Do you mostly handle small tort claims that are worth less than 6 or 7 figures? Many post-settlement funding companies only provide funding against large cases with big settlement amounts. That approach leaves a lot of small law firms with no opportunity to get cash to run their business. Fortunately, not all funding companies reject law firms with small cases. That’s why attorneys need to carefully research their financing options and look for companies who will work with them to find a funding solution.
Lawyers who focus their practice on “low value high velocity” cases have their own unique challenges. These slip and fall, auto accident, workers compensation, cruise line claims and other tort claims are numerous and settle within a reasonable amount of time, but have low monetary value. This work is important since these injured claimants are just as entitled to representation and compensation although they do not have large 6 figure cases. The lawyers also have as big a need for short-term funding as do attorneys who deal with larger cases. It still takes time to get those smaller amounts in and while a firm is waiting for a settlement check to arrive, there are bills that need to be paid. Despite the lower dollar figures, an experienced funding company should recognize the needs of these law firms and be willing to provide cash by grouping cases together.
For illustrative purposes, let’s say a lawyer has 10 settlements each worth $25,000 and will receive $83,000 in fees staggered over time. Those settlements can be grouped together in one “bucket” for purposes of providing post-settlement funding. The funding company can be paid back in one of two ways. Under a “first to pay” option, the total amount funded by the funding company is paid down from the first cases that settle and pay. Once it’s paid off, the attorney keeps the balance of the fees on the subsequent cases to settle. Alternatively, payments can be staggered so that as cases pay off, the funder receives its payments as a percentage of each settled case.
Law firms should be wary of working with funding companies who only provide a “one size fits all” approach. A better choice is to work with a funder who is willing and experienced with tailoring a solution to meet a firm’s needs.
RapidFunds® provides funding in a broad array of cases. If you need funding to run your practice, learn more about how we can help.