The Pay Out: How Long will it Take to Get Funding?

You want working capital to cover case expenses, employee salaries, taxes, advertising or other needs of your firm, but getting financing can take time—time you don’t necessarily have.

Those few funders who promote same-day or instant approval may attract you. However, unless you have impeccable credit and/or don’t mind premium pricing, then this high-speed turnaround option likely won’t be a good fit. 

The truth is that most practical financing options take anywhere from a few days to a few weeks. Below is an overview of what you should expect in terms of timing during each stage of the process. 

1. Browsing Your Options

Before you select a particular type of financing—a line of credit, term loan, non-recourse advance, or other variation thereof—you’ll probably want to conduct some research about the products available to a contingent fee practice.

For instance, many third-party litigation finance companies offer non-recourse funding options to plaintiffs’ firms, but do you really understand what that entails?

Do you know how a line of credit differs from a term loan? 

Do you have a firm grasp on what collateral is required to secure different types of financing and how that may impact the amount you’ll receive?

You can easily find the answers to all of these questions from your colleagues who’ve financed, online or by speaking to funders directly by phone, e-mail, at bar association events or attorney conferences. We’ve also provided the answers here.

Estimated time: 1-3 days 

2. Preparing Your Firm for Financing

Once you know what type of financing is most suitable for your practice, it’s a good idea to take some actions at the outset to place your firm in the best possible position to receive funding. 

Making a few quick, simple adjustments to your practice now can help you maximize the amount of financing you’ll receive, plus give you the power to negotiate more advantageous terms, such as pricing, maturity date or how much collateral, including your current and future attorney’s fees, you’ll need to provide to secure the funding.

Steps you can take include:

• Preparing a budget and your financial statements
• Organizing your firm’s case management systems
• Projecting how much you’ll receive in fees from your cases
• Investigating ways you can improve your credit score 

Find out more about how to prepare for financing here. 

Estimated time: 0-5 days 

3. Selecting the Best Funder

Just like comparison shopping products, you should comparison shop funders too. This generally involves looking at multiple financing companies on the internet, contacting various funders, as well as trying to get the particulars about the terms of the proposed financing agreement and the underwriting process even before you start the application process. 

As you’re probably aware, you can get a general sense of what distinguishes one funding company from others in the industry—from highlighted product features to fringe benefits—directly from their webpages or social media accounts. However, talking to the funder will give you a more thorough view of how their funding process works and other characteristics of the funding that may entice you (e.g. low interest rates), or steer you away (e.g. hidden fees or charges). Learn more ways you can select the right financing source for your firm here.

 Estimated time: 1-2 days

4. Application, Approval and Funding

If you’ve prepared your firm for financing, then the application to funding period can be quick—in some cases only a few days.

If you haven’t, then be prepared for a longer, more arduous process, relatively speaking. You may be required to field additional documentation requests, endure an involved collateral examination or sustain funding delays due to things outside of your control (like a payoff letter from your current lender, getting data from co-counsel or records from your off-site accountant) than your organized counterparts.

Basically, the more prepared your firm is, the quicker the funding process will be. This is especially true if your firm has a large volume of cases or seeks a significant amount of financing. Once the funder has all the information requested, it generally takes less than a day or two to document the transaction and advance you the funds. 

Estimated time: 3-14 days 

When it comes to the length of time it takes to receive funding, the reality is that it can take a longer amount of time than you anticipate. The good news is that you have a lot of control over the timing. Reputable financing companies have efficient underwriting processes and can expedite your application if you’re able to get them answers and materials promptly. So what could take a few weeks, may only take a few days if you know what to expect and plan ahead for it.