towards closing your books for the year. After working hard on their behalf, you expect to be compensated for your efforts. However, if your firm doesn’t provide clients with multiple payment options, your firm is likely struggling to collect the legal fees owed.
Clients avoid paying legal bills for any number of reasons. Some may not have sufficient funds, and other times they may require more payment flexibility or a more convenient way to render payment. Today’s legal clients expect to have many payment options available, and if your firm doesn’t provide them with a choice, they will likely have difficulty paying legal bills.
When the technology used by your firm provides clients with payment convenience and flexibility, lawyers in your firm can spend time focusing on representing clients and less time trying to collect outstanding legal fees, resulting in increased profitability.
Law Firm Revenue During the Pandemic
Law firms, like most businesses, were negatively impacted by the pandemic’s effects. In March of 2020, at the height of the pandemic, the world came to a standstill, and consumer spending dropped to a near halt. Law firm revenues declined rapidly in early 2020, but increased over time in line with the economy’s recovery overall.
We observed a significant dip in payments volume in the spring of 2020, at the onset of the pandemic. However, law firm payments revenue gradually increased throughout 2021, with a full recovery towards the end of the year. In 2022, growth exceeded pre-pandemic heights and showed no slowing. In other words, all signs point to a full recovery. That’s great news for legal professionals!
Collection Rates for Legal Professionals Using Online Payments
In the age of Venmo, PayPal, and Square, your clients expect the convenience of paying for goods and services online. Writing checks is outdated, and clients prefer to avoid the hassle of coming into an office to pay in person.
Our data shows the amounts collected by customers who used online payments in 2021 compared to those collected by customers who don’t yet collect online payments. Notably, the collection rates for customers who accepted online payments were nearly 10% higher than those who didn’t.
Payment Timeframes
Streamlined billing practices are one of the cornerstones of a successful law firm. More likely than not, you know how important it is and have taken steps to reduce inefficiencies in your law firm’s billing processes, but you know that you could - and should - be doing more.
One of the best ways to streamline a billing process is to provide clients multiple ways to pay invoices. When you provide your clients with flexibility, including the ability to pay by credit card and ACH, your firm will get paid much more quickly.
How much faster? According to 2021 data, customers who accepted online payments received them 32% faster than those who relied on traditional methods.
Conclusion
Your law firm needs to focus on its bottom line to succeed in a competitive market, especially as the end of the year nears. Fortunately, there are technologies available that make it possible to streamline your firm’s billing and payment processes and increase profits.
Content originally written by Nicole Black, Legal Technology Evangelist for MyCase.
Special offer for ABA Members: enroll with LawPay by December 31, and you’ll get the additional perk of no monthly fees for 3 months, plus a $100 Visa gift card! Get started >>
This content is advertising.
