Line of Credit for Lawyers

For certain practices, a line of credit for lawyers is the best option for a plaintiff's lawyer to handle financial challenges associated with the case. However, these lines of credit are only available to well-established firms with principal partners who have been with the firm usually five years or more.

A line of credit for lawyers is a non-binding commitment by a lender to loan up to a specified amount to the lawyer. It is designed to help plaintiffs’ firms with long-drawn-out cases and high attorney cash expenses. Attorney lines of credit give lawyers the ability to operate and pay expenses without draining their personal resources. A line of credit can also be extended to a law firm. In either case, it provides lawyers with increased cash flow and greater borrowing power. The amount of the line of credit is founded on the law firm’s case history and existing volume of cases. This line of credit empowers lawyers to:

• Pay case and operating expenses without going into debt using personal capital
• Draw on line of credit as needed
• Use funds during the case and then get reimbursed for interest and costs incurred at the end of the case

Lawyers who obtain a line of credit have immediate access to capital which provides resources needed for their practice. It extends advantages like:

• Evens out cash flow irregularities
• Grants the ability to keep up with defense teams who are well-funded
• Provides funds to retain services of top experts
• Helps to pay salary expenses
• Allows lawyers to increase advertising
• Provides cash in hand for litigation or practice-related expenses

A law firm line of credit, also known as a case cost line of credit, is only available to firms that are "well-established". Other criteria taken into consideration includes:

• Principal partners length of tenure (usually at least 5 years)
• Firms should be made up of multiple attorneys (though single owner firms may qualify)
• Firms must meet an average for net fee revenues
• Clean history with little or no negative disciplinary history

Lawyers can find line of credit funding through the following resources:

• Attorney Funding Group, LLC
• Law Cash
• RD Legal Funding
• Esquire Capital

Some banks have established guidelines for line of credit loans to lawyers and law firms. Guidelines used by conventional banking institutions are as follows:

• The loan amount is contingent upon each bank's assessment of the total loan package.
• Some banks limit a loan to three times the firm's monthly expenses, not including partner draws.
• The borrower may use and repay funds at will, up to the credit line amount. Banks usually prefers the borrower be out of debt for at least 30 to 90 days each year before a line of credit is extended.
• Line of credit is reviewed annually and then extended, increased or terminated.
• The borrower usually receives a designated amount of money over a period of time

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