Law Firm Financing

What Is Law Firm Funding

Law firm financing, also referred to as law firm funding, is an innovative way for law firms and attorneys to handle litigation expenses, maximize cash flow, and expand services to clients through employing non-recourse capital from a third-party in exchange for a percentage of the financial recovery from a portfolio of lawsuits. Litigation funding levels the playing field for litigation participants by connecting necessary funding for litigation expenses and needs with parties who have meritorious claims but might otherwise be unable to effectively bring forth a lawsuit.

Why Law Firm Financing?

Lawsuits can be extremely costly and crawl along. Employing external law firm funding offers significant growth opportunities for law firms, attorneys, and their clients. Not only does it help minimize cash flow volatility, but also provides the flexibility to retain current clients, acquire new clients, and establish new business opportunities.

How Law Firm Financing Differs From Traditional Bank Loans

Law firm financing offers an accessible and practical alternative way of financing other than lines of credit or bank loans. Traditional banks typically require a personal guarantee from the law firm partners, along with mainstream collateral in exchange for credit. Banks don’t take unearned contingency fees from cases for collateral. There are two distinct ways law firm funding diverges from lines of credit and traditional loans:

  • No fixed payments- law firm funding is specifically constructed for law firms and attorneys, and doesn’t need fixed payments.
  • Non-Recourse Capital: Law firm financing isn’t a loan, but rather a non-recourse advancement of capital that future contingent fees collateralize.
    For law firms, bank loans and lines of credit can be a lengthy and uncertain process, leaving law firms and attorneys without needed capital to expand their business.

Benefits Of Law Firm Funding

  • Minimizes risk for law firms: Non-recourse funding means that if you are unsuccessful in your judgement, settlement, or growth venture, the lawsuit financing doesn’t need to be repaid. The capital is collateralized only by your firm’s fees, and a return is only collected if a judgement results in a positive recovery or settlement.
  • Capital for litigation expenses: Law firm funding is a vital way of paying court expenses, expert witness fees, and many other costs associated with litigation, all while diversifying risk. Law firm financing also helps to reduce and offset the volatility of contingency work.
  • Fee acceleration: After a settlement, it can take longer than anticipated to receive payment. Litigation funding helps avoid cash flow delays by injecting capital upfront after the case is settled during the ongoing process of receiving the settlement.
  • Flexible payment arrangements: Working capital and advanced overhead allows law firms to provide prospective clients with alternative and flexible fee arrangements, ensuring that the case at hand can employ quality specialists and appropriate resources.

Contact Us Today

Through his extensive experience in the industry, Jay Scarola can connect law firms with affordable law firm financing options. With access to reputable lenders and competitive rates, Jay’s expert team can help you determine the right kind of financing for your firm. Call Jay Scarola in West Palm Beach to learn more about law firm financing options for your situation today.

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