Should My Firm Offer Legal Fee Financing or Payment Plans?


As our economy enters a period of financial stress, consumers are leaning toward options that provide flexibility in purchases. Larger-priced items become a deterrent as families and businesses struggle to make ends meet. We all need financial relief while still obtaining the services that matter the most to us.

 “Modern consumers demand convenience, security, and flexibility when paying for their goods and services, and like it or not; legal clients are no different.” The American Bar Association (ABA) confirmed legal clients are significantly impacted by the economic woes the world is experiencing. 

Furthermore, the ABA admonishes, “[i]f your firm fails to provide the payment options that modern clients want, you risk falling short of client expectations. Poor client experience can snowball into a whole host of problems for your firm, including poor client retention, little to no client referrals, and ultimately hurting your law firm’s profitability.”

The legal field is a sector of life that provides necessary services and expertise that is not always readily able to be reduced, like your neighborhood grocery store’s discount sale. So, what do attorneys do in these situations? What is the best strategy for providing necessary services to the public and ensuring equal access to legal services without harming your practice? Establishing an alternative payment plan structure may be the answer for you and your clients.

Why Your Firm Needs Multiple Payment Methods.

Having multiple payment methods available for your firm is essential for several compelling reasons:

Having multiple payment plan options is a prudent strategy that aligns with modern client expectations and the changing landscape of financial transactions. 

Legal fee financing is a financial arrangement in which a third-party entity, often a specialized financing company or lender, provides financial assistance to individuals or businesses to cover their legal expenses. This assistance allows clients to access legal services and representation without paying the total cost of legal fees upfront. Instead, clients can spread the payment over time, typically in installments.

In legal fee financing, the financing entity may charge interest or fees for extending the credit, which can vary depending on the terms of the agreement. The law firm receives the entire payment upfront, while the client can make installments to the third-party creditor.

This approach helps individuals and businesses afford legal services when they might not have the immediate funds to cover legal costs, making it an attractive option for those facing legal issues but lacking the financial resources to address them immediately. 

Legal fee financing and payment plans are two distinct strategies law firms can employ to facilitate access to legal services for their clients. Legal fee financing involves third-party financiers who cover the entirety or a portion of a client’s legal fees. This arrangement often comes with interest rates and specific repayment terms.

On the other hand, payment plans are agreements directly between the client and the law firm. Clients pay their legal fees over a predetermined period, typically in installments. Choosing this method also provides an opportunity for higher client satisfaction and ratings because offering the payment plan directly gives clients a message of empathy and care.

Choosing between these options hinges on several factors. 

Ultimately, the choice between legal fee financing and payment plans should align with the firm’s long-term growth objectives and client satisfaction.

How to Determine if Alternative Payment Arrangements Are Right for Your Firm

Determining if alternative payment arrangements suit your firm involves carefully assessing various factors to ensure they align with your firm’s goals and client base.  

Balancing client accessibility with financial sustainability is paramount. Determine your firm’s and client’s needs. Here are some steps to help you make an informed decision: 

The Benefits of Offering Alternative Payment Arrangements

Offering alternative payment arrangements can provide several significant advantages for law firms. Alternative payment arrangements can be especially beneficial when legal matters are complex, time-consuming, or involve substantial legal fees, as they ease the financial burden on clients and enable them to secure legal representation when needed.

These arrangements cater to a diverse client base and enhance the accessibility of legal services, ultimately contributing to the firm’s success. Here are some key advantages:

Offering flexibility in payment arrangements demonstrates your commitment to client-centric solutions. This can build a positive reputation in the legal community and among clients. 

Implementing Alternative Payment Arrangements

Implementing alternative payment arrangements in your law firm is a strategic move that can make a difference in your law firm’s collection. While we discussed the available payment plan options, their benefits, differences, and overall impact within a legal firm, the most crucial factor to consider is having the right legal billing management software to facilitate different payment collection capabilities.

Gain a Competitive Edge

Offering alternative payment options gives your firm a competitive edge in a rapidly evolving legal landscape. Alternative payment methods stabilize your cash flow, provide financial flexibility to clients, and mitigate risks associated with relying solely on traditional fee structures. By aligning with ethical principles of ensuring access to justice, these arrangements bolster your firm’s reputation and position it as a forward-thinking and adaptable player in the legal market, paving the way for long-term success.


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National Law Review, Volume XIII, Number 262