Financial and legal leaders from BridgePoint Financial discuss pressures litigators face, solutions they provide.
November 23, 2020
Lawyers often struggle with the business side of law. It’s hardly their fault, law schools don’t teach practice financial management such as the cashflow implications of contingency fee arrangements. In the first years of most litigators’ careers, many don’t pay attention to costs and focus solely on winning cases. More than ever, firms who do contingency work face financial pressure. Out-of-pocket investments required of firms such as experts’ fees have become more expensive. Cases meanwhile are taking longer to resolve, while settlement values in personal injury cases in particular have stagnated, and in some instances, they’re shrinking. Add the COVID-19 pandemic into the mix and it’s a rare litigation firm that isn’t struggling with cashflow management.
More traditional strategies for managing disbursements have become less viable. In an uncertain environment, a firm may have limited cash reserves or partners’ capital to draw from. At the same time, bank credit remains elusive for firms doing contingency fee work and lacks the specialization litigators need. Alternative funding solutions that firms are increasingly turning to comes from litigation lending firms. Two leaders from Canada’s top litigation lender, BridgePoint Financial, explained how their funding packages work to serve litigators of different practice areas, sizes, and needs. They talked through the ancillary services that come with their funding arrangements and why they stand out in the litigation financing market.
“Our law firm clients look to us to fund the disbursements that individually aren't big ticket items, from hundred dollars for court filing fees to several thousands of dollars for expert reports,” says Stephen Pauwels, co-founder and principal at BridgePoint. “But across a firm’s file inventory they can easily add up to millions of dollars that the firm has to carry at any given time, while waiting years on average for their fees at settlement.”All Blog Posts