Headlines of law firm redundancies are rife and are set to dominate when the Job Protection Scheme ends in a matter of weeks. Funding is also big news as firms look beyond CBILS Loans to access cash, quickly.
Law firms are rightly concerned about the headlines as this impacts access to justice and employees.
SpectraLegal Finance has been advising our clients and contacts to apply for the most attractive line of funding at present – the CBILS Loans, and, additionally in Wales, the Economic Resilience Grant. These have offered law firms a short term cash option but what happens next? Unlike grants, the CBILS Loans will have to be repaid (with repayments starting at 12 months) and any VAT payment holidays will have to be accounted for soon. This will eat into cashflow and the ability for law firms to move forwards.
However, for law firms with assets, there is another way to quickly unlock cashflow, without losing control of the business.
CBILS Loans first, then consider your options
Firms are still able to run their cost-cutting exercises at the moment, but we expect the real pinch to happen from September onwards – in light of the end of the CBILS Loan application deadline and also the Job Protection scheme (that ends in October). Law firms are very aware of the challenges ahead, which is why we think we’ve recently seen increasing demand for our Disbursement Funding products.
Our mantra, from day one of lockdown has been, seek whatever government support you can. The CBILS Loan is an incredibly attractive proposition but that funding runs out at the end of September 2020. We believe law firms should then look to specialist funders to assist with other areas.
Sustainable law firms are well-funded. They use disbursement funding products as they understand what assets they have and how to finance them – they won’t be dipping into an overdraft to help them ‘tick over’.
Disbursement products exist for sustainable law firms with well-managed assets and allow them to unlock their balance sheet. Specialist funding for the legal sector is a very good place to start if you’re struggling with cashflow but have clear opportunities to grow and sustain your firm – without losing equity or control.”
Medical Agencies: the end of extended credit?
Funding litigation is a drain on cashflow, and in these times, reserves are low.
We’re seeing an increased interest from medical agencies for our finance products as they know that we can help them with the extended credit they’ve provided to law firms. We’re always delighted to help these agencies to continue to support their clients, to avoid adding additional pressure on litigation firms’ cashflow and will continue to do so now.
Equity Release (ER+) Funding Product
We believe sustainably funded law firms that, that consider all options to preserve cash, will take back control and thrive in these challenging times.
Our ER+ product is a short-term solution and ideal for extraordinary times. It could well be the key to unlocking your balance sheet.
We can act quickly to give you a capital injection while the firm keeps control of the business.
The SpectraLegal Finance Equity Release (ER+) product removes the disbursement expenditure burden from the law firm. It offers:
- A facility that is able to grow as the firm grows.
- The firm is able to monetise assets that are traditionally locked up for many years.
- Gives the firm the power to negotiate better terms with suppliers.
- Cash is freed up for marketing services and investment in client files to maximise the value of their claims.
- Financial leverage enables partners to conserve cash while generating a higher PEP.
Headlines of law firm cashflow challenges are rife and as the difficult circumstances are set to continue, we expect to see an increasing level of interest in disbursement funding products and advise lawyers to see what options are available to them, to empower their firm and ability to thrive in challenging times, without giving control away.