In Litigation Funding Magazine Article, Elena Rey and Tristan Dollie Examine Law Firm Borrowing

Law firms seeking to borrow and lenders seeking to lend need to know how to navigate the potential pitfalls that can arise from financing arrangements to avoid issues with legal services regulators, Brown Rudnick Partner Elena Rey and Counsel Tristan Dollie said in an article published in the October issue of Litigation Funding.

The article, entitled “Borrowed time,” focuses on the restrictions and obligations of lender requirements for a law firm borrower and the security relating to such finance arrangements.

“Like operating businesses, law firms require debt facilities to provide liquidity throughout the business life cycle,” Rey and Dollie said in the article. “Such debt facilities are often for general corporate purposes but can also be for more specific purposes such as litigation finance.”

Some of the main issues identified regarding law firm borrowing include use of funds, security, management, and monitoring.

Lenders usually require a borrower to specify how the funds will be utilized so they can demonstrate that the funds will be used with a view to increase the firm’s value. As a result, it’s important the parties agree an approach to ensure the lenders’ risk is mitigated while the law firm borrowers retain the operational flexibility required to comply with legal service regulations.

Read the full article here.