Small Business Administration loans are often considered to be the most ideal form of small business loans for attorneys. However, despite typically having lower rates, longer terms, and larger loan limits, SBA and bank loans aren’t always the best loans for law firms—SBA and bank small business loans for attorneys can take weeks or months to come through, and typically only businesses with collateral and extremely strong credit are approved.
What if your law firm needs fast funding or doesn’t meet the strict requirements of the SBA or other commercial lenders?
With a streamlined online application, shorter turnaround, and more flexible approval requirements, alternative online lenders like Greenbox Capital® can approve more attorney funding, often in as little as one business day.
Merchant cash advances are one of the most popular funding options offered by alternative lenders, but thanks to their relative youth, ease of access, and the sometimes secretive tactics used by disreputable lenders, many myths and misconceptions exist about merchant cash advances. In reality, MCAs are a regulated, practical source of funding that small businesses have been using to achieve their goals for over a decade.
With no restrictions on how MCA funds can be used, merchant cash advance funding provide law firms with the flexibility to use their funding however they see fit, whether they plan to finance growth initiatives or need funding to help meet the challenges of their industry. In this post, we’ll explore 10 ways law firms can use merchant cash advance funding to fuel their growth, including:
- Meeting increasing demand for legal services
- Updating technology and software
- Hiring staff
- Shifting to remote work
- Offering new services
- Purchasing real estate
- Acquiring another practice
- Building a client-focused firm
- Investing in continuing education
- Boosting your law firm’s marketing
We’ll also take a look at how MCAs can help attorneys respond to challenges like longer billing cycles, protecting client data, covering licensing and registration fees, and navigating COVID-19.
Let’s get started.
10 Ways Attorneys Can Use MCAs To Grow Their Law Firm
Though there are no restrictions on how MCA funds can be used, they are typically best used for financing growth initiatives that will increase your law firm’s revenue—the more you earn, the faster you will repay your merchant cash advance.
Here are 10 ways MCAs can help you grow your firm and your revenue:
1. Meeting increasing demand for legal services
Demand for legal services hit record year-over-year levels in the third quarter of 2021, with corporate clients in particular increasingly seeking external expertise to help navigate the COVID-19 pandemic and regulatory uncertainty. Corporate law departments are spending more on outside counsel than ever before—35% higher than in 2016, with 4 in 10 corporate clients anticipating an increase in legal spending.
As this trend continues and litigation backlogs caused by the COVID-19 pandemic ease, demand for legal services will continue to increase for both corporate and non-corporate law firms. MCAs can provide the funding you need to meet this increased demand, whether you hire new staff, upgrade your technology, offer new services, or increase your marketing to attract new clients.
2. Updating technology and software
Old devices and outdated software can hinder your firm’s productivity and your ability to advocate for your clients. Other new technologies, such as electronic discovery, have also shifted the legal profession by increasing complexity and operating costs.
Updated technology can also have a direct impact on your revenue. According to the 2020 Legal Trends Report, firms that used online credit card payments, client portals, and client intake solutions together consistently earned more than 20% more revenue per lawyer each month compared to firms that hadn’t adopted these technologies.
Merchant cash advance funding can be used to purchase new tech and software that will boost your productivity and revenue, such as:
- Secure laptops so employees can work remotely or in the field
- New devices so people don’t have to struggle with sluggish systems
- Sophisticated client management systems
- New legal practice management software
- Improved timekeeping and billing software
- Effective document management
- Online payment processing software
Improved technology can also help you automate processes so you and your team can focus on higher-value work rather than time wasting processes and admin.
3. Hiring staff
It’s best to hire new staff before your firm is too busy and your existing team is overworked—hiring proactively rather than reactively ensures that your team is ready to take on more work without leading to burnout and lost time. If you wait till your team is already burning out to take on a new hire, you’ll end up with more work on your plate while you onboard the new team member.
Increasing your workforce can enable your firm to take on more cases and provide the highest level of care. Merchant cash advances can provide the working capital you need to hire and onboard qualified staff before they start earning your firm money, such as:
- Additional attorneys
- Office managers
- Reception staff
- Business development specialists to help your firm grow.
You can also use merchant cash advances to hire experts or additional support staff to help with a particular case, such as outsourcing document review, scanning, and other tasks.
4. Shifting to remote work
Employees are demanding more flexibility in their work arrangements in 2022. Offering remote work options can help you attract and retain the best talent while also potentially reducing overhead and office expenses. Merchant cash advances can help you purchase the technology you need to enable remote work and onboard new remote staff regardless of where they live.
5. Offering new services
Clients are demanding more of their law firms in 2022, including extra expertise in areas specific to their industry, as well as data privacy and security, financial expertise, and regulatory or compliance expertise. For law firms who work with corporate clients, proactive risk mitigation and cost control are the most common challenges, and firms that can offer coordinated, innovative solutions and strategic advising will better meet the changing needs of these clients.
