Law Practice Line of Credit

Despite the rosy-eyed expectations many law students have upon graduating, being a lawyer isn’t quite the debt-free, lucrative career path that many predict it to be. From immense law school debt – often reaching into the hundreds of thousands of dollars – to the truly vast costs of marketing your law practice, working as a lawyer – whether with a firm or independently – is a costly practice.

In fact, given the somewhat extreme costs of even qualifying as a lawyer, the average associate is unlikely to repay their student loans, and reach a level of personal financial stability, within five or ten years of graduating from law school. Those six-figure salaries are appealing, yes, but the idea that they’re a path to straightforward wealth isn’t quite right – in fact, it’s a misleading idea.

Because of this, many law students leave law school in a state of financial dire straits. They’re left with little in the way of savings – the bulk of their paid internships going towards the immense cost of law school itself. They have little in the way of seed money or investments, with the bulk of their own savings again, used for tuition fees. In short, they’re in need of credit, and a great deal of it.

As such, many would-be lawyers use a law practice line of credit in their early years – a simple, yet powerful way to enable growth and steady improvement in their careers. Establishing a law firm is a costly, difficult process, and it’s one that very few new, and even seasoned lawyers, are able to do without assistance. As such, law practice lines of credit are a popular, accessible option for lawyers.

In this guide, we’ll look at both the amount of money that can be taken out using a law practice line of credit, the repayment terms assigned to most borrowers, the average costs of starting and running your own law practice, and the long-term effects of using a line of credit for your business. Whether you’re a new lawyer or a seasoned professional, read on to learn more about law practice financing.

There are many places from which you can gain financing for your law firm. One of the most well-known and popular is through the standard banking system. Many of the country’s major banks are skilled and experienced in serving the needs of law firms and independent lawyers. Banks such as Bank of America and Wells Fargo both offer funding options for law firms and trial lawyers.

However, as with any loan or line of credit taken out through a major bank, there are limits to how well a large company can understand your needs. These banks deal with millions of borrowers on a monthly basis, putting them in a position where effective service can be difficult. As such, many of the country’s top law firms instead choose to work with a firm that specializes in practice financing.

These include companies such as LawCash, an independent financier that specializes in securing financing for law firms, both new and old. Whether you’re servicing thousands of client accounts, competing to get your foot in the door, or looking to establish a new firm altogether, these smaller companies are often a good choice due to their mix of law experience and financial knowledge.

Before you take out a law practice line of credit, regardless of where it may be applied for, it’s very important that you know where your credit will likely be invested. Will it be used for ongoing costs related to trials and client management? Will it be used to fund your business’s expansion into new areas and legal avenues? Will it simply be used to pay the day-to-day costs of running an office?

These are all questions that you need to ask yourself, as they will have a profound effect on the size and scale of your line of credit. Generally speaking, a line of credit is relatively fluid and versatile – if you would like to limit your business’s spending, you can do so. Likewise, if your firm would like to expand suddenly, most lenders can work with you to expand your access to credit financing.

It’s equally as important to project the outcome of this spending. If you plan to invest in business advertising to bring your law firm to a new audience, keep in mind that it’s potentially quite tough to measure the results of this before it’s carried out. Likewise, an investment in new premises or a new service region may be difficult to predict, making it a tough choice to invest in from credit.

Thankfully, many finance firms that specialize in law firm financing understand these unique needs, and offer separate lines of credit for case-related costs, law firm financing, and advertising your law practice. For this reason, we suggest going with a specialist firm if you’re unsure of exactly where your general line of credit will be spent – this allows you a greater deal of accountability.

While credit itself is a scary concept, particularly in the wrong hands, it’s one that those in the legal profession are relatively familiar with. As such, it’s a sure-fire way to expand your business and take care of the often extreme expenses of running a law practice. Whether for yourself, your clients, or your staff, an investment in a law practice line of credit is one that few can afford to miss out on.