find the latest legal job
Legal Inhouse / Lawyer / Company Secretary
Category: Other | Location: Brisbane QLD 4000
· Fantastic Company · Potential to be Part Time / Flexible Work Pattern
View details
Part Time Risk & Compliance Officer
Category: Other | Location: Brisbane QLD 4000
· Brisbane City · Flexible Part Time Hours
View details
Infrastructure Lawyer/SA
Category: Construction Law | Location: Sydney CBD, Inner West & Eastern Suburbs Sydney NSW
· Global elite law firm · Dedicated Infrastructure team
View details
In-House Legal Counsel (Mid to Senior)| Regulated Markets (Energy and Gas)
Category: Generalists - In House | Location: Melbourne CBD & Inner Suburbs Melbourne VIC
· Full PD on Request · Exciting High Impact Role
View details
Family Lawyer
Category: Family Law | Location: Eastern Suburbs Melbourne VIC
· Boutique Firm · Great Reputation
View details
Top 5 tips for using disbursement funding in 2017

Top 5 tips for using disbursement funding in 2017

Anthony Hersch

Now that the intensity of the Christmas period has passed and the industry is emerging from the January hiatus, it’s common for SME law firms to reflect on business from the previous year and plan for the year ahead, writes Anthony Hersch.

We expect there will be two main areas of consideration for SME law firms for 2017:

1. Managing cash flow

For all small businesses, managing cash flow is crucial. In the legal space, we continually find that for the large part, this dictates SME law firms’ capacity/ability to generate revenue and in turn growth. Typically, third-party costs (disbursements) are a cash flow drain and tie up working capital.

2. Facilitating business growth

Facilitating growth consistently goes hand in hand with managing cash flow. The optimal situation is for working capital to be released and redirected into the business to increase turnover. Growth can occur through a variety of means, whether that be additional staff, more marketing, etc.

When considering the year ahead, we encourage SME legal firms to utilise disbursement funding to help boost the organisation’s operations, sustainability and future earning potential.

In a nutshell, disbursement funding is the provision of finance for third-party costs (disbursements) that form part of any litigation. These include medico-legal and radiology reports, court appearance and filing fees, barrister fees and all other expert reports/expert witness fees. The reason this financial product is powerful is it allows the law firm to defer payment of disbursements until settlement (or up to 30 months – whichever comes first).

The effect of the financial solution is significant: disbursement funding removes the immediate barrier to business growth by enabling access to capital.

Here are our top five tips for using disbursement funding to achieve growth without cash flow implications:

1) B2B v B2C funding: Consider the benefits of a B2B v a B2C disbursement funding product in relation to client conversion rates. B2B funding enables lawyers to retain their client relationships with no onerous loan documentation that’s required when involving claimants (and thus rarely impedes conversion).

2) Terms of trade: Consider what the funder’s terms of trade are, to include whether personal guarantees and/or claimant involvement are required (this is largely affected by whether the funder is B2B or B2C). Utilising disbursement funding shouldn’t be complex or time-consuming.

3) Speed of invoice funding: Timing is everything. Be sure to understand the expected turnaround time for third-party invoice payment (should be 24 hours) and corresponding receipt of reports.

4) Fee structure: Ensure that all fees are openly disclosed to avoid surprises. This includes asking whether the disbursement funder charges account-keeping fees, annual fees, drawdown fees and/or penalties if matters become protracted.

5) Financing model: There are a number of financing models available for disbursement funding. Knowing the fully funded cost up front is the simplest option. The alternative is a moving target and involves complex calculations of the financing component leading up to settlement.

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.

Anthony Hersch is the general manager of disbursement funding at JustKapital Litigation Partners. ASX-listed, JustKapital is an established market leader of litigation and disbursement funding in Australia. Its disbursement funding business division is geared to provide financial solutions to small to medium-sized law firms. 

Like this story? Read more:

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

The legal budget breakdown 2017

Top 5 tips for using disbursement funding in 2017
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
Anti-radicalisation programs playing ‘second fiddle’ to terrorism laws
Several academics have questioned the balance between Australia’s counterterrorism legislation and...
 William Ah Ket
‘Bamboo ceiling’ thought piece wins inaugural law prize
A paper that explores the idea of affirmative action to achieve greater diversity among members of A...
Nov 22 2017
Reduced investment protections will make robust commercial arbitration mechanisms all the more critical for investors
Promoted by Maxwell Chambers. This article discusses the current trend away from investor protect...
Allens managing partner Richard Spurio, image courtesy Allens' website
Jun 21 2017
Promo season at Allens
A group of lawyers at Allens have received promotions across its PNG and Australian offices. ...
May 11 2017
Partner exits for in-house role
A Victorian lawyer has left the partnership of a national firm to start a new gig with state governm...
Esteban Gomez
May 11 2017
National firm recruits ‘major asset’
A national law firm has announced it has appointed a new corporate partner who brings over 15 years'...
Nicole Rich
May 16 2017
Access to justice for young transgender Australians
Reform is looming for the process that young transgender Australians and their families must current...
Geoff Roberson
May 11 2017
The lighter side of the law: when law and comedy collide
On the face of it, there doesn’t seem to be much that is amusing about the law, writes Geoff Rober...
May 10 2017
Advocate’s immunity – without fear or without favour but not both
On 29 March 2017, the High Court handed down its decision in David Kendirjian v Eugene Lepore & ...