Tips for Maintaining a Profitable Legal Practice with Low-Income Clients
Introduction
Most attorneys begin their professional journey inspired and motivated to help make justice equally available to all. As your law firm or practice grows, you may find yourself struggling to keep this ethical aspiration while trying to make your law practice profitable.
Remember that when you serve low-income clients, you are growing your reputation in the community and your potential for references made to family and friends of the individuals you help. After a successful resolution of their legal issue, you basically get free advertising when your clients share their great experience with everyone they know and even in online reviews (which gives your website an SEO boost too).
The following tips will help you make the most of all your legal leads and establish valuable legal services to fit the budget of even your low-income clients.
Build a Sustainable Business Model
One of the most important steps to maintaining a profitable legal practice for low-income clients is to build a sustainable business model. There are many steps you can take to accomplish this, including:
- Outline the costs in easy to understand terms
- Establish value
- Establish a sliding scale fee structure
- Provide alternative fee arrangements
- Offer a flexible range of services
- Make it easy to get paid
- Streamline administrative processes; and
- Incentivize on-time payments
Outline Costs in Easy to Understand Terms
Most individuals or potential clients don’t have any idea about the amount of time and effort that is needed to win a legal case. Without knowing this, many potential clients will be prone to speculation and misconceptions about where their money is going.
Be sure to use simple, layman’s terms when you meet with your client to discuss any billing issues, or include an explanation in your emailed or printed bills. When you’re transparent in this area of your practice, it helps boost your word-of-mouth reputation. Being up front and clear about billing issues and costs may even cause clients to recommend you to others for that reason alone.
Many potential clients have probably heard stories about lawyers who sent bills to get money out of their clients for services they either did not provide or that were not actually necessary. People who are not lawyers may also not understand the necessity for you to research issues related to their case. So be sure to answer your clients’ billing questions openly. If your client asks about a charge for research, be prepared to show what was researched and how that was necessary to win their case.
The following are examples of billing practices that may raise red flags to clients and courts about billing practices:
- Block billing: Block billing occurs when a lawyer bills one block of time for multiple services.
- High minimum billing times: This occurs when a lawyer sets a high minimum time for any client interaction, such as billing a 30 minute minimum for a 5 minute phone conversation.
- Repeated entries: Repeated entries for the same amount of time, such as research for 2 hours multiple times.
- Billing for office overhead costs: Office overhead costs may include utilities, such as phone or fax.
Always do your best to make your clients feel comfortable enough that they can raise any billing questions they may have. Keep a detailed log with any items included on your client’s bill so that, when they do ask about a particular charge, you’re prepared to explain what was included.
If possible, make an outline of all the services you provide and the associated costs for each as well as the fact that these may vary depending on the case and the type of work done.
Establish Value
When you take time to explain the work behind your billing, be sure to emphasize the worth of that work in terms of advancing your client’s case. This is especially important for work that your client may perceive as small, administrative, or not directly related to their case but that you know is essential for their case to be successful.
Focus on the rewards that may be gained and the inconveniences they will avoid. For example, many inconveniences are avoided by mobile connectivity and notifications. Clients appreciate when you explain that what may seem like a bill-padding activity or waste of time to them, such as organizing documents when preparing for court, makes you both appear to be and actually be more prepared. Help them understand that it also gives you the ability to easily answer questions from the court as well as provide any documents the court requests.
Appearing more professional also makes any arguments you present on behalf of your client seem more professional and convincing. All of these results stem from what may seem like mundane tasks, but these help increase your client’s chances of success in court.
Establish a Sliding-Scale Fee Structure
When you’re setting up your practice, it’s important to know who your preferred or target clientele are. In order to do this, you must know the details surrounding their employment and income, which can help you estimate their ability to pay your legal fees.
You can also research the pricing and rates currently being charged for services offered by your local competition. This can help you set up affordable and competitive pricing for your area.
A sliding-scale fee structure adjusts the cost of services based on your client’s income. This scale may also be based on their household income and family size.
With this kind of structure, the higher a client’s income, the more they will pay. The lower the client’s income, the less they will pay.
