Given the evolving economic climate and rapid pace of digital transformation, financing new office equipment, technology or software can offer more strategic benefits than ever. These benefits can help legal executives position their firms for success.
Below we explore some of the key strategies and latest stories behind why law firms are turning to leasing in 2021.
In today’s environment, firms are reprioritizing their IT budget for the years ahead. Firms’ technology spend tends to include a variety of equipment ranging from laptops, desktops, telecom systems, copiers, servers, and more. Whether migrating from a desktop to laptop model or implementing a cloud-based infrastructure, you can combine IT hardware and services into one recurring expense through leasing.
At the onset of the pandemic, an Am Law 100 firm began shifting their IT model to support employees working remotely. The firm was migrating from desktops to laptops and sought out a seamless solution. A fair market value lease provided them with a built-in refresh cycle to protect against obsolescence and included data wiping services for when it is time to return the equipment.
Key strategies:
Making long-term growth investments is critical to keep pace with the evolving and competitive legal landscape. Whether firms are investing in lateral hires, training programs, future build-out projects, or wanting to maximize tax benefits, leasing is a way to help achieve their financial goals.
A California-based law firm needed to move their headquarters office to accommodate growth. The relocation required a significant investment in furniture, technology and other leasehold improvements that went beyond the tenant allowance. Although the firm had a strong cash position, finding a solution to maximize their tax strategy was a top priority. Utilizing a lease structure allowed the firm to expense their rental payments and align the cost of the project to the partners’ tax benefits.
Key strategies:
As law firms are migrating to cloud-based solutions, consulting fees, annual subscriptions and maintenance agreements are growing expenses in technology budgets. A short-term financing arrangement spreads out these costs, leading to better predictability and stronger cash flow management.
An Am Law 50 firm was in the process of renewing their multimillion-dollar Microsoft license agreement. While the firm typically paid cash for their renewal, they were interested in considering alternatives to better align the upfront cost of the project to the use of the software — similar to how they would budget for their utility expenses. The firm opted to finance through a 12-month lease, allowing them to spread out the cost into a monthly expense.
Key strategies:
To thrive in the post-pandemic environment, law firms should consider alternative funding sources that offer more benefits than utilizing cash alone. Financing your upcoming technology refresh, annual subscription renewal or software upgrade can help position your firm to achieve greater financial success now and into the future.