How Law Firms Can Use Merchant Cash Advances to Fuel Growth

Canada Small Business Financing Program loans are often the preferred small business loan for law firms. Although they typically offer lower interest rates, longer terms, and larger loan limits, the downside is that CSBFP and bank loans can take weeks (or even months) to be approved, and they’re usually reserved for businesses that have collateral and extremely strong credit.

So where do you turn if your law firm needs fast funding or you don’t meet the strict requirements of the CSBFP or other commercial lenders?

With a simple online application, more flexible approval requirements, and shorter turnaround times, alternative lenders like Greenbox Capital® may be able to provide the right small business loan for your law firm.

Merchant cash advances are among the most popular funding options offered by alternative lenders. Because they’re relatively new and easy to access, and because of the sometimes secretive tactics used by disreputable lenders, there are many myths and misconceptions about MCAs. In reality, MCAs are a practical source of funding that law firms have been using to grow small practices for more than a decade.

There are no restrictions on how merchant cash advance funding can be used, so law firms can use MCAs however they see fit. In this post, we’ll explore 7 ways law firms can use merchant cash advance funding to fuel their growth, including:

  1. Meet the increasing demand for legal services
  2. Invest in your staff
  3. Update law firm technology and/or software
  4. Offer new services
  5. Purchase real estate
  6. Acquire another practice
  7. Boost marketing efforts

We’ll also take a look at how MCAs can help attorneys respond to challenges such as:

  • Navigating COVID-19 safety protocols
  • Enhancing data security
  • Dealing with long billing cycles
  • And covering licensing and registration fees

7 Ways Attorneys Can Use Merchant Cash Advances For Law Firm Growth


Although there are no restrictions on how merchant cash advance funds can be used, they are typically best used to finance growth initiatives that will increase your law firm’s revenue. After all, the more revenue you generate, the quicker you can pay off the MCA.

Here are 7 ways merchant cash advances can help fund law firm growth:

1. Meet the increasing demand for legal services


The law firm industry in Canada experienced strong growth over the five years leading up to 2019, with increasing demand for legal services facilitated primarily by growing demand for restructurings, secondary offerings, and other capital market activity, such as finance and insurance law.

 

To protect business interests and meet ever-changing COVID-19 regulations, corporate clients have been relying on law firms that have business expertise. The biggest challenge ahead for the legal sector in Canada is ensuring sustainable and profitable growth while meeting these demands. Merchant cash advances can provide the funding your firm needs to meet increasing demand, such as hiring new staff, upgrading technology, offering new corporate law services, or expanding marketing efforts to attract new clients.

2. Invest in your staff


With each passing year, employees are demanding more flexibility in their work environments. Offering remote work options not only helps you attract (and retain) top talent, but it can also reduce your overhead expenses and improve your profitability.

Whether you’re hiring remote or onsite staff, you don’t want to wait until your firm is overloaded with work to begin recruiting. It’s best to hire staff ahead of time so you’re ready to take on more work while continuing to provide the highest level of service as your firm grows. Merchant cash advances give your the working capital you need to hire:

  • Attorneys
  • Paralegals
  • Bookkeepers
  • Office managers
  • Reception staff
  • Business development specialists to help your firm grow

You can also use MCAs to hire experts to help with a particular case, or bring in temporary support staff to assist with document review, scanning, and other tasks.

Merchant cash advance funding can also be used to cover continuing education tuition fees, allowing you to continually invest in your staff’s ability to meet the ever-changing needs of your clients.

3. Update law firm technology and/or software


Old equipment and outdated software can not only put a cramp in your firm’s productivity, but it can also negatively affect your ability to advocate for your clients. Electronic discovery and other new technologies have also led to a shift in the legal profession by increasing operating costs and complexity.

Updated technology can have a significant impact on your revenue. According to the 2020 Legal Trends Report, law firms that accepted online credit card payments and provided client portals and client intake solutions consistently earned more than 20% more monthly revenue per lawyer compared to firms that hadn’t adopted these technologies.

MCA funding can be used to update technology and software to boost productivity and revenue. Law firms can use merchant cash advances to invest in:

  • Sophisticated client management systems
  • Fast, secure laptops so employees can work efficiently from anywhere
  • New document and legal practice management software
  • Improved timekeeping and billing software
  • Up-to-date online payment processing software

Today’s technology can also help you automate certain processes so your team can focus on higher-value work.

4. Offer new services


Clients are demanding more from law firms in 2022. They expect industry-specific expertise, as well as data privacy and security, financial prowess, and regulatory or compliance knowledge. Proactive risk mitigation and cost control are the most common challenges for law firms that deal with corporate clients, and law firms that provide innovative solutions and strategic advice will better meet the changing needs of corporate clients.

