How to Manage the Ebbs and Flows Unique to a Plaintiffs’ Practice
Counsel Financial was recently featured on Esquire University’s podcast, a resource created by Eric Bersano dedicated to lawyers and those who support the legal industry. President & CEO, Paul Cody, and Managing Director, Steve Mingle, spoke with Eric about law firm financing and the unique financial needs of plaintiffs’ practices that Counsel Financial helps to solve.
To listen to the full podcast, click here. Below is a recap of the conversation highlights.
Introduction of Counsel Financial
We are a commercial lender that provides working capital solely to the plaintiffs’ bar. Because our company was founded in 2000 by attorneys, for attorneys, we recognize the unusual challenges law firms with contingent fee practices face and have garnered a staff of experienced lawyers who understand your cases and their potential value. In addition, we aren’t regulated like traditional lending institutions, such as banks, so we have much greater flexibility in terms of our product offerings, sizing and structure of our financings.
Why do law firms seek out Counsel Financial?
Often we are approached by attorneys who have plaintiffs’ practices that regularly incur substantial expenses representing individuals in large, complex litigations, such as mass torts or class actions, before they receive payment for their services.
We also work with many firms that are considering joint ventures, mergers & acquisitions, are in the process of succession planning, or are looking to secure resources for their trial teams.
In other instances, firms come to us with the simple goal of growing their firm or may merely desire capital to smooth out cash flow gaps inherent to their contingent fee practice.
Whatever the case may be, we can custom tailor financing to support your firm’s specific situation and will assist you in executing your goal or solving the specific challenges your firm is facing.
How is Counsel Financial better than a bank?
As stated above, we are a specialty lender, not a bank. Therefore, we differ in several ways, including:
Banks underwrite traditional assets. If you have a piece of real estate, an appraiser can give the bank a solid valuation of the property based upon historical data, models and comparable assets, which can then be underwritten as collateral to secure the loan.
What banks do not understand are future contingent fees. The value of your case portfolio in the eyes of the bank is zero.
Counsel Financial and our team of attorneys go through an interactive process with you and your firm to give value to your unresolved cases, which allows our team to underwrite your firm’s case portfolio as collateral and ultimately fund your law firm based in large part on that value. Your future anticipated fees are your firm’s most valuable asset and can be leveraged as such.
Banks have deposits, which means their rates are typically lower than a specialty finance company. However, as demonstrated above, the value the bank places on your collateral is generally limited to your hard assets. Consequently, the amount you will be eligible to borrow from a bank is generally also limited.
We are not a depository institution. As a result, the cost of our funds is typically more expensive than a bank, but your firm will gain access to significantly more capital—sometimes three to four times more than a bank—because we do value your contingent fee assets.
What is the process of securing financing like?
We always encourage potential clients to first “have the conversation” with us. Any time spent researching resources for your law firm is not time wasted.
Let’s say, for example, you are a single event practitioner and approach us with the goal of jumping into mass torts in order to add diversity to your practice. We’d start by having a conversation to understand your goals in order to explore the various financing opportunities that exist for your firm. Afterward, our team of attorneys would review your firm’s existing caseload with you and our underwriting team would conduct a review of your firm’s finances. Thereafter, we will work with your firm so you can create a budget and strategy for drawing upon and utilizing the funds.
Once your firm secures funding with us, you can then strategically deploy the capital to create additional value for your firm, for instance, by acquiring more clients.
Because our model is inventory-based, we can grow with you and you won’t outgrow us. We have helped some of our clients gain exponential growth over the years and assisted them in better understanding how to effectively use working capital from Counsel Financial to accelerate their firms. We are more than a lender; we strive to be consultative to all of our clients in looking at their firm as not only a vehicle to achieve justice for their clients but to also view it as a business. The process can be educational and beneficial for your firm—valuing your cases, budgeting, mapping out the timing of receipt of fees—these are all exercises that serve to give you a clear picture of how to best run your firm and to be able to capitalize on opportunities as they present themselves.