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Law Firm Loans

A Guide To Law Firm Funding Or Attorney Loans

Did you know that, according to IBIS World, there are over 400,000 law firm businesses in the US? This number is

Attorney Funding

Attorney Funding Made Ease & Affordable

up 0.6% from 2020, and the annualized business growth of law firms in the US was 0.4% between 2016 and 2021.

If you run one of these many law firms, you might have found recently that you aren’t in the best financial situation. This is stressful, especially considering the current challenges that many law firms are currently facing.

Fortunately, law firm funding loans can help you regain your financial standing. But how do they work?

In this guide, we’ll cover everything you need to know about law firm funding. Finally, you can get the money you need and you can run your law firm successfully without having to worry about money. Read on to learn more.

What Is Legal Funding?

Legal funding is a solution that was created by experts in the law so that the contingency fees of plaintiffs and attorneys could be taken care of more easily. This solution eases the cash flow problems that many law firms finding themselves facing (like paying for expert witnesses) when operating normally.

Basically, plaintiffs and attorneys receive the funding they need with the expectation that they’ll be able to pay back the loan once they get future receivables.

Until plaintiffs receive the money, they don’t have the capital they need just yet and are in a situation that is emotionally or physically traumatizing (or both).

Until Law Firms or attorneys receive the money, they don’t have the capital they need to push their business forward but will be able to pay off the loan once they have won or settled some of their cases

Other names for law firm funding include “legal funding,” “settlement loans,” “lawsuit loans,” “lawsuit lending,” and “litigation lending”

How Do Law Firm Loans Work?

If you decide to apply for a loan, the legal funding company, which is a third-party company, will provide you with money with the hope that you’ll win the case. You would have an expected amount you’d get when you win the case.

After you win, you would pay back the loan with a certain percentage of your winnings—usually around 30% or 40%.

However, if the case or cases all fail, the third-party company doesn’t receive money back from the law firm. They lose the money that they invested in the business – This is referred to as a Non Recourse Loan.

The Difference Between Law Firm Funding and Loans

Something important to note is that law firm loans are different from loans. When you get a loan, you have to pay upfront fees, and you also have to deal with points and monthly funding. This is very different from a law firm loan.

There are typically some fees when you get a law firm loan, usually to cover underwriting costs. However, even with these fees, you aren’t expected to pay them back until cases are won or settled...

Why Law Firm Loans Make Sense

Even though lines of credit and bank loans are less expensive and more common as funding options, going to a bank for a loan might not actually be the best choice for the owner of a law firm. This is for several reasons.

First of all, when you’re applying for a LOC or loan, the lender will require you to present your non-liquid assets. For example, real estate, stocks, or bonds.

These assets as used as collateral, which means that they demonstrate that the person or business that has taken out the loan can pay the loan back.

Many law firm owners might not necessarily have this type of collateral. Chances are, they’ve spent much of their money investing in future cases or paying for their law office rent.

Another problem that comes up when applying for a traditional loan is the need for a high credit score to be accepted for the loan (or to have a reasonable interest rate).

As a law firm owner, your credit score might not be high because of work-related expenditures.

Additionally, paying the monthly payments may not just be possible for you, as you need to have a successful case to make the money for paying back the loan.

You may not have this money yet, even though you know you will in the future. For this reason, the best loans for you can be la aw firm loan.

The Steps in Getting A Law Firm Loan

If you’re considering getting a law firm loan, there are several steps you take. First, you’ll get in touch with the third-party lender about the amount of money you need to be lent. When this happens, they’ll purchase a percentage of your future legal winnings.

In terms of collateral, the third-party company will accept your law firm’s case inventories.

This is evidence that you’ve been successful enough in the past that you’re likely to win your case—which means you’ll theoretically be able to pay back the loan.

It’s important to note that they won’t do a credit history check.

You also won’t be personally responsible for the loan. When it’s paid back, the money will be taken directly from the obligor, administrative, or attorney escrow accounts.

The Role of Underwriters

When you get a law firm loan, there are underwriters on the team at the third-party company who will review your application, determine your eligibility, and customize the funding package you finally agree to with the third-party lender.

To do this, they first study the cases with which you’re planning to pay back the funding.

By taking a look at past, similar cases your law firm has handled before, they’ll get a good idea if you’re likely to win this case. Additionally, they’ll look at the details of the case itself to make this evaluation.

They’ll also determine how much funding they can give you when they would need the money back by, and the discount rate.

Once You’ve Been Approved

If the underwriters approve your law firm loan, they’ll purchase a portion of your future receivables. This will come from the obligor account. Once this happens, you’ll usually only have to wait 48 hours or less to get the money you need.

