Legal Fee Financing: What is It and How to Offer It

Hannah Bruno
Hannah Bruno
December 20, 2022

What if you could receive your total fee upfront at the beginning of an engagement while still allowing your clients to pay in installments? It sounds too good to be true, doesn't it?

With legal fee financing, not only is it possible, you can start taking advantage of this modern payment option today.

While law firms have used various billing options over the years, the rise of legal fee funding solutions and other types of funding options that became popular during the pandemic has become a standard and expected payment option for consumers. Adding legal fee financing as one of your available payment methods can make a massive difference for your firm and elevate your practice to reach more clients and, ultimately, increase your profitability.


What is legal fee financing?

Fee funding is an installment loan option that enables customers to purchase products or services while paying for them in installments. By establishing a direct relationship with the merchant, the consumer can avoid using credit cards to cover the cost of the purchase, eliminating the associated fees and interest charges associated with them.

You may think, "Well, this sounds great for consumer goods, but can lawyers offer financing for legal fees and services?" Yes, of course!

Legal fee financing, as it's commonly called—is one of several alternative payment methods offered through law firms. By easing the burden of large, one-time bills, legal services can make themselves more accessible to those who need them most. This represents a growing shift toward not only focusing on what legal services are offered but also how lawyers can offer clients help with legal fees.

Here are examples of the types of legal fees that your client can pay using legal fee financing:

  • Attorney hourly fees
  • Flat fees
  • Contingency fees
  • Retainer fees
  • Statutory fees

Aside from the attorney's fees, there may be additional expenses depending on what type of case you are taking on. These fees may include court fees, travel expenses, expert witness fees, or investigator fees.

Is it ethical to offer financing for legal services?

So are third-party financing arrangements ethical? In many circumstances, yes – and as of 2018, the ABA has clarified the issue with its helpful ethics decision, Formal Opinion 484.

The formal opinion addresses a half-dozen scenarios in which lawyers assist their clients with third-party financing. In each case, Formal Opinion 484 notes that lawyers may participate in these arrangements but should comply with specific model rules to ensure communication and transparency and avoid conflict of interest.

Additionally, many people who need access to legal representation can find the services preventatively expensive. By offering the option to pay for your legal services in smaller increments, you are providing access to a service that can have a positive impact on a person's life.

As with any new process you consider implementing in your firm, we recommend researching the nuances of offering legal services financing to your clients.

Who should consider getting help with legal fee funding?

Whether your client needs help drawing up a will or a contract – or facing a legal dilemma – hiring an attorney can be expensive.

Law firms that cater to first-time legal clients report cost as the primary deterrent for customers who decide not to retain legal counsel. With 63% of Americans living paycheck to paycheck and the hourly rate for legal representation sitting at $275 as a national average, law firms must utilize the best available tools to help potential clients afford services.

Legal fee funding opens up access to legal representation to people in a variety of circumstances, including:

  • Those with lower or unpredictable income
  • Those who want an alternative to credit cards.
  • Those who have credit cards but would prefer to charge a manageable amount.

When offering legal fee funding to your clients, it is crucial that you clearly communicate their financial responsibility from the start. It is possible that hiring a lawyer will be one of the most expensive decisions your client will ever make. To spare them from unexpected bills and to ensure that you receive timely payment for your work, set clear expectations as to what clients can expect to see on invoices, when they'll receive them, and how they'll be able to pay.

Why should law firms offer options for legal fee financing?

Traditional billing remains the primary choice for millions of consumers, but we are starting to see a significant shift in this trend. For younger consumers, fee funding solutions will be key in choosing which attorney or firm they engage for services.

Many first-time legal clients may end up using the same legal firm time and time again. Firms must consider offering fee funding options and the potential long-standing relationships they may develop with clients who prefer this payment method.

More reliable cash flow

In addition to expanding your available payment options and making your law firm more attractive to prospective clients, fee funding improves the consistency and reliability of your cash flow. One of the most common reasons lawyers hesitate to let clients pay over time is that traditional payment plans can have a higher incidence of late and non-payments. The advantage of offering financing for legal fees is that it helps mitigate the risk of both. Your firm receives the total requested amount upfront, and clients can split an invoice into multiple payments.

Faster payments from clients

The other significant benefit of legal fee financing is that it increases how quickly you collect your total fees. When it comes to traditional payment plans, giving clients the ability to make multiple smaller payments over time means, by definition, you receive smaller deposits.

Allowing clients to use a legal fee financing option, on the other hand, means you can secure your total invoiced amount at the start of the engagement.

More ways for clients to pay

Your clients expect you to provide modern payment methods for their convenience. By offering clients flexibility in payments, your firm's lawyers can spend less time trying to collect unpaid legal fees.

Adopting an online payment solution enables you to offer flexible payment options such as credit, debit, eCheck, and in some cases, legal fee financing. The result is a stabilized cash flow, happier clients, and more time to focus on work that matters to you. Fee financing can instantly make your firm more appealing,keep new clients coming in, and current clients coming back, as well as increase your chance of client referrals.

How can law firms offer legal fee funding?

Legal fee funding is simple to manage and execute using the proper legal software. For instance, online payment solutions like LawPay make it easy to offer various payment options.

Pay Later is a legal fee lending solution exclusively available through LawPay. With Pay Later, your clients can pay for legal services in installments while your firm still receives 100 percent of the invoiced amount upfront.

Rather than being put in the challenging position of having to find a way to pay one large lump sum, Pay Later enables your clients to secure legal representation and still allocate funds for other expenses. For example, Pay Later is an excellent option for a solo business owner who requires legal services but must keep money in reserves for unexpected costs.

Below are a few specific payment features that will improve the process of implementing legal services financing for your law firm.

Seamless invoicing: The best software solutions allow you to create invoices in a few easy clicks—and get paid via electronic bills, QR codes, secure click-to-pay links embedded in emails, or over the phone.

More straightforward billing: Along with giving you the power to offer automated legal fee financing through Pay Later, LawPay simplifies and streamlines the overall invoicing process and makes it easier for your clients to pay.

Flexible online payments: It's also essential to make it easier than ever for clients by offering the option to pay using any device through credit card, debit, or eCheck.

Along with checking the boxes above, LawPay maintains responsibility for the cardholder data that passes through the payment portal. Multiple levels of security ensure all information is protected with advanced data encryption. Our payment solution exceeds standards for internet security and PCI Level 1 compliance to protect your payments at the highest level possible.

Manage your law firm's financing options

As payment models evolve, more firms are providing fee funding solutions as a service to clients. Beyond the benefits listed above, the advantages of fee funding ultimately serve both you and your clients. The client gets help with legal fees and knows exactly how much they will owe with a set number of smaller payments scheduled over an established time frame. This is an increasingly attractive option for consumers in a time of growing economic uncertainty.


Now is the time to explore how fee funding and lending solutions can help your legal business flourish by offering new payment options that are growing in popularity with a broad range of consumers.

Pay Later is a fee lending solution built by LawPay specifically for the legal industry. Sign up for Pay Later and redefine the client-centered experience.