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As we head into the last month of 2005, Marie B. Ray’s words, “We have only this moment, sparkling like a star in our hand and melting like a snowflake,” ring true for me. Although here in the desert we seldom have snow, on a clear winter night we have stars enough to make up for it. When I think back to all the truly wonderful moments, I realize how full this year and my life is.
Since, like so many others, I spend a great deal of my time at work, I want that time to be well spent and fulfilling. I like a certain amount of variety to keep things interesting while relying on some degree of predictability to keep an even keel. Lawsuit funding has given me both to the nth degree!
When I look back to a few short years ago, nobody knew what lawsuit funding was. There were no national funding sources advertising these services. Then this niche became a blip on the radar screen. Within a couple of years, it became better known as more people became curious about it. In the past year or two, the popularity of lawsuit financing has exploded with many new funding sources appearing out of nowhere.
With additional information becoming available, more and more consultants started adding this tool to their cash flow tool kit, with many making lawsuit funding their primary focus. As this small slice of the cash flow industry grows, we are now seeing specialization within the field. Although the primary focus is still the personal injury case, there are now sources that are advancing funds for clients involved in divorces and other unusual funding situations.
The direction that I am most enthusiastic about is the commercial side of this business. Admittedly, since my initial training over 11 years ago was in factoring, which I expanded into other forms of business financing, I have a keen interest in all aspects of business. This definitely includes the lawsuit funding side such as breach of contract, patent infringement, and law practice funding.
Here is a quick overview of what is happening on this side of lawsuit funding.
Advances on Cases
We are able to get advances for attorneys based on potential future settlements just as we are in plaintiff funding. The difference is that the attorney will have a number of cases, giving us the opportunity to get them greater working capital.
Case Cost Financing
Case cost financing offers a little bit of a twist because there will be no out of pocket cost to the law firm and no obligation on the part of either the attorney or the plaintiff if the case is lost. This acts almost like an insurance policy.
Attorney “Factoring” for Settled PI Cases
When there is a settlement agreement already in place, attorney factoring can be used. The check will be coming some time in the future. It could be in two weeks or six months. However, the attorney needs money NOW! Just as with any other growing business, a quick infusion of cash may be just what the law firm needs for this “cash crunch.”
Traditional Factoring
Although we often overlook this option, factoring for law firms that bill by the hour to creditworthy business customers is also available.
Line of Credit
Lines of credit to law firms are designed to make money available to a firm so it can use the money, pay it off, then use it again. These programs are customized to fit the individual needs of the firm, often in conjunction with an established bank line.
Because the funding sources in this field are as creative as they are, I expect we will see new niches within this niche developing in the near future. Stay tuned!
Written by Richard Shapiro. Richard Shapiro is the owner of CondorFunding.com
Source: The American Cash Flow Journal

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