As clients continue to ask law firms for alternatives to hourly billing for costly and risky cases and law firms try to reconcile those requests with their own risk tolerance and historical profitability under the hourly model, many have found the answer lies in partnering with a legal financier whose time horizons and appetite for risk can bridge the gap.
But law firms should look beyond the funding of individual cases for individual clients when they think of legal finance. Sophisticated third-party capital can also support significant expansion of a firm’s practice, by facilitating the integration of lawyers, practice groups, and even entire firms whose billing model is premised on taking greater risk than the suitor firm is traditionally willing to embrace. By the same token, it can help resolve tensions among existing firms that seek a consensus on litigation risk tolerance.
