Close Brothers recently acquired Novitas Loans Ltd, a Salisbury-based firm, which is a leading provider of loans to the legal sector. Below Jason Reeve, Director at Novitas, shares his views on the financial needs of law firms.
Escalating legal costs are placing law firms under mounting financial pressure, constraining the cash flows and capacity of legal businesses, and the ability of their clients to actually afford legal representation.
Law firms already struggle with cash tied up in work in progress. Meanwhile, they must meet the costs of running the business and pay court fees upfront which impacts on liquidity. When added to barristers’ fees, the financial outlay involved can prove prohibitive to taking on more work, until expenses are recouped.
Conventional forms of borrowing may not provide the answer to this problem. For law firms, overdrafts provide uncertain and costly credit, while traditional bank lenders can be hesitant to provide finance. This environment has created a need for specialist lending to bridge the finance gap, to help the smooth running of the legal sector, and widen access to legal representation. Novitas helps to strengthen the balance sheets of law firms, remove debt, and fund access to legal services.
Whilst the majority of law firms may struggle with their cash flow at some point in their business lifecycle. It is essential that all firms understand the funding options available to both themselves, and their clients. By being able to unlock their working capital, law firms are better placed to invest in their growth, proposition and the service they provide to clients.