Legal Funding for Attorneys
About Legal Funding
Legal Funding provides attorneys the cash they need to grow and expand their law firm, take on new clients, pay bills, and more.
Attorneys are going to need cash to expand their law firm. At Balanced Bridge Funding, we offer you a range of customized Legal Funding solutions that are fast, professional, and discreet. Legal Funding is designed specifically for attorneys and is appropriate for law firms of all sizes.
What is Legal Funding?
Legal Funding includes all types of financing solutions for attorneys. These solutions are sometimes called legal finance, third party litigation funding, factoring, attorney line of credit, and financing for attorneys. But whatever you call these various financial vehicles, Legal Funding is about financing operations, growth, and future opportunities for law firms.
If you’d like to take an in depth look at Legal Funding, please check out our Legal Funding Essential Guide.
Why Use Legal Funding?
Attorneys make use of Legal Funding for many different reasons but there are three reasons we hear repeatedly from our customers at Balanced Bridge Funding:
- Lawyers need Legal Funding to take on new clients
- Lawyers need Legal Funding to grow their law firm
- Lawyers need Legal Funding to help manage cash flow
Let’s Take A More In Depth Look at These Three Reasons
#1: Legal Funding to Take on New Clients
For lawyers, taking on new clients and new cases is expensive and time consuming. Even when a plaintiff attorney wins a case, it might take a long time before a law firm gets paid for its work. This can make law firm partners hesitant to take on new clients or certain types of cases because they know it is going to create a cash flow problem for the firm. Without the availability of Legal Funding solutions, law firms could only rely on their own cash reserves to fund the ongoing operations of their companies. But if you have Legal Funding available to use, it makes it easier to take on more cases, more complex cases, and larger cases, knowing you have financing available to you to handle the expenses new clients inevitably bring.
#2: Legal Funding to Grow Your Law Firm
Big businesses never hesitate to use “other people money” to finance their growth. They sell stock, sell bonds, take out loans, seek out private equity, use lines of credit, and more to finance their future growth. Why should a law firm be any different? If you finance your future growth on your own limited resources, you have limited power and strength to grow your law firm. But if you use finance companies to fund your law firm growth, you have potentially unlimited strength. That is why they call using other people’s money “leverage.” If you want to grow your law firm you are going to need to take on new talent, purchase new technology, and expand into new practice areas. All of this costs money; money you usually have to invest before you have ever have work to cover the expense. That way, when the new work does come in, you are able to handle it. Many small business owners have tried to grow using only their existing workforce and old machines or technology; what they find is that either their existing team becomes strained and burned out, or they outstrip the capacity of their machines or technology. But to take on new people and new technology before they have work, strains their profit margins and cash flow. But if they embraced using leverage, they could cover the additional expense without straining cash flow. This is how businesses grow. It is also why many never grow – they try to avoid using other people’s money to finance their growth.
#3: Legal Funding to Managing Cash Flow
Cash flow refers to two flows of cash: Cash Flowing into your business – and – Cash Flowing out of your business. If your cash flows out of your law firm faster than it flows in, you will have cash flow problems. Additionally, when you have to continuously pay bills, rent, and salaries every month, but it takes you years to get paid for your work, this creates cash flow problems. Your cash goes down, down, down, and only periodically goes way up. And if you run out of cash to pay those monthly bills, regardless of how much money you have coming to you, you are out of the game. You can’t pay bills with money you are owed. You can only pay bills with money you have available now. This is how Legal Funding came about – to aid law firms in overcoming these cash flow problems.
If you’d like to take an in-depth look at cash flow for law firms, please read our blog post Cash Flow 101 for Law Firms.
Legal Funding – Cash Flow Management – Growth
Legal funding is important to attorneys, and plaintiffs. Lawsuits take a long time to reach a conclusion, and even once a lawsuit is over, either by award, or by settlement, it can still take a long time (sometimes years) to receive your money.
While all of that is happening, there are expenses that pile up, experts that need to be hired for other cases, employees to pay, bills to pay, and other lawsuits to keep going.
