The No-Stress Way to Efficiently Fund Your Law Firm
In this blog, we focus on how to efficiently fund your law firm and what the typical lending options are for contingency fee law firms.
The Challenge of Starting Up
Starting a business is hard. Starting a contingency fee law firm is harder. For many entrepreneurs, working for yourself is exciting until you realize that owning your own business also involves owning everything that entails. It can be overwhelming managing the firm’s business needs while also litigating.
At the start, many lawyers fund their practice with personal savings or investments from family and friends. As your firm celebrates its first wins, you may reinvest earnings back into the business to pay for case costs, hire talent, or run marketing campaigns to acquire more cases. However, as your practice grows, your reinvestments will begin to spiral as you take on more cases and invest even more into cases with high earnings potential. Soon you will notice there is little cash leftover to for critical business initiatives. Your firm will essentially be living paycheck to paycheck, waiting for the next case payout for funding.
Managing the Financial Balancing Act
This painful balancing act is one contingency fee law firm owners unfortunately know very well. It hampers the firm’s growth potential, never having enough to invest in initiatives that could accelerate growth such as case management technology, digital advertising campaigns, or hiring high quality attorneys – these all require capital and liquidity but yours are tied up in case costs.
At this point, most law firm owners go to their bank for a business loan. But most bankers do not understand the business model of a contingency fee law firm and struggle to accurately value a law firm’s greatest asset — their contingent case inventory. Consequently, many firm owners will either be rejected or receive a loan for far less than their business needs.
The Value of Allying with a Strategic Banking Partner
Founded by trial lawyers, Esquire Bank uniquely understands this pain. Esquire Bank has the expertise to value a firm’s case inventory and the authority to lend against it. The advantage of obtaining financing with an attorney-staffed bank are manifold, but the most important are:
First, the bank has the expertise to accurately value your case inventory and can offer loans that enable you to make the necessary investments for exponential growth.
Second, the bank has products tailored to contingency fee law firms: a Case Cost Line of Credit to free up the cash tied up in cases and a Working Capital Line of Credit to invest in growing business operations.
Third, while many commercial banks have onerous fees and covenants, Esquire Bank does not. Additionally, Esquire Bank does not require the firm’s partners to put up personal assets as collateral.
Juggling the roles of law firm owner and litigator are stressful enough. Making the right decisions about how to fund your law firm to scale growth should not be.
Meet with Esquire Bank
Interested in modernizing your law firm through technology? Learn how you can fund your law firm by financing case costs and freeing up capital to invest in talent, marketing, technology, operations, case acquisition, and growth. Schedule a no-obligation consultation with an Esquire Bank Business Development Officer today at a time convenient to your schedule.
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* The information provided on (or accessed through) this blog is provided for general informational purposes only and is not intended as, and should not be relied on for, law firm operations, tax, legal or accounting advice. Some of the information may not be applicable or appropriate for all law firms. Please consult your own tax, legal and accounting advisors as appropriate. Results may vary by law firm.
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