Personal injury law firms, and mixed practice firms with a PI practice area, often face cashflow strain from unbilled disbursements.

This could be viewed as just the cost of operating a no win no fee business model, but this view may overlook the immediate value of cash in your business.

For every PI practitioner, a firm might be carrying between $150k and $350k in disbursements. Multiply this out for the average 4 practitioner firm, and you have a serious chunk of coin locked up for anywhere from 12 to 36 months depending on the matter types. Medical negligence and abuse files will sit at the higher end of this, but across the jurisdictions, word is that settlement timelines have stretched out for all types of compensation matters.

Unlock Trapped Cash with Disbursement Funding

Disbursement funding can unlock this trapped cash, and for firms that have self-funded or used a bank loan that requires regular payments, a disbursement funder can take on all new disbursements and even reimburse disbursements that have already been incurred, making cash immediately available and deferring repayment to settlement. So, what might a firm do with that cash?

Providior funds business growth. We unlock trapped cash. We do this through funding disbursements. Read on for 5 possible, productive uses of that unlocked cash and book a consultation with us if this piece resonates.

The Top 5 Reasons to Unlock Cash with Legal Disbursement Funding

1. Invest in Talent & Capacity.

Hiring a finance manager or more support for your practice manager can help the administrative and financial elements of your business run more smoothly. As a result, the legal practice director and managing partner can have a more strategic focus, reduce stress and enable focus on business growth and faster/better outcomes for claimants.

Unlocked cash allows you to hire more lawyers to free the leaders in the business to be more strategic and find time to work on the business rather than in it on a day to day basis.

2. Invest in Productivity Tech.

There are some exciting developments in Legal Tech that have the potential to transform your business. The quality and capability of Practice Management software continues to improve and integrations with accounting and the customer relationship management (CRM) systems provide opportunities to streamline your operation.

AI-enabled platforms addressing document management allow your team to do higher-value work faster and to achieve superior outcomes for claimants sooner. This in turn improves the cash flow to the firm, creating a virtuous cycle. Investing in these platforms is achievable, even for relatively small firms.

Having the time and talent in your business to explore the capability of the many tech products as well as making full use of the many apps in robust suites like Microsoft365 can make a huge difference to a firm’s growth trajectory and ability to sustain growth over time. See point 1 for ways to free up time and talent for this purpose. Investment in tech further opens up capacity within the firm, which then calls for… more clients.

3. Invest in Client Acquisition Capability

The firms that are winning and growing sustainably are those who have the momentum in file/client acquisition. A strong client acquisition strategy looks like:

  • Amplified, word-of-mouth from satisfied claimants through testimonials boosted by digital ads
  • Referrals from specialists with whom the firm has developed multi-level relationships
  • Thought leadership pieces that showcase your team’s extensive knowledge and experience
  • A coherent brand identity that speaks to the integrity of the firm and draws in claimants who need to be able to trust a law firm to help them secure their financial future.

There are many marketing specialists out there who have a deep understanding of client acquisition best-practice and can structure campaigns and guide your team on great content creation, but they do cost money!

4. Prepare for End of Financial Year Pressures

The end of each financial year seems to roll around very quickly. Your Accountant might inform you mid-June that you have had a highly profitable year, but because of disbursements and other cashflow pressures, the cash itself is not liquid within the business. This might impact your ability to access those profits to pay dividends or additional super contributions and of course, also impacts your ability to make a timely payment of the tax bill that follows a very profitable year. By having cash available in the business, you have more room to move and greater flexibility in financial decision-making.

PI practitioners understand that they have great earning potential over time, but it can be frustrating when despite all of the hard work, drawing sufficient personal income to support the lifestyle and family goals that we all aspire to, is not possible due to the amount of long-term committed cash within the business.

5. Consider How Succession Planning Can Benefit your Firm’s Strategy

Anyone who has successfully stepped back from or exited a business knows that developing succession is an imperative, yet one that takes time. By developing potential successors within your business who know your business, you create a practical and executable plan to reduce your workload over time and move into a mentoring and consultative role while maintaining a strong income stream. This involves not just hiring and developing great talent, but also structuring the business so that as those partners acquire equity stakes, they can do so at an achievable price point. Having one of the largest asset items on the balance sheet (disbursements) funded by debt might enable partners to buy in at an affordable price based on a simple valuation method.

Funding Levers

Disbursement funding is just one funding lever that can be pulled. WIP Funding is another, that enables simple acceleration on files that are already subject to a Deed of Settlement, awaiting payment. The value of this type of funding recognises the value of cash now vs cash in the future and is another way that firms can unlock trapped cash.

Unlock Trapped Cash – Providior Funds Disbursements

Book a consultation to discover how Providior can fund business growth for you.

Note: Providior is a cashflow solutions provider and does not provide financial advice. We provide material for general informational purposes only, sharing insights from across the PI Legal sector and offering thought suggestions on ways that challenges can be overcome. You should seek independent professional advice before making any financial decisions.