Law firm financing, also known as law firm funding, is an innovative way for attorneys and law firms to cover litigation expenses, expand services to clients, and maximize cash flow by using non-recourse capital from a third-party in exchange for a portion of the financial recovery from a portfolio of lawsuits.
Litigation funding levels the playing field for litigation participants, by enabling parties with meritorious claims who might otherwise be unable to effectively bring a lawsuit to have the requisite funding for their litigation needs and expenses.
How can law firm financing be used?
Funding can cover your hourly fees, expert witnesses, trial exhibits, and court fees.
Use funding to cover firm expenses, from salaries to overhead and operations.
Litigation finance can help amplify marketing program development.
Lawsuits can be exceedingly expensive and progress slowly. Utilizing external law firm funding provides significant growth opportunities for attorneys, law firms and their clients. Not only does it help reduce cash flow volatility, but it offers the flexibility to acquire new clients, retain current clients and pursue new business opportunities.
How is law firm financing different than traditional bank loans?
Law firm financing provides a practical and accessible alternative means of financing to bank loans or lines of credit. Traditional banks not only require mainstream collateral in exchange for credit, but also typically require a personal guarantee from the partners of the law firm. Banks will not accept unearned contingency fees from cases as collateral.
Specifically, law firm funding differs from traditional bank loans and lines of credit in two distinct ways:
No Fixed Payments
Law firm funding is specifically designed for attorneys and law firms, and does not require fixed payments.
Law firm financing is not a loan--rather a non-recourse advancement of capital, collateralized by future contingent fees.
The availability of bank loans and lines of credit to law firms can be an uncertain and lengthy process, leaving attorneys and law firms without the necessary capital to pursue new business, execute marketing campaigns, and grow their practices.
Accelerate growth with law firm funding
Law firm financing is an effective mechanism for attorneys and law firms seeking to ease the lumpy cash flow cycle associated with contingency fee and commercial legal practices.
Law firm funding provides liquidity for attorneys and law firms engaged in a diversified practice, allowing them to focus on litigating cases, and improving litigation outcomes against well-capitalized defendants.
Improved Cash Flow & Operating Capital
Attorneys and law firms require a steady flow of working capital to effectively run their practice. It can be difficult to succeed in a competitive market if faced with delayed payments, out of pocket litigation costs, and protracted cases. LexShares enables attorneys and law firms to monetize illiquid assets, generate working capital, and build a cushion for personal expenses, when necessary.
Growth of Your Law Firm & Legal Practice
Without adequate funding, attorneys and law firms might otherwise be unable to execute marketing campaigns to acquire new clients. LexShares’ law firm funding enables attorneys and law firms to expand their reach.
Acquisition of Top Legal Talent & Expert Witnesses
The outcome of a case and size of the recovery often depends on the testimony of an expert witness. However, expert witnesses can be expensive, with rates that can exceed $1,000 per hour and engagements sometimes lasting weeks or months.
To ease the costly and time-consuming process of identifying, vetting, engaging with, and paying trusted litigation support, LexShares partnered with GLG Law, one of the leading expert witness services in the legal industry. LexShares’ partnership with GLG creates a more unified, efficient experience for law firms and clients striving to improve litigation outcomes by securing highly regarded expert witnesses.
Law firm funding is an essential method for paying expert witness fees, court expenses, and numerous other litigation costs, all while diversifying risk. Law firm financing also helps offset and reduce the volatile and potentially negative accounting impacts associated with contingency work.
Reduced Risk For Law Firms
Our law firm funding is non-recourse, which means that if you are unsuccessful in your settlement, judgment, or growth venture, you do not have to repay the lawsuit financing. Our capital is solely collateralized by your firm’s fees and we only collect a return in the event of a positive settlement or recovery from a judgment.
Flexible Payment Arrangements
Advanced overhead and working capital enables law firms to provide prospective clients with flexible and alternative fee arrangements, and ensures highly trained associates and appropriate resources are used for the case at hand.
After a settlement, receiving payment can take longer than anticipated. Litigation funding helps avoid cash flow delays by injecting capital upfront after the case has been settled while the process of receiving the settlement is ongoing.
LexShares offers two core funding products for attorneys, all designed to help share risk and avoid downside exposure.
We provide funding collateralized by multiple contingency fee matters which may or may not be related. Examples includes but are not limited to class actions and toxic and mass torts. Funding can be used for marketing programs, firm, or litigation related expenses.
We provide funding to cover capital for law firms collateralized against their entire case portfolio. Funding does not exclusively need to cover case costs but can be used to finance payroll and other firm expenses.
The LexShares law firm funding process
Attorneys and law firms are eligible to submit claims for review.
Submit your application for funding and execute NDA.
LexShares' team reviews your case.
LexShares sends a contract detailing terms of funding.
At LexShares, we welcome clients from most U.S. jurisdictions. Funding must exceed USD $200,000, with overall collateral valued at $2 million or greater. The maximum funding amount is uncapped.
LexShares funds all types of commercial claims, including whistleblower cases, breach of contract, intellectual property, fraud, judgments, professional negligence, MDL, business torts, arbitration, and insolvency and bankruptcy.
LexShares’ funding and underwriting process is highly transparent and straightforward, so funding recipients will always have a clear understanding of where they stand during the process.
Get funding from LexShares
Submit information about your firm to LexShares to discuss financing opportunities.
All accredited investors using the Site must acknowledge the speculative nature of these investments and accept the high risks associated with investing in legal claims including but not limited to concentration risk, lack of control over the prosecution of underlying claims and claimant's inability to assert and collect on their claims. Investment opportunities posted on this Site are “private placements” of securities that are not publicly traded, are subject to holding period requirements, and are intended for investors who do not need a liquid investment. The plaintiff may not prevail in their lawsuit, resulting in a loss of invested capital for investors. Investors must be able to afford the loss of their entire investment without a change to their lifestyle. Diversification does not guarantee profits or protect against losses. The securities are offered pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended, and are not required to comply with specific disclosure requirements that apply to registration under the Securities Act. Neither the US Securities and Exchange Commission nor any state regulator or other regulatory body has passed upon the merits of or given its approval to the securities, the terms of the offerings, or the accuracy or completeness of any offering materials. Neither LexShares nor any of its directors, officers, employees, representatives, affiliates or agents shall have any liability whatsoever arising, for any error or incompleteness of fact or opinion in, or lack of care in the preparation or publication, of the materials and communication herein or the or that the valuation of any securities offering is appropriate. LexShares does not give investment advice, provide analysis or recommendations regarding any offering posted on the Site. Prior results are not indicative of future performance; actual results may vary materially. Any testimonials are examples from clients or press, and may not be representative of your experience. They are not a guarantee of performance and they have not been compensated for their testimonials. Articles or information from third-party media outside of this domain may discuss LexShares or relate to information contained herein, but LexShares does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party articles, do not constitute an approval or endorsement by LexShares of the linked or reproduced content. The Site may contain “forward looking statements” which are not guaranteed. IRR reflects the annualized rate of return per the xirr Excel function. All investors should make their own determination of whether or not to make any investment, based on their own independent evaluation and analysis. You are strongly advised to consult your legal, tax and financial advisors before investing. The securities offered on this Site can only be marketed in jurisdictions where public solicitation of offerings are permitted; it is solely your responsibility to comply with the laws and regulations of your country of residence.