August 27, 2020—It’s a question many are now confronting, and it has nothing to do with the law: “When will we get paid?”
As the pandemic and other macro factors continue to impact the economy, law firms’ efforts to collect from their clients present a real challenge. On one hand, firms need steady revenue to meet their operating expenses and other obligations; on the other, they need to put client interests first. With clients facing their own financial stresses, lawyers must show extreme sensitivity to their clients’ challenges, arguably before their own. Law Finance Group, a leading litigation financier and provider of capital to law firms for more than 25 years, has recognized this dilemma and stepped in with a solution—AR Now: Accounts Receivable Financing.
A first-of-its-kind product, AR Now will:
- Immediately advance 50% of a client’s outstanding bill.
- Allow law firms to maintain the billing relationship with the client, while Law Finance Group stays in the background.
- Offer facilities up to $20 million or more, giving law firms peace of mind to focus on their work.
- Avoid personal guarantees that law firm lenders typically require.
When clients pay their invoices within six months, law firms keep 93% of the amount billed. When invoices are paid within a year, law firms keep 88%. The full program terms allow law firms to give clients up to 18 months to pay outstanding bills.
“You don’t need to read about furloughs and cost-cutting to know that firms and their clients are under great stress right now,” said Dan Bush, Law Finance Group’s chief investment officer. “We’re happy to offer a product that relieves a lot of that stress on law firms, while also benefitting their clients.”
AR Now also holds the promise of relieving any tension that may exist between law firm partners and management and provides a strategy to navigating this reality together. Often, compensation plans incentivize partners to offer overly generous discounts that get funds in the door, but work against the broader firm goal of maximizing revenue. AR Now aligns the interests of partners and management, while offering attractive advantages to both groups.
Partner benefits: Partners can offer clients extended payment terms, further establishing themselves as valuable problem solvers in a time of crisis. For them, AR Now also allows the firm to book revenue that could contribute to partner distributions.
Management benefits: AR Now gives chief financial officers, chief operating officers, pricing professionals, and client services managers immediate capital without having to offer clients substantial new discounts or tapping their lines of credit.
“Our AR Now product has other applications for law firms and their clients—for instance, facilitating new alternative fee arrangements,” Bush said. “Ultimately, we’re here to help both firms and their clients get through this challenging moment, and, as always, are willing to get creative to get that done.”
For detailed terms and more information about AR Now, click here.
About Law Finance Group
For more than 25 years, Law Finance Group has been a leader in the litigation and law firm finance industry. We have provided over half a billion dollars in financing for individual lawsuits and litigation portfolios to parties and their law firms. Our innovative financing solutions are based on our deep understanding of the civil justice system and the realities of the modern law firm business model. Law Finance Group maintains offices in San Francisco, New York, and Austin.