Provide Alternative Fee Arrangements
Another way you can assist low income clients is by using an alternative fee arrangement. This is any type of fee arrangement where a client pays you something other than the traditionally charged hourly rate for the legal work you perform.
With this type of fee arrangement, you are paid for the value derived from your legal services instead of based on the amount of time it takes for you to complete those legal services.
Examples of alternative fee arrangements include:
- A portfolio
- A hard cap
- Phased, or budget-based billing
- Contingency fees
- Blended rates
A portfolio is a lump sum that is paid for legal services that cover a large body of legal work. This may be paid in increments or all at once. For example, if there is a constant need for a certain type of contract. In this situation, a lump sum may be paid for all of the legal services that related to those contracts in a given year.
With a hard cap, fees are billed at an hourly negotiated rate, which provides that the client will pay up to but not more than a set number. With this fee arrangement, your law firm will absorb the risk of loss.
Phased, or budget-based billing, can be used to divide large transactions or litigation into phases. The parties would then agree upon the budget for each phase.
If a contingency fee is charged, your law firm will receive a set percentage of the client’s recovery. With this type of fee arrangement, the client’s interests and your interests are closely aligned because you both benefit from an award to the client.
A blended rate is a rate that is blended between the rates for associates and partners and is charged to the client for all of the work that is performed by your law firm. This rate may be used in any type of arrangement that bills using an hourly rate.
Offer a Flexible Range of Services
By unbundling legal services, you can provide clients with greater flexibility in their ability to pay their legal fees. If possible, offer separate, high-value services that your clients can choose from based on their means and budget.
By taking a client’s case one step at a time, the cost will be less intimidating to low-income clients who may have thought that pursuing a legal claim would drain their finances or drive them into debt.
For example, it may be possible for you to charge a small, flat rate to clients for help with filling out claims they can file themselves, such as claims in small claims court. You can provide them with the necessary advice to help them win their case at a cost they can afford.
Make it Easy to Get Paid
Providing multiple types of payment options can make your legal services more attractive to clients who do not have a lot of extra money at their disposal. It’s helpful to accept credit card payments online or mobile app payments instead of checks.
It can also be helpful to offer a flexible payment plan or extend credit when possible. You may not want to take the risk of extending credit, but this could allow your clients to make smaller payments over time.
Streamline Administrative Processes
One important step for maintaining a profitable legal practice for all types of clients is to streamline administrative processes so extra time is not spent on unnecessary issues. It’s important for your firm to have formal processes for client intake, invoicing, and communication.
It may also be helpful to decide on certain issues ahead of time, such as:
- When to discuss fees (before or after the pre-screening process)
- When to send invoices
- What channels to use for communication, such as:
- email
- phone calls
- social media
- live chat
There are many different types of legal software you can use for client interaction, case management, and billing. Clio is one type of legal software that helps with case management and billing.
Forbes provides the best legal billing software as:
Incentivise On-Time Payments
Low-income clients will appreciate receiving discount incentives for making on-time payments. Help your clients understand that paying their bills on time will allow them to save money and ensure that their case and your law practice as a whole runs smoothly. There are several ways you can create incentives that will make your clients want to pay on time.
You can explain that making on-time payments will help them avoid any late fees. You might establish a late fee between 3-5% just to highlight to clients how making their payments on time is to their benefit. Be sure to explain this in any representation contracts that are signed at the time they hire you.
Another option is to offer a small discount to clients who make early payments. This could also be between 3-5%. This amount may seem small, but it will likely feel much larger to a low income client and help them feel like they’re getting a deal and being rewarded for their efforts.
Of course, you’re not required to keep representing clients who don’t make payments at all. It’s helpful to provide clients with as much leeway as you can, but it’s also important to make sure you’re not being taken advantage of by clients who agree to pay and then do not.
Develop Your Niche and Target Market
One way to maintain a profitable legal practice for low-income clients is to develop a niche and target market. This can be accomplished in several ways, including:
- Identifying high-demand legal services for low-income clients
- Focusing on specific areas of expertise
- Assessing local community needs
- Aiming for affordability
Research the pricing and rates for services that are being offered by your local competition so that you can offer competitive and affordable pricing. Identify your target or preferred clientele and, if possible, any relevant details about their employment. Learning these details during an initial consultation can help establish from the start of each case whether they will be able to pay their legal fees.
