Look to Specialized Bankers to Understand Law Firm Banking Needs
March 11, 2022
When it comes to banking and accounting, law firms have unique needs. Working with a team of bankers experienced in the legal industry can help your firm stay in compliance with regulations as you manage your strategic growth plan. Of nearly equal importance, a banker experienced with the needs of law firms can serve as a trusted advisor, anticipating your needs and guiding your firm as it grows and changes.
The American Bar Association outlines some specific banking and accounting requirements in section 1.15 of its Model Rules of Professional Conduct, including maintaining at least two separate bank accounts, known as operating and escrow accounts. The separation equips your firm to safeguard funds from fraud, and steer clear of breach of contract or other ethics concerns. Your banker should inherently understand these accounts and IOLTA accounts, which are exclusive to the legal industry.
When evaluating law firm banking and financing needs for your small or large law firm, consider:
• Cash flow needs. While some law firms receive upfront client payments, most clients follow a payment plan or pay on contingency after the case has closed in the client’s favor. As law firms evolve, billing models have adapted to meet changing client needs, which can result in cash flow fluctuations. As your law firm expands, having access to cash for marketing, payroll and talent acquisition smooths the way for your firm to maintain its growth momentum.
• Changing client wishes. According to Clio’s 2021 Legal Trends Report, 40% of consumers will only consider a law firm if it takes credit card payments. In addition, 37% of law firms that have posted recent growth currently use online payment options. Your banker can help you determine the most suitable payment processing setup for your firm.
• Real estate and office demands. A growing law firm may need access to funds to finance office space. A full-service bank that offers a complete suite of banking services can provide a commercial real estate loan to help your firm secure the office space you need.
• Treasury management. This specialized business banking service helps your law firm maximize cash balances for greater returns and long-term growth. In addition, law firm treasury management streamlines payables, receivables and fraud protection to free up time and offer added safeguards for your funds. Choose a bank that offers tailored treasury management solutions that fit your firm’s needs.
• Lines of credit and credit cards. Various types of credit allow you to manage monthly expenses between billing cycles and empower your attorneys or staff to make real-time purchases. A business credit card that is integrated with your bank can simplify credit card management for your team and provide a host of other benefits, including fraud protection.
• Partner buyout options. For established law firms navigating growth and changing economic environments, a partner buyout may be part of ongoing growth. In the event that you want to purchase your partner’s share of the business, the right loan and banking expertise can help ease the process.
We work with small and large law firms in a variety of practice areas, and we develop banking solutions tailored to your firm’s unique needs. To learn more about how our law firm banking team can customize solutions for your law firm, contact your First Independent Bank relationship manager or find out more about what our bank can offer law firms like yours.