What is Law Firm Finance?

Law firm finance refers to the arrangement where law firms can take on funding, secured against their potential future income. Law firms are increasingly seeking finance solutions to help drive growth, improve liquidity and manage risk. For law firms involved in a substantial amount of claimant-side litigation and arbitration work, flexible finance allows them to improve cash flow management and increase risk tolerance.

Law firm finance can take several forms either supporting a portfolio of claims or a direct facility to the business which they can draw-down on a pre-agreed basis. This facility allows law firms to cover an agreed proportion of up-front expenses associated with specific claims or pursue a greater number of claims than they might normally while preserving their own capital.

Typically law firm finance arrangements are highly bespoke based on the size, and type of law firm and the portfolio of cases it is likely to be pursuing. Repayment terms vary widely, often incorporating elements such as an agreed percentage share of future fee income, an agreed percentage of a successful judgment/award/settlement on a case or even, on a particularly diverse portfolio, a monthly interest rate.

Woodsford is a founder member of both the International Legal Finance Association and the Association of Litigation Funders.