While it’s a given that a career as an attorney demands expertise in the practice of law, the business side of the legal industry also requires a high level of savviness and should not be overlooked or viewed as secondary. The stakes are high when large sums of money are flowing in and out of a firm, with client fees and settlements coming in, and legal team payroll, case expenses, and firm overhead payments going out. It’s crucial for legal firms to have a trusted banking partner – one that knows the legal industry and its nuances and regulations – to guide and manage cash flow, particularly if they are a litigation law firm working with large settlements.
Benefits of an Attorney-Bank Relationship
Law firms should establish a relationship with a banking partner they can trust – and it’s crucial to ensure the bank has a track record of successfully working within the legal industry. There are many advantages to a secure partnership between a law firm and bank, and following are five key areas that can benefit attorneys:
Establishing a new practice: Whether an attorney is right out of law school or is an experienced lawyer branching out on their own, launching a business requires capital. It’s expensive to get a business up and running and a banking partner can open deposit accounts for new firms and help with items like securing letters of credit for office leases.
Financing case expenses: Financing court cases can be challenging, and the process requires the legal team to have working capital available up front to pay for expenses such as expert witnesses, background research, and creation of courtroom exhibits. Generally, the costs and expenses needed to get a case to a resolution is a fraction of the payout, but cases can take time to resolve and having the right banking partner can help a firm finance its expenses and manage cash flow. A firm with an established banking partner has the advantage of the bank’s trust and is therefore more likely to be successful with securing a loan.
Managing trust accounts: It’s imperative that legal firms have a trustworthy partner to manage its trust accounts so they can focus on litigating and let their bank handle the finances. A firm’s banking partner should have expertise and experience handling trusts for law firms and their clients and be sensitive to the unique needs of these accounts. There are a lot of nuances to consider, as money paid out can have strings attached, such as if a minor is to be the recipient, or if an estate is involved. These cases need to be handled carefully and expertly, and the right banking partner will be equipped to do so.
Securing financing for onboarding new partners: For many law firms, bringing on new partners is a strategic path for growing the firm and for expanding revenue opportunities. But adding partners to the roster can be complex and expensive. Working with your bank to find financial solutions for onboarding new senior team members is a creative way to pursue the firm’s plans for growth while keeping the financial needs of your new partners in mind.
Setting up corporate credit cards: A firm may opt to work with their bank to set up a corporate credit card to finance up front expenses. A typical card has a credit line of $100,000 and offers several advantages. Firms that use a credit card, such as the Signature Bank Corporate Credit Card, rather than paper checks significantly lower their chances of fraud – they eliminate the risk of mailing paper checks to experts, witnesses, and vendors. They also can have zero-liability fraud protection for unauthorized purchases, significantly reduce time for payment, and save on administration and processing costs. Furthermore, an online dashboard can provide a quick snapshot of spending patterns and status of payments.
Find a banking partner you can trust
All law firms, but particularly those on the litigation side, should establish a relationship with a bank that has a proven track record specializing in handling the financial aspects of the legal industry. Getting a new firm up and running, financing case expenses, and managing trust accounts are all ways a banking partner can help. Does your firm have a trusted banking partner?
Signature Bank is Chicago’s business bank, focused exclusively on serving the needs of privately-owned businesses and their owners. Learn more at www.signaturebank.bank or contact Nate Dinger 312-386-6904.
