The future of law is niche. Discussing the LexisNexis Bellwether Report – The Art of Success: Why Independent Law Firms Are Thriving, a New Law Journal op-ed highlighted that over two-thirds of Solicitors feel that being bespoke was a “key driver to success”.
Law Firms that specialise in core areas attach significant focus on getting to know their clients’ business and the quality of their legal expertise. Almost three-quarters of interviewees (69%) expected an increase in the number of niche firms leading up to 2022 and 65% believe specialist firms will attract business away from traditional high-street legal practices.
Three core elements drive growth and prosperity in boutique Law Firms – “the quality of their expertise, solid commercial logic, and commitment to a happy working environment”, linked with strong investment in technology and information.
Armed with talent, flexibility, and the freedom to find creative solutions to client problems, aside from recruitment, the only barrier to success for these dynamic legal players is accessing capital.
Litigation finance offers a solution
The trend for utilising Law Firm finance has increased exponentially in recent years. This has led to the development of more tailored products, opening the doors for niche firms to access the capital they need to compete with larger practices. Not only can they expand their casebooks, but boutique law firms can use Law Firm finance to build a reputation for working with top experts and advisors.
Traditional credit products fail Law Firms
Credit options available to other businesses do not tend to work for legal practices because contingent receivables are seen as too risky to be a valuable asset. Litigation finance providers, whose lending policies are specifically geared to Law Firms, have begun to fill the credit needs required by ambitious partners who need capital to reach growth targets.
The benefits of litigation finance for boutique Law Firms
Taking advantage of Law Firm finance provides considerable advantages for practices, including:
- Providing the capital needed for growth – niche law firms have the expertise required to take on large, complex matters, but often lack the money needed to fund the disbursements associated. Legal finance bridges this gap, providing clients with the confidence that your firm has the liquidity to advance their case to its conclusion.
- Attracting new clients – most boutique firms are formed from partners breaking away from top City practices to create their own enterprise, run in a way that matches their ethos. Although some clients may follow, niche firms need to attract new, high-paying clients quickly and are having to compete with large, well-resourced, established practices. Law Firm finance relieves pressure on cash flow and allows specialist firms to fully push their competitive advantage in the marketplace.
- Preservation of capital – when scaling up, healthy cash flow is a precious commodity. Traditional lenders such as banks may provide much-needed funds but trying to match repayments with receivables can prove a challenge. Law Firm funding is geared to the needs of a legal practice and takes into account the time needed to reach settlement, especially in complex personal injury and commercial matters.
Launching a niche legal practice is not for the faint-hearted, but this can be said of any start-up. Partners must have an entrepreneurial attitude from the get-go. Not only is competition coming from larger law firms, but alternative legal services are also becoming big players in the market and ‘self-help’ legal sites are becoming more numerous and their threat can no longer be batted away with a dismissive “you cannot rely on DIY law”. The fact is these outfits are being started by lawyers themselves and are becoming increasingly more sophisticated. The increase in digital technology and AI also brings about competition –the Online Court Pilot which began in April 2018 is one example, and although the pilot only deals with cases of £10,000 or less, many see this approach as the future of dispute resolution.
To compete, boutique firms need cash, not only to increase their casebooks and afford best in class experts, but to keep their capital available to invest in technology and talent – the two aspects that set them apart in an already crowded legal marketplace. Law Firm funding provides the vehicle required to strategically grow your niche practice and reserve your precious cash flow and capital for tactical investments.
To find out more about Law Firm funding, please contact us on 0333 222 5731 or talk to your solicitor.
BMS Funding works with the legal profession and businesses to provide funding solutions for all market sectors.