MCAs can provide the working capital your firm needs to keep up with these demands and set yourself apart from the competition in your area.
6. Purchasing real estate
Purchasing your office space can help lower your firm’s fixed costs by ensuring your payments don’t increase over time. When you own your space, you also have the freedom to customize your office space to suit your unique needs, and if you have extra space, you can also rent it out and create a second revenue stream.
SBA loans and bank loans are often the most recommended type of loan for purchasing real estate, but MCAs can also be used for this purpose and may be ideal if you don’t have time to navigate the drawn out process of applying for funding from the SBA or a bank.
7. Acquiring another practice
Acquiring another practice is an effective way to grow your firm without launching a new office from scratch.
Again, SBA and bank loans are the most often recommended type of loan for this purpose. However, MCAs can also be used for this purpose, and are often ideal for firms that need funding quickly to take advantage of a short-lived opportunity.
8. Building a client-focused firm
From offering a seamless, stress-free on-boarding experience to capturing client feedback after a case is closed, the best thing you can do to support your business’s growth is build a culture that focuses on client satisfaction first. There are a number of ways you can do this, such as:
- Creating a communication system that works for clients, such as using client-friendly language
- Designing rates and fees based on client needs
- Creating documented systems and procedures to reduce mistakes, better manage your team, and maintain productivity
Implementing these tactics may require an investment of capital. MCAs can provide the capital you need to execute these and other changes that will help you put your clients first.
9. Investing in continuing education
Merchant cash advance funding can help you cover tuition and other fees so that you can invest in continuing education and training to keep your staff on the cutting edge, or even offer new services to meet changing client needs.
10. Boosting your law firm’s marketing
Boosting your firm’s marketing often requires an investment of capital. Merchant cash advances can provide the working capital you need to invest in your marketing strategies to help draw in new clients, such as:
- Launching a website or updating your current website
- Search engine or social media advertising
- Traditional advertising such as direct mail, billboards, and other local ads
- Review and reputation management
- Sponsoring local teams or events
- Creating a referral program, such as offering discounts to clients who send you referrals
Overcoming Challenges with Merchant Cash Advance Funding
Merchant cash advance funding is typically best used to finance growth initiatives, but it can also be used to help meet some of the challenges of running a law firm. Here are 4 common obstacles MCAs can help you overcome:
1. Long billing cycles
Law firms typically have longer accounts receivable periods, as well as unique billing structures and revenue streams such as retainers or contingency payments. These factors can make it difficult for law firms to maintain consistent cash flow, which in turn can make it difficult to grow your business or respond to unexpected challenges.
Merchant cash advances can help fill in cash flow gaps so that you can keep providing top quality service without delaying your plans to grow.
2. Data security
In addition to consistently following data privacy best practices, law firms face the additional challenge of maintaining up-to-date data security. Regardless of size, all firms must have a secure, ideally cloud-based client record management system with backups and disaster recovery systems in place.
These expenses are unavoidable and upgrades can be costly. Merchant cash advances can provide the funding you need to maintain top-notch data security, especially if you are pivoting to a hybrid or remote work model.
3. Licensing and registration
Whether you’re a solo practice, a boutique law firm, or a large practice, bar registrations, association dues, and other licensing and registration fees must be kept up to date for all practicing lawyers at your firm. The cost of these fees can create cash flow shortages that may impact your ability to grow. Merchant cash advances can help cover these costs so you can maintain operations and stick to your growth plans.
An essentials-only economy temporarily reduced the need for some legal services, particularly direct-to-consumer services. Courthouse closures especially impacted plaintiff-side litigators, who tend to take more cases on contingency and have less predictable cash flow.
Backlogs clearing these cases as pandemic restrictions ease can lead to further cash flow shortages. Meanwhile, pent-up demand for some services can be tough to meet without additional funding to hire new staff, upgrade technology, or improve services.
Merchant cash advances can help bolster your firm’s cash flow so you can invest in tech, qualified staff, and other initiatives that will help you meet demand without compromising cash flow.
Initiatives that will help grow your firm and increase your revenue in the long-term may require a financial investment that you may not have on hand when you’re ready to get started. Merchant cash advances are a fast way to access the working capital you need to kickstart your firm’s growth.
If hiring a new attorney, for example, will help you bring in more business in the long run, but you don’t have cash on hand to cover their salary till they bring in that business, an MCA can help you access the working capital you need to fill in the gaps till business picks up. Merchant cash advances can also kickstart your marketing, enable you to invest in technology to help your team work smarter and increase billable hours, or help you grow into a larger space to support your future growth.
With a streamlined online application, faster turnaround, and flexible approval requirements, Greenbox Capital can provide you with up to $500,000 in merchant cash advance funding in less than one business day.