Law Practice Line of Credit

A law practice line of credit frees up capital for the firm that could otherwise be unavailable because it is tied up in case costs.

Law practices that have extended cases, like trial cases that amass big expenses during the trial, benefit from a line of credit because they can conduct business without tying up their own resources. They can obtain a law firm line of credit through a number of commercial lenders that can be easily found on the Internet. The lending company will establish the base amount of the line of credit based on the law practice's case history.

• Traditional lending agencies – They provide a law firm line of credit if your firm meets their requirements. If your law practice qualifies, you may want to go with a bank instead of a specialized law financier because banks usually charge a lower interest rate. However, in most cases, banks are not equipped to evaluate a law practice's rights to costs and fees in contingency fee suits. Because of this, a bank most often will only loan up to the value of your firm's personal assets, whereas a law firm financier can give you a much larger line of credit.
• Esquire Capital – They offer the same funding as banks plus they can tailor financial programs specifically for your law practice. Their rates are competitive, terms flexible and a line of credit for law firms will most often give you more capital than you can get through a bank.
• Law Cash – Law Cash promises to do what banks can’t. Their financial programs are designed specifically for attorneys and law practices and can give you a loan that provides more capital than most banks can offer. Their loans let you use your funds for things like: payroll, case cost funding, disbursement funding, or other operating expenses.
• Lawsuit Loan HQ – Provides the funds needed for your legal practice without going into debt.

The law practice line of credit lets the firm draw funds during the trial. Some lending establishments bill for the interest amount monthly. Then when the case comes to a close, the lender forwards documents that list costs incurred. The law firm can be reimbursed for interest charged.

The first benefit of a law firm line of credit is obvious. It makes funds available for:

• Working capital
• Client costs advanced
• Investments
• Distributions
• Expansion of the firm
• Funding of additional cases

Along with this, another advantage to an attorney having a line of credit is that the interest on the loan might also be a tax-deductible business expense. Also, in a number of states when the funds are used to fund case costs, loans can be structured in such a way that part of the interest can be charged to clients. You'll have to work with the loan provider though to be sure the loan is structured properly in order to take advantage of this benefit.

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