An innovative funding scheme, equivalent to invoice discounting, has now advanced over £10m to law firms throughout the UK.
Set up by Just Costs Solicitors and Novitas Loans, the costs advance scheme does not require any personal guarantees and helps firms bridge the gap between applying for and receiving their case fees.
Latest figures show that over £10m has been advanced since the scheme was set up at the end of 2013 and Just Costs says it is currently advancing in excess of £1m every month to law firms.
The scheme allows law firms to draw down up to 70% of their likely recoverable costs once they have successfully settled personal injury, clinical negligence and industrial disease cases.
Operated online, it works by Just Costs assessing a case and then advising Novitas Loans on what it considers to be a reasonably recoverable amount. Novitas then makes funds available to draw down within 48 hours. The loan is then repaid to Novitas once Just Costs has received funds from the defendant.
As firms receive their money upfront of costs being settled, this provides more time to push the third parties harder and to hold out for better offers which in turn improves overall recovery profitability for the law firms.
Mark Hartigan, client services director at Just Costs, said: “This scheme has been extremely well received by law firms throughout the country.
“One of the reasons firms are finding themselves under pressure is that they are fundamentally profitable but are not turning unbilled WIP and debtors into cash quickly enough. Our costs advance scheme emphatically addresses this issue. The benefits are numerous – improved cash flow, simple administration and fast payment.”
Jason Reeve, managing director at Novitas Loans, added: “Novitas is now the leading provider of law firm funding; the success of cost advance, with new firms joining every month, shows that we are helping law firms solve improve their cash-flow.”