What to Know About when Financing Legal Fees
While majority of the small and medium sized law firms like to prosper and grow, only few have the working capital needed in handling increased case loads or the extended settlement payment. As a matter of fact, factoring is the purchase and the sale of accounts receivable to which in this case is legal fees is offered at discounted price or close to the time of creation which can help to solve common cash flow challenges.
What specialty finance firms will do is buy legal fees on the settled cases. The moment when a case is settled and that all documents have been executed properly by the defendant and plaintiff, the fee receivable is bought for a discounted price which is normally ranging around 2 to 12 percent depending on the amount and payor. The major difference in the rates is basically on the estimated time it is required to recollect the fee.
Here are few of the steps on how the entire process is done.
Number 1. Master fee purchase agreement – this is executed in specifying terms of under which fees will be bought and this includes both the maximum … Read MoreRead more