Case study

Year-end fee acceleration

Law firm challenge

A global law firm was faced with short-term—but significant—cash flow problems as the fourth quarter drew to a close and they waited for outstanding receivables to be paid. Unable to draw down its bank line at the end of the year, the firm was confronted with a difficult choice: Hold off on paying year-end commitments or risk a cash shortfall that threatened the firm’s solvency.

Burford legal finance solution

Fortunately, the firm worked with Burford to identify a third alternative: A year-end fee acceleration financing arrangement.

Legal finance providers can purchase a portion of a firm’s outstanding hourly or contingent-fee receivables—allowing firms to recognize the revenue they receive immediately, regardless of when clients pay outstanding bills.

For a relatively low cost of capital, fee acceleration reduces the need to offer larger discounts to clients in exchange for payment, or to undermine valuable client relationships with an unseemly push for collection. It also applies in contingent-fee matters where the legal issues have been resolved but payment of the judgment or settlement—and thus the fee—is delayed for some reason, such as a court approval process or deferred payment under the terms of a settlement agreement.

Legal finance impact

The firm was able to monetize completed litigation and client work, providing the firm flexibility to use the funds to support operations and cover cash-intensive end-of-year financing obligations, such as partner profit shares and guaranteed cash payments, partner retirements and associate and employee bonuses.