One of the top business struggles lawyers face is getting 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. That’s why offering your clients multiple payment options, including credit cards, is one of the keys to your firm’s financial success.
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.
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 Writing checks is outdated, and clients prefer to avoid the hassle of coming into an office to pay in person.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.
Billable Rates by Practice Area and Geographic Region
Another way to increase profitability is by charging more for your services. Frequently, lawyers don’t always determine the appropriate value for their services or fail to adjust rates to keep up with changing economic times. Getting stuck in a billable rate rut is all too common and happens even to the best of us, partly because it’s difficult to determine what other lawyers in your area are charging for similar services.
That’s where doing your research comes in! By asking colleagues, mentors, and other legal professionals in your area how much they charge, you can compare your law firm’s billable rates for different types of cases with other legal professionals in your geographic region who handle similar cases. If your practice area is in high demand, you might even be able to raise your rates higher to accommodate demand.
You might consider looking at data on employment via the Bureau of Labor Statistics, which shares the average salaries for lawyers across the country. The mean annual wage for lawyers in the U.S. was $153,630 as of May 2021. Some state bar associations also publish industry trends on salary, breaking those down further by law firm type and practice areas.
How does your firm’s rate compare to the rate charged by other firms in your area? If it’s on the low end, then maybe it’s time to revisit your law firm’s billable rates and, in turn, increase your law firm’s profitability!
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.
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