A Brisbane-based firm says it has quadrupled its turnover in just three years with the help of an alternative solution.
Kemp Law managing partner Michael Kemp said by using disbursement funding, his firm has been able to increase its active cases from 50 to 600 in three years, while forecasting that the firm will reach 1,000 cases by the end of 2017.
Mr Kemp said by utilising disbursement funding through JustKapital Disbursement Funding his firm has been able to defer the payment of all third-party costs until settlement, rather than paying for disbursements upfront.
“Disbursement funding has directly contributed the firm quadrupling its turnover in the three years,” Mr Kemp said.
“Our rate of growth correlates with being able to take on more cases without having to continually outlay money upfront for third-party reports, which are essential to progress the claim.
“We’re not talking loose change here. In our situation, there’s been approximately $2 million of specialist reports required for the 600-odd claims to date that we haven’t had to provide upfront funding for.”
Disbursement funding, he said, has allowed the firm to mitigate the challenges of actively facilitating growth to ensure the firm’s sustainability, while taking away cash flow pressures.
“The primary challenge for starting and maintaining a PI firm is cash flow. If you open your firm with say 50 matters, you’ve got to have the resources to fund them yourself for the first 12 months. This can be crippling – particularly as all PI cases typically need a variety of specialist reports to substantiate the claim,” Mr Kemp said.
“Reports are usually about $3,000 to $6,000 for a straight-forward claim, but can quickly become $35,000 plus for more complex injuries. In actual figures, this equates to a minimum of $250,000 for the reports that align with the 50 cases, upfront.
“This ongoing expenditure can break a start-up, which is why being able to defer payment through disbursement funding has been so significant, and why we’ve been able to increase our number of cases so quickly.”
Speaking about Mr Kemp and his firm’s success, JustKapital Disbursement Funding general manager Anthony Hersch said, “Disbursement funding is a practice that’s well-established and widely adopted internationally, and is geared to assist SME law firms, personal injury law firms, commercial litigation firms and family law firms”.
“By definition, it is the provision of finance for third party costs (disbursements) that a legal firm incurs on behalf of their clients that forms part of any litigation. The reason this financial solution is powerful is it allows the law firm to defer payment of disbursements until settlement, or up to 30 months – whichever comes first,” he said.
“The upside of disbursement funding is clear. Use it to release capital constraints, take on additional cases and generate more revenue. We encourage SME law firms to take advantage of this smart alternative in 2017.”