Forward Looking Law Firms are Adopting ‘Payment Over Time’ for Technology Purchase


Today in our personal lives, rather than making large one-off payments to own expensive items, such as IT devices, cars and such, many of us opt for a purchasing model that allows us to use the products without necessarily ‘owning’ the assets. Given the rapid pace of technology and how quickly some of these items become obsolete, smaller, affordable payments give us all the benefits of using the products as if we owned them, but with an attractive option of upgrading to the latest version at the end of a defined period of time.


The same rationale applies to law firms and indeed any type of business. By purchasing technology assets on a ‘payment over time’ basis, firms can fund everything that is critical to business operation – from hardware such as PC, tablets, servers, telecom systems and digital devices through to complex software projects like practice management, document management, case management and so on.

Adopting this approach to technology investment offers many business advantages from a cash/finance perspective – specially to law firm partners:

Tax efficiency – The cost of renting the technology comes off the Profit & Loss account, which makes the technology purchase a lot more tax efficient. This in turn also means that partners pay less tax themselves, which can be substantial considering that most of these individuals fall under the higher income tax category.

Cost distribution across partnership is equitable – Historically, law firm partners have invested in expensive, business-critical technology systems, the benefits of which they may have never fully experienced, due to the timescales involved in some of these projects coming to fruition. Say for instance, a law firm needs to implement an integrated document and case management system across multiple offices. Such projects can often take multiple years to deliver ROI. Rather than a partner, who is due to retire before the system truly takes effect, paying upfront for the project; a ‘payment over time’ approach ensures that the individual only pays for the legitimate portion of the technology cost/rental while in office. Subsequently, the new partner taking over the role of the outgoing individual also takes on the continuing cost of the project. The cost burden on partners is significantly reduced and is equitably spread across the partnership.

Cashflow – Firms need a healthy cashflow for smooth business operation. It gives them the flexibility to react to changing client requirements and market forces. Rather than depleting a significant portion of the firm’s cash reserve upfront on a resource intensive technology project – by adopting the ‘payment over time’ model, firms could optimise their funds to invest in activities that are core to the organisation or indeed expand into new areas. Additionally, firms can remove the spikes in their cash flow by replacing them with simple, defined monthly payments.

Higher ROI – Typically finance directors assign expected ROI rates for the investments they make for the business. For example, the expected ROI from a £100K investment in IT may be 2%, but the same amount of outlay in people or a physical asset may be assigned a higher ROI of 4%. Therefore, a ‘payment over time’ approach delivers a better return on the firm’s cash investment.

However, perhaps the biggest benefit to law firms – who heavily rely on IT for business operation – of this approach is that it offers them unprecedented level of freedom to continually upgrade and refresh the required technology assets across the duration of the payment plan. If at the end of 18 months, the firm decides to transition to the next version of its document management system, it can easily do so my adjusting the monthly payment figure accordingly. Partners can ensure that they are matching the investment costs of the business with the benefits being delivered over a number of years. Already, many firms including Wright Hassall, Wiggin, Boyes Turner, Stephens & Scown, Wilsons and Geldards are benefiting from this approach.

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