Embedded Finance Is Changing Legal Practice Management
If you have paid for a ride using the Uber app or coffee with the Starbucks app or taken advantage of “buy now, pay later” on Amazon, you have experienced embedded finance as a consumer. The transaction is seamless and integrated within the experience, making the bank invisible to the consumer.
Embedded finance is increasingly appearing in legal practice management. Business applications for professional services, such as an online legal practice management platform, are increasingly becoming the hub for all law firm activity.
What will the future of law firm management look like as embedded finance advances? Embedded finance in your legal practice management holds the promise to free lawyers and staff from many mundane tasks, such as opening new accounts, paying and sending bills, tracking expenses, administering payroll, ensuring insurance policies are up to date, reconciling multiple trust accounts and so on.
CARET Legal’s fintech expert Kevin Gallagher recently wrote about embedded finance law. Check out his article on Legaltech News: Embedded Finance is Changing the Business of Law.
We have yet to meet a law firm associate who enjoys tracking billable time and reviewing invoices.
A team of industry experts, including Tomas Suros of CARET, discuss time and billing in this Above the Law podcast on Time, Billing and Payments.
Simplifying this process is one of the greatest advantages of having a legal practice management (LPM) software like CARET Legal that includes embedded finance. As one user says, “This program enables me to bill after every action taken on a client file and prompts me to do it. I have been capturing more billable time due to this software.”
In addition to improving a firm’s in-house recordkeeping, an embedded billing program can send invoices and track payments electronically and securely.
Related post: Learn how you can streamline time & billing and payments in your law firm – today.
The embedded solution allows you to slice and dice invoices in a myriad of ways, including billing multiple clients on a single matter, setting unique rates for each client, splitting percentages between fees and costs and consolidating invoices when a client has multiple matters in a given billing cycle.
Embedded finance enables clients to pay with just a click on their laptop, desktop or phone, part of the online convenience many now demand. Scheduled and recurring payments, retainers, one-time invoices – all can be handled through the LPM.
With APX Automated Payments in CARET Legal, your firm can accept secure payments via e-checks, credit cards and ACH transactions. You can direct where payments go and set up alerts for paybacks and disbursements.
Did you know? Seventy-five percent of clients pay the same day they receive invoices through a “Pay Now” link.
Get paid on the same day with CARET Legal and APX automated payments.
Invoices are matched up with client records in real time, reducing errors, missed invoices and double billing mistakes. Payments show up instantly allowing for speedy reconciliation and improved cash flow.
An embedded finance program also greatly enhances a firm’s payroll capabilities. It streamlines the monitoring of time and billing data, reduces the burden of managing taxes and compliance regulations and eliminates the need for a payroll processor.
On a more micro level, firms are able to see which attorneys are meeting expectations and which are falling behind. Metrics can be viewed year to date or by prior month or prior week.
CARET Legal offers compensation reports to show what has been billed vs. collected, to split payments between responsible and originating attorneys and to tally both realized and unrealized revenue for each matter.
Manually managing your firm’s trust accounts can be a bookkeeping nightmare. The embedded financial solution incorporates appropriate jurisdictional rules and client requirements for all accounts. You can open an interest on lawyers’ trust account (IOLTA) but pay expenses from an operating account. A well-designed embedded system will simplify the process of managing multiple trust accounts, provide three-way reconciliation and can be set up to send alerts on a per-matter basis when trust funds or operating retainers run below a prespecified amount.
Financing Firm Operations
With real-time financial data from merchant accounts and payment processing, embedded finance tools can help firms maintain lines of credit and obtain business loans. Information on expenses and income could allow a firm to tap short-term credit and lending options, greatly simplifying the process for obtaining capital. These financial services can support any business loan program provided by a state or federal government the firm may qualify for, such as the Paycheck Protection Program in 2020.
Watch for and embrace embedded finance
Automating all of these financial tasks not only makes operations more efficient for a law firm staff and its attorneys, but it will also dramatically improve the client relationship – enabling you to offer clients easy, flexible payment options.
Most importantly, embedded finance features in legal practice management will take firms into a future where they can offer more enticing services and gain insights from the client base that allow them to grow and succeed.
See why everyone is talking about end-to-end practice management: Schedule a personal demo of CARET Legal.
Try CARET Legal hands-on: Get a free trial of CARET Legal.