All too often trial attorneys and plaintiffs’ attorneys are forced to advance expenses and case costs before other cases have settled. This can lead to a cash crunch for litigation attorneys. The time it takes for cases to settle creates difficulty for those in the business of running a litigation practice.
Traditionally, banks have not recognized the value of the cases an attorney has in his or her office when determining whether to provide business loans or lines of credit. This is particularly true in today’s economic climate.
Fortunately, trial attorneys have a new ally; law firm financing companies. Law firm financing services can include:
- law firm loans,
- attorney lines of credit,
- case cost lines of credit, and
- case cost funding/disbursement funding.
Law Firm Loans
Law firm financing enables law firms to advocate for their clients as avidly as possible, while still paying case costs and medical bills. Law firms can also use law firm financing for other business expenses such as employee salaries, marketing, and other incidental expenses.
Attorney Line of Credit
With attorney line of credit, or law firm line of credit loans (also known as a case cost line of credit), attorneys use anticipated fees on open cases as collateral. Attorney lines of credit are best for plaintiffs’ firms with protracted cases and large attorney cash expenses. Attorney lines of credit enable attorneys and law firms to operate and pay expenses without extending their own resources. Attorneys can draw on lines of credit as needed, and be reimbursed for case expenses at the end of the case. In addition, in most jurisdictions, attorneys can be reimbursed for interest on their attorney line of credit.
Revolving attorney lines of credit offer great flexibility. Repayment can be made based on a fixed amount per case, or based on a fixed percentage of net cash receipts.
Case Cost Line of Credit
Case cost line of credit services to attorneys using anticipated fees on open cases as collateral. Case cost lines of credit help contingency fee law firms finance litigation expenses, case costs, and disbursement costs. With case cost lines of credit, attorneys can use the funds advanced to pay case costs, thus shifting the burden of paying case costs away from law firms.
In most jurisdictions, law firms can receive client reimbursement at settlement for any interest on their case cost line of credit, as well as any additional charges incurred by your firm.
Case Disbursement Funding
Law firm financing companies can provide case disbursement funding to trial attorneys based on their case loads and the expected case costs and case fees. Disbursement funding is repaid at a fixed amount per settled case or based on a fixed percentage of the attorney’s portion of the recovery. Case disbursement funding can be taken as a lump sum payment or on a case-by-case basis. Firms can be reimbursed for money expended for others. In turn, this capital can instead be used to finance growth, advertising, and other business expenses.
Case Cost Funding
Case costs and disbursements are de facto interest-free loans made by contingency-fee lawyers to their clients. Like other forms of law firm financing and attorney financing, case cost funding puts capital back into attorneys’ pockets.
With case cost funding, attorneys can address cash flow concerns arising from the outlay of case costs. Case cost funding can be structured on a case-by-case basis. Each funding is tied to specific case. Repayment occurs at the resolution of each case. There are no monthly payments. Attorneys can usually pass fees for case disbursement funding on to their clients.
Today, trial attorneys and plaintiffs’ attorneys are facing an economic squeeze. Many law firm financing options exist which can help. Law firm loans, attorney lines of credit, case cost lines of credit, case disbursement funding and case cost funding can all provide trial attorneys and law firms with capital. Law firm financing enable firms to grow and to serve their clients best.
