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 |
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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 |
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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