The third-party company never purchases what you expect to be the entire legal fee or settlement amount. This is to minimize risk on their end and to make sure that you’ll have some access to future funds.

Usually, the percentage amount they’ll purchase is between 10% and 50%.

Types of Legal Funding

There are several types of legal funding you can receive. These include pre-settlement funding, post-settlement funding, voucher funding, and line of credit. We’ll review each of these in detail now so you can decide which is best for you.

With pre-settlement funding, the settlement amount hasn’t been determined yet. You’ll pay a higher interest rate for the funding because it’s a higher risk for the legal funding company.

You can use this type of funding to pay for current expenses and the day-to-day running of your law firm.

With post-settlement funding, the settlement amount has already been reached. For this reason, the interest won’t be as high.

If you have public defenders in your law firm, then you can also be eligible for voucher funding. Because many public defenders have to wait a long time to receive their state-provided pay, this can be a helpful solution to them.

Voucher funding works a lot like post-settlement funding, with the legal funding lender purchasing part of the fee the public defender expects to receive.

Finally, there’s the line of credit option. However, these work slightly differently, as they aren’t advances. Instead, they work more like the lines of credit you’d get through a bank.

If you want to advance your practice, this is a great option, as you can access the capital you need as your law firm grows.

Need More Information?

Now that you’ve learned everything you need to know about law firm loans, you might need more information. Maybe you want to learn more about a specific type of legal funding loan. Or maybe you want to find a law firm provider near you.

Whatever information you need, we can help. At Lawsuit Loans 911, we’re experts when it comes to law firm loans. We also provide law firm loans and get them to you fast.

To learn more about how we can help you, Click here for detailed information Law Firm Or Attorney Funding Options.

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Attorney and Law Firm Loans

HOW TO GET LOANS FOR ATTORNEYS & LAW FIRMS

ATTORNEY LOANS

ATTORNEY LOANS – LAW FIRM LOANS

In 2018, the United States was home to an astounding 1.33 million active, licensed attorneys. That figure signifies an increase of more than 15% from a decade ago. Thus the greater need for Loans for Attorneys

The above statistics don’t even include the bar passing-graduates of the Class of 2019 yet. This class alone constitutes of 33,954 graduates.

In any case, becoming an active, licensed lawyer means that you can now launch your own law firm. However, that would require thousands of dollars that you may not have access to at the moment.

Unless, of course, you apply and qualify for financing and loans for attorneys.

That’s right — there are several ways to finance your law firm, just like how businesses can take out loans.You can apply for Loans for Attorneys.These financial programs for lawyers, however, are not like your run-of-the-mill business loans. For starters, most of these law firm funding services are non-recourse.

Ready to learn all about opening a law firm and how attorney loans or law firm financing work? Then let’s get this guide started!

why start a law firm

WHY START A LAW FIRM?

Why Even Start a Law Firm?

In one survey, more than three-quarters of employees said that they feel “on their own” in their company. They believe that their employers don’t give them enough tools or help to grow their careers. As a result, many of them file for resignation.

Workplace politics is another main reason workers quit their jobs. It has such a massive impact, in fact, that at least one-third of employees have left a job because of it.

Besides, as you may have likely experienced, law firms have very competitive environments. The nature of the work itself is competitive — being a lawyer is all about winning a case for the client, after all.

Without proper management, excessive competitiveness can become very stressful. Over time, this can take a huge toll on one’s self-confidence. Ultimately, you may not experience the growth that you’ve always wanted as a lawyer.

These are problems that you can have direct control of if you start your very own law firm. Since you’ll be your own boss, you can create a better workplace, not just for yourself, but for your people too. As a founder of a law firm, you can get away from and get rid of tiresome office politics.

At the end of the day, however, starting a law firm gives you more professional independence. You can take on more projects that interest you and allow you to focus on the niche you want to specialize in. All these then gives you more freedom to craft your own legal brand.

Career and Job Outlook – Loans for Attorneys can Help

Over 100 million cases — that’s how many get filed each year in US state trial courts alone. Federal trial courts, on the other hand, receive an estimated 400,000 case filings every year.

In fact, at the end of the 2019 fiscal year, US attorneys handled more cases than at the start of the year. During the beginning of the year, there were only 74,843 pending cases in US district courts. This jumped to 80,365 pending cases at the end of the year.

All these stats prove that there’s an indisputable need for attorneys. As a lawyer, you’ll always be in demand.

As a founder of a law firm, however, you can make your services even more easily available. This, in turn, can heighten the demand for your specific legal expertise and skills.

The Biggest Challenge

Court Cases Cost Money

Court Cases Cost Money

Note, however, that your law firm won’t just provide you a place to practice the areas of the law you want to focus on. It’s also a business, and that means overhead expenses and continuous costs. In some cases, such as in personal injury lawsuits, you may also have to rely on contingency fees.

