Client Funding

Client Funding fills some firms with dread because of its historic links to the days of Claims Direct and TAG, when all clients had to sign a loan agreement to finance the referral fees and ATE premiums. Those days are long gone and many organisations like Injury Lawyers 4 U have advertised long and hard against Client Funding, however, there is still a role for Client Funding, particularly in complex and high value cases.

Client Funding as the name suggests, involves the client entering into a loan agreement to finance their disbursements. Interest is either paid by the client on a monthly basis or can be deferred to the end of the case. The interest charges and any documentation fees will be deducted from the clients’ damages as the loan will always be settled before any damages are paid. However, the solicitor can always pay these charges on the clients’ behalf if they want the client to receive 100% of their damages.

Usually the Lender will agree an overall facility limit with the firm and the firm will then be able to set up individual loans for clients within that overall facility limit and draw down funds as they are required. The key difference between today’s Client Funding arrangements and days gone by, is that today the solicitor can only draw down those disbursements which can be properly billed to the client – so that excludes referral fees.

With ATE premiums being deferred in the main and many straightforward medical reports being deferred, Client Funding is mainly used in complex and high value cases where the solicitor needs a number of specialist reports, or other disbursements such as Court Issue Fees and Counsels Fees. Many of the country’s highest profile firms still use Client Funding in these circumstances.

The advantage of Client Funding is that the disbursement funding requirement is taken off the solicitors’ balance sheet and they don’t have to finance the disbursement costs from cash flow.

If you are interested in Client Funding please contact PCC to discuss your requirements in more detail.