How can financial services companies help legal firms with costs?
Recent research by PwC found that reducing costs has leapt from being last in a long list of priorities for legal firms to number four – ahead of critical challenges including reducing cyber threats.
This might be down to the fact that a recent survey by the Law Society found that firms are forecasting a 10-20 per cent drop in revenue for the 2020/21 financial year. And that’s just the start.
Without taking into account pressures on corporate balance sheets, the pandemic has seen a negative effect on families’ finances leading to many clients struggling to pay the fees arising from personal legal action.
Firms can offer their own solutions to help clients with funding cases. If cashflow allows, deferred payments with an uplift in charging rates is an option, as is a “conditional no win, no fee” arrangement.
These approaches can help customers, but of course pass risk and cashflow challenges directly to solicitors’ practices. So if costs and cashflow are going to be an issue in the coming months and years, how can the financial sector help?
Deep knowledge of the area you operate in is key for a financial service provider to provide a credible solution for firms and their clients. They have to be prepared to take the time to understand the dynamic of the legal sector. Firms need to understand both the opportunities, and the needs, creating solutions and crafting products that properly address them.
The financial services sector has traditionally been poor in designing products that work for law firms. Many make the mistake of trying to shoehorn an existing lending approach into the legal sector. This approach doesn’t work for either busy lawyers or their clients.
A consultative approach benefits everyone –‘we’ve got a product – please sell it’ won’t wash. You need to be able to demonstrate that you understand the issues and have created a credible solution, and in the process overcome any natural aversions.
When we designed our first lending product in the probate space – Inheritance Advance, we spent over six months consulting with law firms, specialist probate services and ‘boutique’ firms to understand them, their business and the needs of beneficiaries. Their input was invaluable and instrumental in shaping our offering. Our IHT Loan followed shortly afterwards and we’re now on the verge of launching our third product to help people fund contentious probate cases and again we’ve consulted with some of the largest firms in this space.
Our recent consumer research told us that 50 per cent of people would expect their solicitor to be aware of and advise on products that can help with contentious probate, probate delays, or with the need to obtain an inheritance early.
Flexibility is also key for complex cases. Every situation is nuanced and as a lender it’s important to adapt to a situation that might be a bit of a ‘curve-ball’. Ideally lenders can focus on fundamentals and adapt their product to meet the needs of the circumstance. Traditional brokers can’t offer this flexibility and we’ve proven it’s really useful to be able to offer solutions rather than tick-box criteria.
By offering their clients credible solutions, solicitors improve their cashflow and service levels, and that in turn improves their clients’ experience of the firm.
This article was submitted to be published by Tower Street Finance as part of their advertising agreement with Today’s Wills and Probate. The views expressed in this article are those of the submitter and not those of Today’s Wills and Probate.