Operating Costs

The costs of starting and running a law firm are the biggest challenges you’ll face. There are the rental rates of commercial space, for starters. Depending on where you’ll establish your firm, you could be looking at as much as $50 per square feet of office space. Loans for Attorneys sounds appealing

Outside of your firm’s expenses are the soft and hard costs of providing legal services. Soft costs often arise from legal research, electronic data storage, and paperwork. As for hard costs, these include court filing fees and paying for copies of medical records.

Delayed Client Payments – Use Loans for Attorneys

On average, processing of legal claim settlements can take anywhere from one to six weeks. That’s the average “waiting time” for claimants or plaintiffs to receive settlement money.

If you’ll work on a contingency basis, then you’ll also wait for up to six weeks to get paid for your legal services. If their claim or lawsuit doesn’t win, however, then you won’t receive any payment. Contingency fees, after all, are a “no win, no fee” type of legal expense.

Also, having a strong case doesn’t always mean that a claim or lawsuit gets paid on time. Payments for wrongful imprisonment settlements, for instance, can take three months to years. Many other lawsuits, particularly those for personal injuries, can take even longer.

Loans for Attorneys: Funding When You Need It

Regardless of how long it’ll take for a claim or lawsuit settlement, your law firm must continue to run. Bills and expenses,

Non Recourse Loans

Non Recourse Loans

however, won’t wait to get paid. Worse, not having access to a stream of funds can result in key pieces of evidence getting delayed.

In such cases, it’s best to consider law firm funding, which can take the form of cash advances and lines of credit.

Cash Advances

Get earlier access to funds from settled cases or finalized verdicts with a cash advance. With this type of litigation funding, you don’t have to wait for weeks, months, or years to get paid. So long as there’s a guaranteed settlement on the case, you can tap its funds even before you receive the check.

The exact amount that you can get in advance depends on your expected payment though. This payment refers to the agreed-upon fees that your client will pay you if you, as the lawyer, win the case. From there, the lender will make computations on your anticipated lawyer fees.

Once granted, you can expect the cash advance within 24 to 48 hours.

Line of Credit

A line of credit (LOC) is another way to get cash funding on litigation handled by your law firm. It works in a similar manner as a credit card in that you can borrow up to its preset limit, any time you need to.

The LOC limit will depend on your agreement with the lender, although it often depends on won cases. You can, for instance, have the limit based on the expected payments of settled cases or verdicts. You can also have the lender provide you a customized LOC program tailored to your law firm’s needs.

Either way, every repayment you make toward the LOC will “refresh” your limit. So, if you pay $1,000 on your LOC account, you can use that amount once again when the need arises.

Working Capital Loans

Did you know that as many as 69% of business owners tap their personal funds for the sake of their business? Such is the case whenever their business encounters financial issues.

For many who don’t have stowed funds, loans are the second most common option. This, in fact, is a usual occurrence, seeing that only about seven in 10 working adults in the US have some savings.

That said, working capital loans can be your law firm’s saving grace if you don’t have savings. Besides, you most likely don’t want (nor is it recommended) to use your own personal funds. Even if it’s your law firm, you need to separate business expenses from your personal life.

You can use working capital loans to fund your law firm’s daily expenses. You can use the money for operational costs, such as paying witness fees or court filing fees. You can even tap it to cover payroll and even your law firm office’s rental payments.

Why Litigation Funding and Not Traditional Loans

Grow Your Business

Grow Your Business

With litigation funding, you can take out non-recourse loans or advances. This means that your repayment to the lender will depend on the outcome of your case. If you don’t win the case for your client, then you also won’t owe the lender anything.

Non-recourse lawyer cash advance programs also don’t have specific repayment deadlines. Again, it’s because you have to repay the lender only when your client receives the settlement. As such, you don’t have to worry about compounding interest rates on your attorney loans.

These are benefits that you can’t expect from a traditional financial institution. There are very few banks — if there’s even any at all — that provide non-recourse attorney loans. In addition, almost all conventional loans depend on a borrower’s credit score.

Get the Funds You Need to Grow Your Law Firm Now

There you have it, your ultimate guide on litigation funding and loans for attorneys. Now that you know you your law firm has many financing options, it’s time to explore each one of them. The sooner you do, the sooner you can grow your law firm and make a mark in the legal industry.

If you’re looking for reliable law firm financing programs, we here at Lawsuit Cash 911 are ready to help. Please feel free to check out our numerous innovative funding options for lawyers! Don’t hesitate to give us a call too, if you need help applying for law firm funding.

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