In the past most established law firms were able to predict cash flow based largely on an assessment of past performance combined with an assessment of incoming work. That approach has worked for a long time.
COVID-19 has changed that forever.
Future income has never been more uncertain making forward planning extremely difficult. The drastic impact of the shutdown of society for health reasons is a risk few businesses had considered.
Court closures, the property market slowdowns, rent payments in arrears and evictions under moratoria and even commercial and personal solvency itself have been thrown into disarray.
Established law is often being changed or suspended by announcement with significant consequences. We now know that no client is too big to fail or have a cash flow crisis or in fact, just stop paying debts or rentals.
These threats provide law firms with a great opportunity for transformation.
What can be done?
LEAP (through its wholly owned subsidiary RapidPay – Australian Financial Services Licence 485573) provides you with the tools to reduce risks and transform your firm into one with more certain predictable revenue.
You possibly have payment plans in place today for some clients, probably for collecting (potential) bad debts, but they can be difficult and time consuming to manage because they are usually only implemented too late in the process.
An instalment plan through RapidPay and LEAP allows you to arrange for a client to make regular fortnightly or monthly payments, using a credit card or bank account, directly into the correct matter for the correct client and into either your Trust or Office bank account, for an agreed affordable amount.
Instead of requiring large upfront deposits, managing the dangers of bill shock, and spending time collecting debt, you can set up a certain and affordable method for funding matters. The amount can of course be adjusted at any time, but we know that most people today prefer the predictability of regular payments.
You might want to:
LEAP can help you do this.
Using proactive instalment plans will not only help you to forecast cash flow, but it will also provide you with a huge competitive advantage against firms demanding large upfront trust deposits.
Collecting bad debts is one of the most unpleasant aspects of legal practice. Lawyers do not want to do it and staff are often ineffective. The traditional debt collection process accentuates the problem, rather than providing a solution.
Also, an inability to pay is often responded to with accusations of poor service and incompetent legal advice which is usually without foundation and demoralising for all lawyers.
Instead, you can negotiate and create an instalment plan so that instead of argument, frustration and litigation, they all convert their debt into affordable but predictable regular payments.
Having paralegals involved in chasing clients for payment is costly and a poor use of their capabilities, instalment plans will automate the collection, and provide your staff with a method that is very hard for a debtor to resist.
With this approach you can almost eliminate the traditional conflict driven approach to collecting bad debts. It will be a relief for your clients in arrears and for your debt collection staff and the lawyers who did the work.
Instalment plans are easy to set up. You create the plan, an email is sent to the client inviting them to agree, and credit card or bank account details are then provided to RapidPay in a completely secure environment where details are protected.
RapidPay includes instalment plan Management for you to manage all your established instalment plans.
Here you can:
You will have complete visibility over the future planned income and your financial managers will be able to predict your revenue and cash flow far more accurately than they can now.
Best of all, if an instalment fails, RapidPay will automatically retry to process the instalment 4 business days later.
This will provide greater certainty and forward planning capabilities; create better client relationships, and will reduce a prime stress of running a law firm, which is meeting payroll.
It will eliminate the personal stress and uncertainty felt by so many lawyers around getting paid and allow lawyers to focus on doing legal work.
Written by Richard Hugo-Hamman, Executive Chairman of LEAP Legal Software