Merchant cash advances can give your firm the working capital it needs to keep up with these demands and set yourself apart from the competition in your area.

5. Purchase real estate


Owning your office space gives you the freedom to customize it to suit the unique needs of your law firm. You can also create a new revenue stream by renting out any extra space you’ve purchased.

CSBFP and bank loans are most commonly used to purchase real estate. MCAs, however, can also be used to buy real estate, and may be ideal for those who don’t have time to navigate the lengthy CSBFP or bank application process.

6. Acquire another practice


As your law firm grows, you may decide to acquire another legal practice. Similar to buying real estate, Canada Small Business Financing Program loans and bank loans are most common for this purpose. However, merchant cash advances are sometimes a better option for firms that need fast funding to take advantage of a short-lived opportunity.

7. Boost marketing efforts


Increasing your law firm’s marketing spend generally requires an investment of capital. Merchant cash advances can provide the cash you need to expand your marketing strategies to attract new clients, such as:

  • Launching or updating your website
  • Search engine or social media advertising
  • Offline advertising (direct mail, billboards, local ads)
  • Review and reputation management
  • Sponsoring local teams or events
  • Creating a referral program

Overcoming Challenges with Merchant Cash Advance Funding


While merchant cash advance funding is generally best to help you finance growth initiatives, it can also be used to help meet many of the challenges you face when running your law firm, such as:


The recent “essentials-only” economy triggered by COVID-19 temporarily reduced the need for some legal services, primarily direct-to-consumer services. Courthouse closures also led to the slow down of work for plaintiff-side litigators, who are more likely to accept cases on contingency, which can cause less predictable cash flow.

 

As pandemic restrictions ease across Canada, law firms now face the task of clearing backlogs, which further slows cash flow. At the same time the increasing demand for certain legal services can be difficult 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 to invest in whatever you need— technology, new staff, and other initiatives that will help you meet demand without compromising cash flow.

2. Enhancing data security


It can be challenging for law firms to maintain up-to-date data security protocols. No matter how large or small your firm, it is imperative for legal professionals to have a highly secure (ideally cloud-based) client record management system set up. You also need to ensure you’re properly backing up your data and that you have disaster recovery systems in place.

 

Continually updating and upgrading data security systems can be costly. Law firms can use merchant cash advances to maintain the highest level of data security, which is even more important with the prevalence of today’s remote and hybrid working models.

3. Dealing with long billing cycles


Law firms are known to have longer billing cycles, which means revenue isn’t always received in a timely manner. They also tend to have unique billing structures and various revenue streams, such as retainers or contingency payments. These factors can make it difficult for law firms to maintain consistent cash flow, thereby making it difficult to grow the business or acquire funding from traditional lenders.

 

Merchant cash advances can help bridge the gap in capital so you can continue to provide top quality service while also growing your business.

4. Covering licensing and registration


Whether you’re a large practice or a boutique law firm, every practicing lawyer you employ must keep up with bar registrations, association dues, and other licensing and registration fees. The cost of these fees can create cash flow shortages, but merchant cash advances can help cover these costs so you can maintain operations and stick to your growth plans at the same time.

Wrapping Up


Law firms don’t always have the necessary capital to grow as a business. Merchant cash advances give you access to quick cash flow when you need it.

Perhaps hiring an industry-specific attorney will help you bring in more business but you don’t have the cash flow to cover the salary until revenues are generated, or maybe you need some quick cash to take advantage of a real estate investment or business acquisition. In any of these cases, an MCA can help you access the working capital you need to bridge the gaps.

Merchant cash advances can also be used to jumpstart your marketing efforts, help you upgrade technology and software, and invest in professional development for your staff—all of which will lead to positive growth for your law firm.

With a streamlined online application, faster turnaround, and flexible approval requirements, Greenbox Capital can provide you with up to $500,000 in law firm funding in less than one business day.

At Greenbox Capital, we fund with integrity and take a personalized approach to your funding needs.  It’s always people first. Learn more!

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Pamela Kohl

With over 25 years’ experience in financial services, Pamela Kohl has worked closely with banks, alternative finance, and other fintech platforms to develop core banking services, as well as establish new card programs, lending programs, and global payments platforms. She has been nationally recognized for creating innovative solutions, leveraging new markets, and developing winning strategic partnerships. Currently, Pamela serves as Vice President of Marketing at Greenbox Capital. Pamela earned a B.A. from Marshall University, summa cum laude, and M.A. in International Economics from the University of Miami, where she graduated with Distinction.

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