The longer it takes to get paid, the thinner cash flow becomes.
Legal funding helps relieve the pressure by providing funding in advance of settlements and awards from lawsuits.
Legal Funding Companies – Why Work with Balanced Bridge Funding?
Not all Legal Funding Companies are the same. At Balanced Bridge Funding, we are professional, courteous, and discreet. Our clients like to keep their financing activities private, and we respect their wishes. When you work with us, you work with a group of true professionals with many years of legal funding industry experience, making us one of the best legal funding companies out there.
Is Legal Funding A Loan or Line of Credit?
No, legal funding is not a loan or line of credit.
Instead, a legal funding company purchases a portion of your future settlement or award for a fee. This gives you access to some of your money now, and we make money on the fee.
How Does Legal Funding Repayment Work?
When we purchase a portion of your future settlement, we own it. We are paid directly by the administrator of the settlement or award, as opposed to you paying us back (which is how a loan works). We get our money back directly from the settlement because we purchased it, and we own it.
Why Would I Want to Use Legal Funding?
Attorneys as well as plaintiffs use legal funding because it can take years after a case settles or litigation is concluded to receive a check. Most people (especially plaintiffs) don’t realize this. They tend to think they are just going to walk downstairs, and someone will be waiting with their money. It doesn’t work like that.
In fact, it can take years to receive payment from a settlement.
In the case of lawsuits against governments or municipalities, it could take decades (if ever) to be paid. These entities often have the ability to decide for themselves when they can afford to pay out on lawsuits or settlement agreements. Not only that, but in some cases, they are often allowed to prioritize which settlements or awards they want to pay out first. So even though you might have won a settlement “against the city” – you might be sitting in line waiting to be paid behind lawsuits that settled fifteen years ago. How long can you wait to be paid?
Legal funding provides you the ability to receive part of your funds now, which you can use to do whatever you need to do.
Is Legal Funding Better Than a Loan?
Legal funding can be better than a traditional loan.
For starters, when you want to apply for a traditional loan, you must specify what that loan is going to be used for (house, car, boat, etc.). And if you can’t specify what the loan is going to be used for, then you are applying for an unsecured line of personal credit. If you can qualify for this type of loan at all, your interest rates will be much higher than a secured loan. Not only that, but people who do not have perfect credit rarely qualify for unsecured loans.
But with lawsuit funding, you are almost always approved. Your credit isn’t normally impacted because we are not “loaning” you the money. We are buying part of your future settlement from you at a discounted rate.
As for Law firms – trying to get an unsecured line of credit might be nearly impossible for a newer or smaller law firm. And attorney lines of credit will nearly always have limits that are lower than you need. But with legal funding, you can receive funds for each case you have pending, as opposed to trying to fund multiple cases using a single line of credit.
Banks often don’t understand the law industry and how law firms work. It isn’t always clear to a bank underwriter that a law firm case load is an asset, and a highly valuable one. At Balanced Bridge Funding, we specialize in working with law firms, and we know how valuable your caseload is and how to help fund law firms appropriately.
Why is Lawsuit Funding Better Than an Attorney Line of Credit?
Lawsuit funding is better than an attorney line of credit in many ways.
Funding From All of Your Cases
There is no limit to the number of cases you can receive lawsuit funding from. If you have ten cases waiting to be paid out, you can receive legal funding for each of the ten. With a line of credit, you get the amount you qualify for, and that is it. A line of credit doesn’t generally grow just because you take on more cases.
Getting What You Need
New law firms, or smaller law firms, you might not qualify for a line of credit at all, and if you do, it probably won’t be as much as you need to truly fund your operations. When you use lawsuit funding, you can receive funding for as many cases as you have won or settled.
– It can take a long time for a new law firm to find a bank or credit union willing to loan them money. But you could be approved for legal funding same day or next day.
Learn More About Legal Funding
To Learn More About Legal Funding, read our resource entitled Legal Funding: The Essential Guide.
Quick and Discreet – Hassle Free Application Process
Call: 267-457-4540 to speak to one of our legal funding experts.