Law Firm Funding and Plaintiff (personal injury) Funding have recently been born out of Factoring. Here, opportunities for small to large Law Firms are made available.
Just like any business, law firms can quickly become cash strapped. Case development costs such as expert witness fees, professional fact preparation and presentation services, and travel/lodging expenses for plaintiffs’ trial teams can eat up a law firm's working capital.
When lucrative cases come to your office, then you’re faced with the possibility of recommending it to another office, or seeking Co-Counsel with the understanding that you'll split your fee.
It's a fair point to say Law Firm Funding is more expensive than bank financing. The strategy behind this advance is for you to grow your Law Firm so here are some basic conditions you'd fall into when requesting a Law Firm advance:
In short, Law Firm Funding is for the law firm that's in a good position to win a sizable judgement if only you had the available finances to work your case.
If so, don't let money be the reason to turn down your case.
Recourse verses non-Recourse
As with Personal Injury funding, non-Recourse is made possible with no guarantors, no collateral. Just a sound review by a qualified underwriter. However, the cost of this funding is higher as the risk is greater. A personal credit check will be run, which doesn’t rule out the lower FICO score applicants. Low FICO scores may just mean the agreement should be tweaked to accommodate. An upfront fee will likely be asked of the Law Firm -after the initial review - as underwriting can be expensive. This is largely viewed as earnest money and weed out the uncommitted. Still, you owe nothing if your cases are not won.
Recourse Funding will be less costly, as the risk is lower and comes with guarantees in addition to a pledge of contingency fees associated with your specific cases.
Minimums and Maximums ?
Most Funders wont go below $25,000.
A Maximum from any specific Funder may cap off at $500,000 in order to reduce exposure. However, utilizing a trusted and professional network - then funding can reach into the millions, if requested. The initial Funder will already perform do-diligence, making your case for Funding routine.
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