Scale is a fundamental issue for most law firms, and this can be achieved primarily through:
- organic growth, which usually needs funding through a combination of equity and debt capital; or
- mergers and acquisitions
There are new ways of funding organic growth using portfolio dispute funding. This applies where the firm has existing (and future) cases which are being run on a partial or full contingency basis, and allows the firm to unlock working capital, accelerate growth and drive competitiveness.
In a portfolio solution, the third-party funder’s investment and return are spread across a bundle of such claims. Importantly, because the finance is secured across a diversified portfolio, the levels of risk are lower and therefore the cost of the funding is reduced.
Portfolio funding has a number of advantages over bank loans and partner equity, because the financing is non-recourse, meaning that the funder gets a return only in the event of a success in the cases within the portfolio.
The financing can be used for any purpose, including funding acquisitions, investment in IT, recruitment and general working capital.
Our work usually involves assisting with the preparation of a detailed, integrated financial model covering cashflow, balance sheet and profit & loss, for the business as a whole; preparing an analysis of the current CFA book and a schedule of details of each type of claim (Commercial, Insolvency, PI, Clin Neg etc); and a comprehensive negotiation process with the third-party funder as per single case funding.
M & A
Successful mergers and acquisitions are not straightforward. Apart from ensuring that the combined entity would be properly capitalized and that the costs of the transaction can be funded, there are important considerations of synergies, culture, leadership and marketing to take into account.
Our corporate finance expertise allows us to help you navigate your way through this time-consuming and tortuous process. Working with our partners, we have detailed knowledge of the current market and those firms which would be willing to enter into merger discussions.