Law Firm Financing
Carry case costs and cover payroll instead of waiting on settlements and slow-paying clients, with working capital for law firms.
Checking your options takes a few minutes and leaves your credit file untouched.
Financing for law firms
Cases take months, sometimes years, but rent, payroll, and expert fees arrive every week. FundBetter gives your firm the capital to carry case costs and cover the office while settlements and invoices catch up, so a long docket never turns into a payroll problem.
One application reaches one of our funding advisors who understands how law firm billing and realization work.
Why law firms need working capital
Waiting on settlements
Draw a line of credit to keep the lights on and payroll met while a case runs its course, because contingency work can tie up your fee for a year or more.
Funding case costs
Financing lets you build the strongest case without fronting it all yourself, even as experts, depositions, filing fees, and records add up fast long before a case resolves.
Slow client collections
Factoring turns those unpaid invoices into cash now, so corporate clients on net-60 or net-90 terms no longer leave real work sitting unpaid on your books.
How billing and collections affect law firm cash flow
Outside capital keeps an excellent year on paper from turning into a March when your law firm can't make payroll. Work is performed in one period, billed in another, and collected in a third, and on contingency matters the collection date is measured in years rather than weeks.
Start with work in progress. Every hour your associates record before an invoice goes out is real value the firm has produced and can't spend. Then there's realization. The hours you record aren't the hours you bill, and the hours you bill aren't the dollars you collect. Time gets written down, clients dispute line items, and some receivables are never collected. A firm that plans overhead against recorded time rather than collected cash will run short, usually in the quarter after the busy one.
Contingency work stretches this further. On plaintiff-side matters the firm advances case costs, carries the associate and paralegal time, and receives nothing until a settlement or verdict clears. Defense and corporate work bills more predictably, but on net-60 or net-90 terms set by an insurer or a corporate legal department, which pushes cash out a full quarter.
One obvious pool of money is off limits. Client funds held in a trust or IOLTA account aren't firm assets. They can't be used as working capital, pledged, or borrowed against, and fees must be moved to the operating account once they're earned. That's why firms with healthy books still need an outside source of short-term capital.
Business line of credit vs. a term loan
Match the structure to the job and you pay only for the capital you actually use. Most firms end up using both. A business line of credit covers timing gaps. A long-term business loan pays for something the firm will still be using in five years.
| Law firm line of credit | Law firm term loan | |
|---|---|---|
| Best use | Case costs, and payroll in the months between settlements | Partner buy-ins, a new practice area, an office build-out, a case management platform |
| How it is drawn | Only what a matter needs, when it needs it, and redrawn as fees come in | One lump sum at closing, on a fixed schedule from the first payment |
| Cost basis | Only on the balance drawn, so an idle limit costs the firm nothing | Interest on the full amount for the full term, cheaper per dollar over a long horizon |
| Who it suits | Contingency and plaintiff-side firms with lumpy fee timing | Established firms with steady collected revenue making a defined, one-time investment |
What law firms finance
Fund the line items that decide whether you take a case or pass on it. These are what firms come to us with most often, and several of them are exactly that difference.
Case costs and court disbursements
Financing lets you work a case up properly instead of building it to the size of your bank balance. Filing fees, service of process, court reporters, records retrieval, travel, and trial exhibits all land before resolution, and on contingency matters the firm fronts every one of them.
Expert witness and deposition fees
Retain the expert who often decides the value of the case, without letting the deposit strain the month. Retained experts want money before they review a file and hourly payment for testimony, and a single medical or economic expert can cost more than a month of overhead.
Practice management technology
Invest in case management and billing platforms, document automation, e-discovery tools, and secure client portals, plus the training that makes them stick, and shorten your billing cycle while cutting write-downs. These are multi-year investments, which makes a term structure the natural fit.
Legal marketing and client intake
Keep feeding the pipeline in the exact slow month that tempts you to cut it. Search, paid advertising, and intake staffing for consumer-facing practices all cost money today, and the resulting case may not resolve for two years. Firms funding marketing from current collections tend to cut spend in slow months, which is when the pipeline needs feeding most.
Partner buy-ins and firm equity
Spread an equity partner buy-in, a retiring partner's buyout, or a merger with a smaller practice across a payback that matches the value acquired. These are defined amounts with a long horizon, which is why they belong in a term loan rather than a revolving line.
