Trends in the legal or business world often begin as adaptations to some outside event or circumstance. The early stages of COVID brought about a trend of firms moving away from billable hours and toward contingency fees. Another growing trend is the use of Litigation Finance to manage balance sheets and continue to pursue viable litigation without tying up liquid assets. When law firms opt to ignore trends, they can miss out on advantageous developments.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
Trends in the legal or business world often begin as adaptations to some outside event or circumstance. The early stages of COVID brought about a trend of firms moving away from billable hours and toward contingency fees. Another growing trend is the use of Litigation Finance to manage balance sheets and continue to pursue viable litigation without tying up liquid assets. When law firms opt to ignore trends, they can miss out on advantageous developments.
Burford Capital explains that developing a contingency practice can be a forward-thinking move that anticipates coming economic realities. If you’re considering starting a contingency practice, consider the following:
–An internal buy-in combined with early goal setting will motivate and inspire the team. Consider tolerance to risk, a loose timeline, and a clear vision of what you want to achieve.
–Communication and Education. Investor confidence is vital to any new business venture. Also, consider an outreach team who can find plaintiff-side contingency work. Shareholders may be reticent to build a contingency practice. Educating them on the benefits as well as potential ethical concerns is essential.
–Underwriting. Infrastructure to vet cases and develop contracts is an irrefutable part of establishing a contingency practice. A team that can assess risk and estimate time frames and potential awards is indispensable. Legal finance professionals are ideal for this.
–Partners. Contingency practices can wreak havoc on expected partner payouts if there’s no plan in place. Good communication can help assure partners that they’ll still be compensated fairly.
–Risk Sharing. Partnering with a legal finance entity is a bold step that can reap major benefits. Their expertise and ability to scale up a practice is a vital part of getting a new practice up and running. A trusted partner in risk-sharing can mean the difference between an adequately functioning practice and a booming one that’s ready for anything.
