How Litigation Finance Can Help You Grow, Take Over or Retire
Over the last decade, litigation finance has evolved to offer law firms tremendous flexibility and opportunity. These are exciting shifts that go beyond the traditional funding needed for a firm’s day-to-day operations. Instead, they offer strategies to help a firm thrive in its much larger overall mission and become increasingly valuable.
Traditionally, the legal community has viewed litigation finance primarily to keep the lights on while firms pursue promising cases likely to yield substantial settlements. Worthy cases become assets, with investors willing to provide financing in exchange for a portion of a winning settlement. Law firms obtain funds to cover overhead and professional disbursements, and clients who otherwise could never afford it, are able to retain quality legal representation.
This may be where litigation finance started, but innovative applications are giving law firms the means to do much more. Just consider these often overlooked, yet highly effective uses of litigation finance.
1) Buy out an existing law firm.
This can be a particularly effective use of litigation finance for law firms wanting to accelerate their growth. Especially in highly competitive areas, beginning as a known firm versus an unknown holds a certain promise of established longevity within the market. Likewise, it can be equally effective for experienced lawyers who are ready to move up or to strike out on their own but want to retain the security of an established practice. It’s also a resourceful way for established firms to expand into another jurisdiction or practice area. It’s a selective, smart way to open an office in another city or diversify focus.
2) Purchase another firm’s case inventory.
Each case that a law firm takes on has value. Some hold greater potential than others, but together, they comprise a firm’s real value. Gaining access, however, to cases with value and building a strong portfolio of them often comes only with time. A large docket of cases is typically the result of hard-earned referrals and extensive efforts devoted to community outreach and marketing efforts. After all, many times, people don’t even realize they have legal options until someone tells them that they do. That’s what advertising is all about. The problem is that the considerable expense doesn’t guarantee more clients, and a firm still must screen and evaluate a potential slew—or dearth—of unfiltered responses. Instead, you may be able to purchase an existing portfolio of vetted cases. This may be just what your practice needs to get re-energized during a slow period, expand into a new practice area, or explore a new geographical market.
3) Create a viable retirement strategy.
Litigation finance also holds value for the other side of the transaction—lawyers ready to sell their firm and retire. Junior partners frequently want to take over the firm, but typically lack the financial resources to buy out the senior partner who wants to exit. Having a litigation finance strategy in place makes a transfer easier and provides an objective valuation. This allows the departing partner to take case value with them without stripping resources from the practice they spent their life building. It also allows the selling partner to cash out immediately and completely without waiting years for case resolutions. Everyone can move on—you with a lump-sum payment and the remaining partners with the resources needed to see cases to completion.
So, how does the litigation finance process work for these often-overlooked scenarios? The first step is a thorough analysis of the scope of the assets involved. Whether that’s a single case, a group of cases or a firm’s entire inventory, it’s assessed as an asset—collateral for a lump sum investment that will let you grow, take over or even retire.
Litigation finance companies recognize that legal case portfolios are assets with a future and are willing to wait for the return on that investment. Where traditional banks and financial institutions fail—unable to place a valuation on a portfolio of open cases spanning various timelines—these companies excel and they’re willing to make funds available today. Retirement doesn't have to wait, litigation finance can make it a reality.
Litigation Finance is hard, REMO makes it easy. For more information contact: admin@remolitfin.com
