Litigation financing is a powerful tool that helps lawyers bring consistency and reliability to their business finances. Over the years, we have helped hundreds of law firms accelerate their legal fees and grow their practices.
While the process itself is straight forward it requires careful thought and planning. Here is our advice on the three things to think about if you are considering litigation financing.
Don’t advance your entire fee: Take only what you need now. Litigation financing can drive growth for your business when it’s done appropriately. It’s easy to get caught up in the excitement around big numbers. The reality is that this type of financing is expensive.
Be realistic, not optimistic: Having realistic expectations on timing and cost is essential. Overestimating your future fees or underestimating how long a settlement distribution will take are two of the costliest mistakes you can make. Crunch the numbers, look at the best and worst cases, and then aim for the low to middle range. Remember, things usually take longer and cost more than we expect.
Understand the transaction and its true cost: There are multiple types of litigation financing transactions, most of which involve some type of monthly, or quarterly payment. If possible, get a deal that lets you avoid these scheduled payments. If that isn’t possible, make sure you understand how those payments will impact your cash flow and plan for how you will make these payments.
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