"Necessity is the mother of a litigation loan." – David Cook
Law Schools generally fail to provide graduates with the financial and business training needed to run a successful law firm. As a result, young lawyers start their careers at a considerable disadvantage, with an education heavy in theory and light in practical necessity. One of the biggest gaps created by this lack of business education is how to manage and control expenses. While for many business owners, managing expenses is the first consideration when starting a project, lawyers oftentimes begin a new case without a budget, without the necessary resources to take the case to the end, and without a real strategy for when things do not go as planned.
In order to be successful in your practice, creating a budget and careful planning are essential. You may have an incredible case with huge damages, but without the financing, budget and plans, what seemed like the case of a lifetime can become a true burden and could lead to mistakes or even malpractice.
So what can you do?
Litigation financing has erroneously become synonymous with financing for the plaintiff to cover their medical expenses and living costs while they wait for the case to settle. This common tool used by Plaintiffs is great for the Plaintiff, themselves, but what about all the expenses the law firm is advancing? Aren’t there more efficient ways to finance these case expenses rather than either self-financing or bringing on co-counsel? The answer is a resounding YES. Litigation financing helps firms prepare for the unexpected. Particularly when a case is complex, there is no telling how much time will pass before the resolution. The longer the trial takes, the more expenses accrue. And each of these expenses, when advanced by the law firm out of their own cash reserve, create a deficiency in needed areas such as staffing, expansion and marketing. Litigation finance is much like an insurance policy against those unexpected costs and time frames. It helps lawyers focus on the results of their work rather than worrying about settling cases due to financial shortages. When used responsibly, taking a loan to finance case expenses can unlock financial freedom for the law firm and allow the firm to obtain the best result for the client.
Case cost financing provides law firms with the much-needed capital for ever-increasing case expenses, allowing law firms to use their own cash to pay for the law firm’s operational expenses. These loans can be an incredible asset for firms, whether the firm is new or it is an established law firm with many cases. Every business needs cash to grow, and this unique type of financing allows law firms to leverage their cases for even greater returns. Whether the financing is used to pay for expensive experts, travel to take depositions in person, purchase impressive trial technology to show to the jury, conduct accident reconstruction, or invest in focus groups, the use of a loan for case expenses is the best way for a law firm to run the firm like a business and unlock tremendous growth opportunities.
Sometimes all it takes is some planning and organization. For example, when considering case costs, a firm will periodically re-evaluate its needs based on growth and projected expenses. When incoming revenue is not sufficient to ensure steady growth, LevelEsq offers customized financing plans to help you inject cash flow into your cases so the cases have the best chance for success and your firm has the best opportunity to earn the best fee on the case. The financial freedom created by the use of leverage will create better results on your cases, leading to happier clients, more consistent referrals and a more profitable business.
Can my firm finance all cases or just a select few?
Depending on your intended targets and growth trajectories, LevelEsq can help you find a customized solution that is right for your business goals. Our experts will analyze your growth, projected targets, and risks and work with you to offer an easily customizable solution to support your goals.
Even if a company's growth trajectory is favorable, sometimes life happens. Since it's impossible to predict every outcome, litigation financing provides an extra layer of protection against unexpected litigation costs. For example, trials often drag on and accrue additional fees, only to end with an appeal. Litigation financing fills the gap that helps you stay prepared against unexpected adversity.
In sum, consider your case cost/operating expenses when growing your firm and prepare for the unexpected with litigation financing. A bulletproof approach will set you up for success despite your opponent's appeals.