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What is law firm portfolio funding?
Portfolio finance is a funding product for litigation that enables law firms to leverage a pool of cases into one single funding contract and realize a portion of those future fees immediately. Apart from single-case finance, which involves a litigation funder to work with a client and pay a portion of all fees and expenses associated with a single case, investments for a portfolio of cases allow law firms to continue to be paid partially by the hour while focusing on ongoing growth and success. Capital is often supplied on a non-recourse basis, which means we bear the risk of loss and only receive a return if the transaction is successful.
How it works.
Once approved, our team will work with you to monitor the progress of the underlying cases, manage adjustments based on recovery and recoup the investment return. Please note that we do not control or influence litigation strategy or recovery in any way.
Submit your case
After submission and acceptance of the application, the party looking for funding will sign a non-disclosure agreement (NDA) with us.
Pre-qualify
Then, the law firm and Baker Street Funding will develop a set of parameters (matters relating to a specific practice area, cases of a certain size, matters from a specific office). Then you will submit the portfolio of cases for consideration.
Evaluation
We will then work through a due diligence process with a focus on the underlying cases securing the portfolio.
Get capital
If the opportunity fits within our investment mandate, we will prepare a term sheet and execute a financing agreement. Once that agreement is signed, the capital will be deployed directly to you.
How it can work for you.
Portfolio finance lets you obtain capital while avoiding unnecessary risk. You can use the money in a variety of ways, and it isn’t limited to paying attorneys’ fees or covering the immediate costs and expenditures of the underlying conflicts. At Baker Street Funding, we regularly accommodate law firms that are new to this financing solution, along with those with higher leverage. We may arrange solutions if your legal practice requires an emergency capital injection or wants to level out revenue.
Finance operating costs.
Portfolio financing works like any other form of corporate capital. Use it to support law firm operations, and get stability in unpredictable times.
Create new ventures.
Legal finance for portfolios allows law firms to approach prospective and current clients with attractive fee agreements without having to individually negotiate the conditions of each issue. Competition is identified by more than half of attorneys as a serious business problem. This is especially true in times of economic uncertainty when clients want their companies to accomplish more with less.
Get partners ready for success.
Even in a downturn, our legal finance portfolio may provide developing partners with the resources they need to secure internal clearance and pursue solid cases.
Move to new billing structures.
Move to new billing structures without raising risk exposure, whether you want to actively pursue additional cases on a contingent basis or satisfy specific clients' chosen fee structures.
Compensate managing partners.
Litigation finance assists businesses in addressing the persistent difficulty of compensating partners who work on multi-year contingency situations without affecting other firm partners.
Learn your options.
Monetization
Portfolio monetization can provide a substantial amount of up front capital to law firms to help cover legal expenses, operating costs or expansion costs by collateralizing your future receivables.
Risk-share
Funding for risk share portfolios allow law firms to expand their current portfolios or for corporate plaintiffs looking to pursue additional recoveries. These portfolios consist of a number of large cases and the capital is used to pay fees and expenses as they occur.
Expense only
Financing for expense only portfolios help cover the financial cost of litigation. Law firms take a large amount of risk with contingency based fees and sometimes look to hedge the risk posed by case expenses. This type of portfolio helps alleviate the cash flow issue that many firms face.
Other types of funding products.
Explore our financing solutions.
With Baker Street Funding, our sophisticated litigation finance agreements are built to match the demands of your law firm’s daily operational and long-term objectives. Our extensive expertise helps assess the right solution for your current needs. To that aim, we play an important role in the expansion ambitions of top US law firms. Let us invest in your portfolio of cases and increase profitability and realization rate for the whole litigation practice. Solve complex challenges from opposing parties, fierce competition to domestic and international growth.
FAQ.
How typical is this funding solution?
Investment in a portfolio of cases for law firms is on the increase in both old and new markets, and it will continue to play an important role in the industry’s expansion. This financing option allows you to decrease your own business risk and take on more cases without raising your overall exposure. It is becoming a more strong force in the legal services industry as more and more law firms recognize that getting non-recourse finance might boost their prospects in court.
What are the benefits?
Portfolio financing is now becoming more popular among law firms. However, many attorneys are still unaware of how it may assist their firms.
This type of financing enables law firms and businesses to group several cases under a single funding deal. Baker Street Funding normally provides capital on a non-recourse basis. We accept the investment risks and only profit if the litigation is successfully resolved.
Cross-collateralization often decreases the cost of capital, and the portfolio can contain a mix of claims and defense proceedings. Portfolio-based financing arrangements help law firms fund high-value recovery projects while also providing a powerful tool for developing new business sectors and pitching and winning new business.
What can I use the capital for?
Since our investment is in the law firm rather than the cases, you can use the capital for litigation-related costs or monetize a litigation value.
Some examples of how clients use the funds include larger strategic goals, employing competent lawyers, moving into new markets, making expansions, or addressing fixed fee overruns.
How much does Baker Street Funding charge?
Portfolios often comprise a combination of high- and low-risk cases, as well as matters from other practice areas and defense matters. The good news is that the risk to investments is decreased since each case acts as collateral for the others in the portfolio.
As a result, capital costs are often cheaper than when it is given on a case-by-case basis.
You will be looking at a non-recourse loan for a 1.5% to 2% simple rate per month.