“U.S. Economy Faces Long Recovery From Coronavirus Effects, Experts Say”
That is the headline from the Wall Street Journal from June 1, 2020. But for lawyers, that headline is too high-level from which to draw any conclusions.
The more appropriate headline for us lawyers is, “what does the recovery look like for our clients?
(This blog post is focused on consumers, not corporate clients.)
It’s not a big jump in logic to conclude that lower and middle-income clients will be disproportionately negatively affected by COVID-19 than upper-income clients.
Bottom line. Clients will have less money and cash flow to pay for legal services.
NOTE – Get access to our free guide, “5 Steps To Collecting More Cash, Faster”. These steps form the basis of the “Payment Plan Success System” that drove my law firm’s growth.
The Immediate Economic Impact On Our Law Firm
The COVID-19 impact on our law firm (which services lower to middle-income consumers, with criminal, traffic and litigation issues) was felt soon after the shut-down started in March 2020.
Most of our clients (95%) are on payment plans. And many of those clients reached out to us to discuss changes to their payment plans.
We’ve been handling each request on a case-by-case basis. Thankfully, we’ve been able to stretch out payments for every client that made the request.
And as of the date of this post (June 2020), we are seeing those same clients pay us and stick to their revised payment schedule.
The Future Is Going To Be Tough, But That’s The Opportunity
Clients are going to need help with their cash flow. This will impact every lawyer and will impact how lawyers market their services and pricing.
Of course, it’s a given that you should never sell on price. That is a tough business model to scale. So, we all stick by the smart strategy of giving excellent close meetings (that show your true value), so the client will be less price-sensitive to your fees.
However, you can’t get blood from a stone (as the old saying goes, from my law school days). And, while you can (and should) try to keep your fees steady, if your client does not have sufficient cash flow, then your choices are clear.
Choice #1. Lower your fee to close the client. In this case, you’re leaving money on the table.
Choice #2. Keep your fee as-is, i.e. you want payment in full upfront. In this case, you risk the client leaving to go to another lawyer that will be more flexible in fee and payment arrangements.
Or choice #3. Offer a payment plan.
Yes, we all want our full fee upfront before you start work. We’re lawyers, not banks.
In booming times, lowering your fee, or letting a potential client walk, may have been okay. We’ve always had enough clients to keep busy.
But times have changed. Fast.
Adopt Payment Plans Not Only For Client Satisfaction, But To Build A Competitive Advantage
Clients are going to be looking for payment plans. Many are going to demand it. Either you offer payment plans to your clients or other lawyers in your market will.
Yes, there are horror stories about client payment plans. But, as someone that has built the back of his law firm on client payment plans, I can tell you that payment plans are effective. It is possible (and not difficult) to get paid, on time, and without chasing clients for the payments.
To make payment plans right, i.e. get paid without chasing clients for money, you must have a system. If you don’t have a system to handle your payment plans, then don’t offer them.
The reality is, most lawyers do not have a proper system to manage payment plans. But if you do, then you have an excellent opportunity to capitalize on this economic downturn.
You can (and should use) the payment plan as a way to close business. It’s a big differentiator. It will add value to your clients, helping with their cash flow. And, it will help you win out over other lawyers that do not offer payment plans.
That’s how we built our law firm into a leader in our market. Most other lawyers won’t offer payment plans. We do. Our clients love it. And we love it because it helps us grow our practice.
We expect to grow even faster-using payment plans as a way to differentiate our services and win more clients.