How Litigation Finance Can Help the Boutique Firm
It was not so long ago that the “big firm” was the driving force in law practice. A variety of economic and technological factors have contributed to the diminution of the big firm’s market power, and one sign of that diminution has been the growth of “boutique” law firms. Litigation finance can have an important role to play for boutique firms seeking to secure their place in the legal market and provide better services to their clients.
Recently, it has become fairly common for a partner or group of partners in a large firm to pool their resources and set up their own boutique firms, which specialize in a relatively narrow niche practice areas. Most of the time, a boutique firm has the same capacity as its big-firm counterpart to provide high-level services, but it may lack the financial power to fully compete with big firms. In addition, if there is a real or perceived lack of financial clout for a boutique firm, it can be harder for that firm to attract clients who are looking for stability in their legal counsel.
As it is for less wealthy clients, litigation finance can help level the playing field for boutique firms in their competition with big firms. When boutique firms are willing to work with litigation finance companies, those firms can offer more flexible arrangements for covering both attorneys’ fees and litigation costs. Because of their small size and centralized decision-making, boutique firms can outstrip big firms in offering flexibility.
Working with litigation finance companies can also relieve pressure on the boutique firm’s own budget. Attracting staff who may be used to big-firm salaries can be a challenge for a boutique firm that must operate on a start-up budget By spreading risk and litigation costs, the boutique firm can free up cash for hiring – and keeping – more talented associates and staff.
Litigation finance companies can also be a valuable source of referral business. These companies are often contacted by prospective litigants who have not hired a lawyer and are trying to find out if they can obtain the funds needed to litigate. When a boutique firm has a relationship with a litigation finance company, the company may be more willing to refer the prospective client to the firm.
Topics: litigation finance, legal reform, third-party funding, litigation costs, marketing, networking, boutique law firms
Works Cited: Rebekah Weiler, Litigation Finance and the Rise of the Boutique Firm, LinkedIn (March 31, 2016) available at https://www.linkedin.com/pulse/litigation-finance-rise-boutique-firm-rebekah-weiler
