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Law Firm
Loans - Terms and Conditions
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 a mount 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, or
Call us now at 1-800-598-1178
to get started.
|