When you run a law firm you have to manage to comply with a host of regulatory requirements and also manage as a commercial business. So growth is not going to happen overnight and in the meantime the firm will be struggling to manage its cash flow.
Funding a Lateral Hire or New Practice Group
Support for Lateral Hire or for building out of a new Practice Group – here of course the main upfront costs are the salary guarantees for the senior solicitor/s or for the recruits (and related recruitment costs). A term loan or revolving credit facility would here be used to give the hires time to bed in and to generate returns before the cost to the firm of those hires starts to feel too much.
Fitting Out or Relocating Office Space
The cost of fitting out new larger premises or refitting an existing office to accommodate a growing number of lawyers can exceed $100,000 before any revenue is generated. A firm’s assets can be financed to spread the cost of a property purchase and fit out over several years, allowing for fixed and regular repayments to be made from the space to grow a law firm.
Investing in Legal Technology
New legal technology such as case management systems and AI-powered document review tools are becoming essential for law firms of all sizes, but implementing them can be very expensive. Many law firms will therefore look to implement legal technology through a technology loan or leasing arrangement which allows the lawyer to spread the cost of software licenses, hardware and implementation over a period of 2-3 years.
Acquiring a Retiring Partner’s Client Portfolio
Buying a book of business from a retiring solicitor is one of the fastest ways to establish a new practice area. Law Firm Finance can be structured as a term loan to acquire a client portfolio and then repay the loan from the income generated from the clients acquired as part of the sale of the retiring solicitor’s business.
Knowing What Lenders Look For
Lenders will typically require firms to supply clean management accounts and set out a clear repayment plan. This will also need to confirm that the firm is able to manage its finances in accordance with the SRA’s financial management guidance for solicitors. For Law Firm Finance, visit https://www.novo-modo.co.uk/commercial-finance-Legal-Firms.
Organise your paperwork to make it easy to agree terms when you apply for finance.
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