First things first, what is legal funding? In simple terms, legal funding is a mechanism that enables attorneys and plaintiffs to have cash flow based on the value of future proceeds.
This type of financing has been growing substantially in recent years, even though it is considered to be a somewhat new field.
Legal funding intends to give plaintiffs and law firms solace and breathing space when they are short on capital. Funding helps plaintiffs after they’ve been through considerable trauma and emotional turmoil and helps attorneys grow their firms when needing a financial boost.
In simple terms, everyone gets to be better off as a result of legal funding arrangements. Attorneys and claimants get to have enough capital to proceed with their legal case while taking care of their finances, and the funding firm gets to take its share of the winnings as agreed beforehand once the case is won and the payout is received.
Is legal funding similar to a loan?
The simple answer to this question would be ‘No.’ Legal funding is simply not a loan. More often than not, when law firms are looking to ensure enough credit to proceed with their caseload, they tend to opt to approach financial institutions. What these banks will do is they will provide law firms with a loan or a line of credit.
There are two main problems with such products: Firstly, they do not take into account the specificities of legal practice, and generally, they do not offer as much capital as would be needed. Secondly, every loan needs a guarantor, and therefore you would personally need to guarantee your loan unless the firm in question has a long-standing relationship with the bank. This means that, traditionally, conventional loans are a risky instrument when used for this particular purpose.
On the flip side, at Baker Street Funding, we ensure no such risks are involved. If anything, our funding process is solely based on your current and former case portfolios. Your history with previously settled cases is also taken into account.
Most importantly, all of our funding agreements are non-recourse. For that reason, you don’t have to act as a personal guarantor of the case’s success.
What can law firm funding be used for?
Legal financing is a magnificent asset to attorneys because it helps them access cash flow, cover expenses, and grow their practice while litigating a case or waiting on a settlement.
You can use law firm financing for profitability purposes. It gives you access to capital that you otherwise could not get from a traditional financial institution. These are some of the ways you can use law firm funding:
- Office space.
- Marketing capital.
- Cost of a large corporate dispute.
- Expert witness fees.
- Discovery costs.
- Laboratory fees.
- Deposition expenses.
- Administrative expenses
- Medical record expenses.
How do you fund a law firm?
The process for obtaining legal funding for your law firm is quite simple, and it takes 72 hours. The first step in the process is to request legal financing from Baker Street Funding, following which we will review your application, including your basic information and list of cases.
Secondly, we will then proceed to conduct our due diligence process, further setting up a conference call in order to discuss any queries that we might have about your case portfolio and your litigation experience.
The third and final step then is the approval of the funding. Should your application be successful, then the final terms are generated, and a legal financing contract is drafted and sent to you for your approval.
Once the contract is approved and executed, you will be wired the funds via wire without undue delay.
Generally, the criteria used for funding to be granted are as follows:
- How strong your case is and the likelihood of a favorable outcome;
- The potential for returns through settlements or verdicts based on the outcomes of past cases;
- The potential and forecasted timeframe for the conclusion of the litigation process; and
- The potential profit for our investors and how much the client will get after the litigation or settlement process are finalized.
The bottom line
Legal funding can be used for a variety of purposes. When plaintiffs are on the receiving end, funding can cover lost wages, medical bills, or even daily expenses. This access to money can give plaintiffs some breathing space when it comes to continuing with their daily lives during the pendency of a civil case.
When, on the other hand, it’s lawyers that are getting funded, rest assured that, unlike banks, we at Baker Street Funding do not require collateral. On the contrary, your funding application will solely be processed based on the likelihood and potential value of a settlement or judgment. Likewise, this also applies when plaintiffs get funding, and therefore putting up collateral and credit checks are not part of the equation, come what may.
Our business model is focused on helping people by providing the best rates possible. Baker Street’s Legal Funding solutions for law firms and attorneys are offered at a 2% flat rate. We understand the financials of law firms, and as always, we remain determined to continue funding attorneys and their plaintiff clients, which in turn enables them to meet long-term strategic goals.