Law Firm Loans

There are a number of ways that our underwriters structure law firm loans. However, all of them use the estimated value of contingency fee income from a group of contingency fee cases (settled or unsettled) to determine what the loan amount will be. The tables below show some of the ways that law firm loans can be structured. These tables are for example purposes only. The exact terms for each law firm loan are negotiated on an individual basis between the law firm and the underwriting company.

Law Firm Loan Terms-Underwriter 1

Minimum Amount	$50,000
Maximum Loan Amount	based on estimated contingency fee income from cases submitted as collateral for the loan – may also consider any fixed hourly contracts the firm has
Minimum Number of Cases Required as Collateral	20 to 25
Type of Recourse	Full Recourse
Personal Guarantee	Yes
Other Security for Loan	collateral assignment life insurance on all guarantors in the amount of the credit line
Upfront Application Fees	$500
Loan Structure	48-month line of credit
Fees added at closing	2.5% of line amount payable from first draw
Rates	18% per year
Payments during term of loan	Interest only for first 24 months, 1/24 of principal and interest for month 25 to 48
Maximum Term of Loan	48 months
Other requirements	good attorney credit legal malpractice insurance in force no tax liens (unless loan will payoff the tax liens) not currently in bankruptcy no pending lawsuit or judgments against the firm
Approval Time	2-3 weeks

Law Firm Loan Terms-Underwriter 2

Minimum Amount	$100,000 (but may do less depending on the overall situation)
Maximum Loan Amount	$5 million
Minimum Number of Cases Required as Collateral	at least 5
Type of Recourse	Full Recourse to limited recourse (customized to the situation) (credit of guarantors is consideration)
Personal Guarantee	Depends on the situation
Other Security for Loan	life insurance on key individuals may be required and other collateral may be considered
Upfront Application Fees	Yes, exact amount depends on situation (typically an underwriting fee deposit will be collected upfront to cover costs in evaluating the cases to collateralize the loan)
Loan Structure	lump sum or line of credit (24-month max term)
Fees added at closing	5% loan structuring fee, origination fee (exact amount negotiated prior to submitting application)
Rates	as low as 18% per year for recourse loans to 4% per month compounded for limited recourse loans (exact rates will depend on situation)
Payments during term of loan	Minimum requirement is for half of the interest due on the loan to be paid each month. The remainder of the interest is rolled into the loan and accrues additional interest until loan is paid off.
Maximum Term of Loan	24 months
Other requirements	prefer multi-partner law firms, but will occasionally work with sole practitioners) good attorney credit or a co-guarantor with good credit legal malpractice insurance in force no tax liens (unless loan will payoff the tax liens) not currently in bankruptcy no pending lawsuit or judgments against the firm may place blanket lien on all contingency fee cases of the firm require Confession of Judgment (where allowed by state law) to avoid having to file suit in case legal action is required to collect on the loan
Approval Time	2-4 weeks

Several basic questions about lawsuit finding are answered on the page FAQ’s About Lawsuit Funding.

If you have additional questions, or if you would like to learn if your situation qualifies for law firm funding, please click here to contact us