You want more customers, but they cannot afford your legal services. What do you do?
Many attorneys face this challenge. Legal costs are expensive without a doubt. There are only several things that can happen. First, your customers find whatever means to pay your legal costs. Second, they just never come back. Third, they shop around for an attorney to find cheaper costs.
How can you prevent losing customers by high legal fees?
First, you can work on retainers. Many attorneys work on retainers. These are the issues you face in working with retainers. Let’s assume the cost of your legal services are $2,000. You request 30% upfront which is $600. Now, you have just created an accounts receivable. Now, they owe you $1,400 and you must create a billing and invoicing system. Some clients will pay on time and others will pay late. This affects your cash flow. Other attorneys work on results. They will only charge based on the results. Now, you are working literally for free in hopes to win their case or deliver results to get paid 20% to 30% of any outstanding fee you collect. Last, some customers pay with their credit cards, and they go into deep debt. While paying with a credit card is not a bad option, most consumers will tap out their cards and not have a credit limit available to them. Worst, they will only make their minimum payment and be in debt from 3 to 10 years.
What is an alternative?
Prior to 2018, buy now pay later was only available for retailers or businesses that sold a tangible product. Today, attorneys can enroll in a buy now pay later program and offer financing options to their clients.
How does this work?
Simple. Let’s assume you charge $2,000; your client will have 4 months to pay with 0% interest. Their payment would be $500 per month for the next 4 months. Your law firm receives the $2,000 minus any costs within 2 to 3 business days. Your cost may be up to 5%, which is $100. It’s better to receive $1,900 than having to collect 30% up front and then having outstanding collections with your clients. This improves cash flow for your law firm.
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