Payroll and office overhead
Short-term capital keeps a case that runs long from turning into a pay cut. Associates, paralegals, and support staff are paid every two weeks regardless of what settled that month, and so are rent and malpractice premiums.
Should a law firm borrow against future fees?
Borrowing against work that hasn't paid yet is a reasonable tool for your law practice. It isn't right for every firm or every quarter.
When law firm financing fits
- Collected revenue is steady across a year even though it is uneven month to month.
- Case costs are the only thing capping your docket, and you are turning away work you would win.
- You bill corporate clients or insurers on net-60 or net-90 terms and the receivable is not in dispute.
- The spend has a clear payback, such as an expert on a strong case or a platform that shortens billing.
- A partner buy-in or retirement is scheduled and the amount is known.
- You want capital in place early, so a slow collections quarter does not become a staffing decision.
When a firm should hold off
- The firm is relying on one large contingency matter to repay everything. A bad result leaves no second source.
- Realization is the actual problem. Borrowing does not fix hours that get written down or invoices never collected.
- Your receivables are old rather than merely slow. Financing a collections problem makes it more expensive.
- You are treating the trust account as a cushion. Client funds are not firm capital and cannot cover a shortfall.
- The practice is new with no collection history, in which case a smaller facility beats one you cannot service.
- Overhead sits above what the firm collects in a normal year. Debt delays that reckoning rather than resolving it.
Best ways to use law firm financing
Firms rarely borrow for one big thing. They borrow because the docket, the payroll calendar, and the collections calendar do not line up.
Funding options for law firms
Legal revenue arrives in lumps, so the right structure depends on whether you are bridging a gap or buying something that lasts years.
Business Lines of Credit
Advance case and expert costs, then pay the line down when a matter resolves.
Learn moreInvoice Factoring
Convert billed hours on open client invoices into cash without waiting on collections.
Learn moreShort-Term Business Loans
Hire an associate or paralegal now and repay as the caseload converts to fees.
Learn moreSBA Loans
Opening a practice area or buying office space suits longer terms and lower payments.
Learn moreWho qualifies for law firm financing?
We underwrite the firm, not a single case. These are the numbers most approved practices look close to.
Check if you qualifyFrequently Asked Questions
Can our IOLTA or trust account balance help us qualify?
No. Money held in a trust or IOLTA account belongs to your clients, not the firm, and it can't be used as working capital, pledged, or counted toward qualifying. We look at your operating account, collected fee revenue, and billing history instead. Any funding conversation that treats trust balances as firm assets is one to walk away from.
What happens if a contingency case we borrowed against is lost?
The obligation stays with the firm, not the case. This is business financing for the practice, not a non-recourse advance tied to one matter, which is why we underwrite your overall collected revenue rather than a single file. Firms that borrow within their normal annual collections can absorb a bad result. Firms betting everything on one verdict should size the facility smaller.
Is law firm financing different for plaintiff and defense firms?
The structures differ because the cash cycles do. If you're a plaintiff-side firm, you advance case costs and wait on settlements, so a revolving line of credit that you draw and repay as matters resolve usually fits you best. If you run a defense or corporate firm, you bill regularly but collect on net-60 or net-90 terms, which makes factoring those receivables a practical option.
Can a solo practitioner or small firm qualify?
Yes. Your firm size matters less than how consistent your collections are. Most approvals go to practices with at least six months of operating history and roughly $15K or more in monthly revenue. A solo with a steady docket and clean deposits is often an easier decision than a larger firm whose revenue swings hard from quarter to quarter.
Can we finance a partner buy-in or buy out a retiring partner?
Yes, and this is one of the clearest uses of a term structure. The amount is defined, the timing is known, and the payback runs for years, so a term loan spreads it over a period that matches the value being acquired. Funding it from a credit line ties up the facility you need for case costs.
Which option fits a flat fee or hourly practice rather than contingency?
If you run a flat fee or hourly practice, you collect more predictably, so your problem is usually the lag between billing and payment rather than a multi-year wait. A line of credit sized to one or two months of your overhead covers most of it, and firms with steady monthly collections sometimes prefer revenue-based financing, where the payment rises and falls with what you actually collect.
Other industries we fund
We know the cash-flow realities of 22 industries. If yours is not Law Firm, chances are we fund it too.
Grow your practice with law firm financing
Tell us how your firm bills and how it collects, and we will show you which structure fits. Funds can reach your operating account in as little as 24 hours.