Financing Your Way to Exponential Growth
If you’re looking to expand your law firm, you’re probably considering one of two paths: acquisition or organic growth. Both require access to capital and liquidity – and the way you go about financing has the potential to unlock limited gains or unleash bold success.
Many law firms pay for case costs from their revenue (“self-financing”) –which on the surface may seem like a sound approach but can be highly limiting for firms looking to grow operations and expand into new practice areas or geographic locations. Often, exponential growth requires outside financing to free up cash flow to accelerate growth projects and timelines, while affording greater strategic financial flexibility.
That said, traditional sources of financing typically have drawbacks, trade-offs or compromises:
• Traditional banks can improve your ability to finance new cases, but limit the amount they’ll lend you or burden partners
with onerous covenants.
• Finance companies may offer you a more significant line of credit, but at a much higher interest rate and greater cost to the firm.
• In recent years, another option has emerged in states like Arizona, which is to form an Alternative Business Structure (ABS). With an ABS, you partner with non-lawyer entities (often private equity) to form a company – and although this will give you access to the most capital, it will also require you to forgo a significant percentage of the equity in your business.
Where traditional sources have hindered law firm growth and frustrated firm partners, case cost financing has provided a solution that leverages case inventory as collateral, leading to greater access to capital for law firms.
In this eBook, you’ll read about firms that are enjoying exponential growth because they’re financing with Esquire Bank, a financial partner that specializes in providing tailored banking solutions to law firms and has a unique understanding of the contingency fee business model –enabling law firms the flexibility to pursue growth initiatives.
Let’s look at the different ways some of the most successful firms in the country are investing in growth – and how you can succeed boldly, too.
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