Establish a Strong Network and Referral System
Establishing a strong network and referral system is an important way to maintain a profitable legal practice for low-income clients. You can accomplish this using several tactics, including:
- Offering free consultations
- Collaborate with legal aid organizations
- Build relationships with community partners
- Participate in local bar associations and networking events
There are also many types of social media applications that can be used for networking, including:
- LinkedIn
- Facebook
- Instagram
- Twitter
- Pinterest
- YouTube
Just remember to keep your posts professional on these platforms. Each one can also be a great place to offer discounts, make announcements, and keep the public updated with news about your firm.
Enhance Your Reputation Through Pro Bono Work
Doing pro bono work provides most lawyers with a feeling of accomplishment and satisfaction knowing they helped someone in need. This can be done with free consultations and handling entire cases at no charge.
When you see that you can make a difference in the lives of low-income clients, it can reaffirm your commitment to legal practice. This can also be a very effective way to widen your network.
When engaging in pro bono work, it is important to:
- Select impactful pro bono cases
- Balance pro bono work with billable hours
- Showcase pro bono achievements
It may be helpful to remember back to times in your life when someone helped you during a hard time, what a positive impact it had, and how you remember it years down the road. In some cases, you may be the only person who offers someone help during a hard time. They will appreciate it more than you will likely ever know.
Leverage Government and Nonprofit Resources
There are many government and nonprofit resources that you can use to maintain a profitable legal practice for low-income clients, such as:
- Applying for grants and funding opportunities
- Partnering with nonprofit organizations
- Understanding tax incentives and benefits
There are also many law schools that offer pro bono events for certain clientele, such as wills workshops for seniors. This can be a great place for you to showcase your skills while also helping someone in need.
Your local bar association may also have a pro bono section or database that will allow you to be recommended to clients with lower incomes.
Emphasize Client-Centered Legal Services
An important aspect of any law practice is client-centered legal services, which includes:
- Adopting a trauma-informed approach
- Listening with sympathy and care
- Offering flexible and accessible communication options
- Providing comprehensive client education
Listening with sympathy and care can be one of the most important things you do during any case. Clients who are seeking legal help are individuals who have problems they are most likely emotional about.
When talking to potential and current clients, it is essential to listen carefully and let them speak when they need to. If you have gone through the same issue, it will not be hard for you to empathize.
If not, it is important to weigh their input and provide direct but compassionate answers. Using voice modulation can also help calm a client and put them at ease.
Listening with sympathy and care will make the client more comfortable. It will also make them more likely to recommend you to another individual in the future.
Continuously Improve Your Practice
With any type of legal practice that caters to any type of client, it is important to always be trying to improve the practice by:
Regularly reviewing pricing and fee structures
Soliciting client feedback and making adjustments accordingly
Staying current on legal developments and trends
The law is always changing and society is always changing but the need for lawyers will likely never change. What can change, however, is the way you interact with your clients, how you charge your clients, and how technology influences your practice.
For example, it may be helpful to offer the ability to have an initial consultation over Zoom or another similar platform. This will help clients who do not have the means to come directly to your office have the ability to interact with you and, hopefully, decide they want your help for their case.
Help Provide Equal Justice for All
Most people become lawyers out of a desire to help others, no matter their income or social status. Many lawyers start their practices with great dreams of helping everyone they can, and it’s likely you did the same.
Then comes the office rent, bills for overhead, and other expenses of day-to-day life, which makes it seem more difficult to help others just for the sake of helping. It’s possible, though, to maintain a profitable legal practice while still helping low-income clients.
The tips in this article can help you embrace the rewards and challenges that come with serving low-income clients which is a step toward providing equal access to legal representation for all individuals.
Remember that if one low-income individual has a legal problem, there are likely many more with the same issue who are seeking affordable and helpful legal representation. Each one of these clients has the potential to send you many more clients over time, so be sure to do what you can to implement some of the suggestions we’ve provided here. It will pay you back in goodwill and positive referrals.
