Law firm financing is vital to running and operating a successful law firm.
There are many costs associated with running a legal practice like software subscription fees, operating expenses, physical office leases, and marketing for new client acquisition.
Lawyers and attorneys can use firm funding for things like:
- Case expenses
- Maintaining good cash flow
- Marketing endeavors and new client acquisition
- Purchasing and maintaining office space and supplies
- Technology, like software subscriptions and physical hardware
- Membership fees for State Bar and other associations
- Insurance fees
Law firms should create a financial plan with goals.
If you’re running your own law firm or planning to start one, it’s integral that you start with a written financial plan that outlines your near-term and long-term financial goals for the practice. When creating his plan:
- Seek input from financial advisors and accountants who have experience with law firm lending and accounting.
- The financial plan should include your expected cash flow and an outline of all operating costs
What are the Benefits of Law Firm Financing?
Law firm financing comes with many benefits. If you have adequate law firm funding, you’ll be able to pay vendors on time, as well as ensure uninterrupted access to important information in law databases to name just a few benefits. There are plenty of other benefits for lawyers and attorneys when it comes to law firm financing:
Improve Your Law Firm’s Cash Flow
With law firm financing, you can greatly improve your law firm’s cash flow. You need access to capital so you can do things like hire more staff, put out new marketing campaigns, and acquire new clients. You never want to be in a position where you need to pause any of these activities due to a shortage in cash flow.
Scale Your Business Faster
There may be business opportunities you’ve been putting off because you don’t have enough working capital to invest in them. For example, you may be at the point where you need a bigger office space to support additional staff, or perhaps you need to upgrade your law firm practice management software or tooling. Law firm financing can help you tackle these important activities to help grow your law firm.
Better Financial Management
By obtaining financing, law firms can improve their financial management by keeping their expenses in check, reducing their debt, and managing their cash flow more effectively.
Law firm financing can be tailored to the specific needs of each law firm, providing them with the flexibility to choose the type of financing that best suits their business needs.
How Can You Finance a Law Firm?
There are many different financial solutions that can help you grow your law firm and case selection. Our team of experts can help you figure out what financing solution is best for your firm. Click here to find your rep. They will learn about your firm, answer any questions you have about our case expense financing service and other financial products, give you a demo of our AdvoTrac Case Expense Financing Software, and help you apply.
Law Firm Lending Services
There are also many types of loan options available for lawyers, attorneys, and law firm business owners. Here are a few:
Case Cost Funding
Case Cost Funding is a specialized financial solution offered by Advocate Capital, Inc., designed to assist contingent-fee law firms in managing and covering various case expenses necessary to win cases for their clients. This funding allows law firms to avoid tying up their own cash in case-related costs like expert witness fees and medical records. This financing model facilitates better cash flow management for law firms and allows them to free up their post-tax profits to grow their law firm and accomplish their financial goals.
Through Advocate Capital's proprietary software, AdvoTrac®️, law firms can efficiently track and manage their borrowing costs on a case-by-case basis, which allows them to recoup the borrowing costs for the cases that they win, optimize their net cost of capital and enable them to focus on delivering justice for their clients.
Working Capital Lines of Credit
A working capital line of credit is a versatile, prime-based law firm line of credit that can be used for a variety of purposes at your law firm including advertising, payroll, overhead, and case expenses. Read more about Working Capital Lines of Credit here.
An option for smaller law firms or those just getting started and do not yet qualify for Case Expenses or Working Capital Lines of Credit. Read more about Small Loans here.
Can be used to make an investment in equipment for your law firm. Read more about Term Loans here.
SBA (U.S. Small Business Administration) loans are federally-backed small business loans for law firms that can be procured through a bank or credit union, but the application process can be lengthy, and there may be restrictions on how you can utilize the funds. Read more about SBA Loans.
Law Firm Banking Services
We have a special partnership with Pinnacle Financial Partners, so we can offer you customized banking services that fit your unique business. Read more about Business Checking here.
Business Money Market & Saving
This enables you to earn interest on your law firm’s savings. Your law firm’s cash is the foundation of its finances. Most banks offer a “one-size-fits-all” solution that may or may not be right for your law firm. We know that no two law firms are exactly alike, and we offer a broad array of account options to meet your special needs. Read more here.
Through our partnership with Pinnacle Financial Partners, we offer IOLTA deposit accounts. IOLTA (Interest on Lawyers' Trust Accounts) is a specialized type of bank account used by law firms and attorneys to manage client funds that are held for a short period of time and are not large enough to earn significant interest on their own. IOLTA accounts are typically used to hold funds that belong to clients but are held only temporarily, such as advance payments for legal services, settlement proceeds, or other client funds that will be used for specific purposes.
Additional Services & Ways to Finance Your Law Firm
Owner-Occupied Office Space
Ready to move on from leasing and purchase or build your own property? Read more about our financing options for owner-occupied office spaces here.
Home Equity Line of Credit
You can also get a low-interest line of credit that is secured by the equity you have in your home. Read more about a home equity line of credit here.
Advocate Capital, Inc. Law Firm Financing
Advocate Capital, Inc. provides many of the financial products through our partnership with Pinnacle Financial Partners, but you might also be interested in AdvoTrac®, which is a proprietary software we developed so you can track your case expense lines of credit on a per-case basis. Key benefits of using AdvoTrac® include:
- Law firm line of credit tracking
- Same-day ACH
- Ability to pay off and fund cases
- Run detailed reports
- Excellent customer support
- Secure, cloud-based technology accessible from anywhere with an internet connection.
Ready to see how Advocate Capital can help your law firm? Contact us today.