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Should You Finance Legal Fees?

financing for legal fees

You may be wondering if you should finance your legal fees. You need great legal representation, but lawyers can be expensive. Financing legal fees is a new way to pay for your legal matters a little at a time to make sure you have money for other important expenses. 

This article will explain the pros and cons and how to obtain financing for legal fees and services. Financing your legal fees can be a great way to access quality legal representation by managing costs. But before you decide to finance, make sure you understand the terms of the agreement and what to look out for. Find out everything you need to know about financing your legal fees here.

Understand How Legal Fees are Calculated

Legal fees can be one of the biggest expenses associated with any court case. It is therefore important to understand how legal fees are calculated and what factors are taken into consideration when coming up with a final cost. Factors such as the time invested in your case by your lawyer, their expertise and experience, and other associated costs like filing fees, all play into the overall cost of your legal fees.

In some cases, when the facts of your case are straightforward, you may be able to get an estimate of legal fees upfront. However, in other cases where there may be more complexities and uncertainty involved such as litigation, your lawyer will likely not be able to give you exact estimates on legal fees until they know more details about your case. 

Lawyers generally charge their clients one of three different ways: 

  1. Hourly – They will apply their hourly rate to each phone call, text, email, meeting, and court.
  2. Flat-Rate Fee – You pay one fee upfront to cover all legal fees in the matter. 
  3. Percentage – Your attorney will be paid a percentage of what they win for you such as in a personal injury case. 

Here is a great discussion on flat-rate fees versus hourly when choosing your attorney. 

Lawyers generally charge either a flat rate fee or by the hour. In some cases known as contingency cases, lawyers are only compensated if they win or settle your case so it’s important for both parties to have an understanding of the costs and potential risks associated before beginning any legal action.

Flat-rate fee attorneys will have an easier time calculating your expected costs for a legal matter, but you can also get an estimate from hourly attorneys before applying for legal fee loans. 

Assess Your Financing Options

Before deciding to finance your legal fees, it is important to evaluate all your financing options. For the most part, people fall into two categories when it comes to financing legal fees – those who can afford to pay in full and those who need help financing the cost. If you are able to pay in full, that may be an option worth considering as it gives you complete control over how much you spend on your case. Alternatively, if you cannot afford to pay in full or need help managing costs, there are various financing options available including lines of credit, loan programs, and payment plans.

When considering a financing option, be sure to research and compare all available options to best ensure the solution fits within your budget. Additionally, it is important to know the full cost of the service upfront, as well as any additional or hidden fees, such as interest rates and late payment penalties. You should also make sure that you can handle any potential rate increases in the future and determine if you are able to pay off the loan early or have flexible payment terms. Ultimately, by assessing your financing options carefully and understanding all associated costs and fees, you will be best prepared to select a financing option for your legal fees.

Shop Around to Find the Best Rates

When financing legal fees, it is important to take the time to shop around for the best rates and terms. Different legal firms may offer different financing structures and you should use this as a way to compare offers. Be sure to look at factors including interest rates, fees, repayment plans, qualifications required for approval, and other important details so you can make an informed decision about your financing plan.

It’s important to make sure that the deal you get is the best one for you. All too often, people sign up for financing plans without taking the time to truly understand the terms and conditions associated with it. Be sure to ask questions and read all paperwork carefully before signing anything. It’s also a good idea to shop around online and compare different companies’ offers so you can find one that works with your particular scenario. This may take some time, but it will be well worth it in the long run if you are able to get the best rates available.

Legal Financing Companies

Most law firms do not actually offer financing for legal fees through their firm, but partner with legal financing companies to provide more services. For example, many law firms use Affirm to finance legal fees for their clients. Most people have used Affirm for small loans and for purchases. Affirm is easy to use and is great for small loans which is why many law firms use them. However, it may be hard to qualify for enough legal financing to cover your entire case and you may be required to put down some of your own money to qualify for the loan. 

Another option is or to go through your credit card company or your local bank to see if you can secure financing for legal fees before you get started on your case. 

Keep in mind that legal financing companies are different than pre-settlement funding companies. Pre-settlement lawsuit funding companies are often used in personal injury cases and provide the victim with funding based on the merits of their case to hold them over until they reach a settlement. 

Here is a list of legal financing companies you can check out: 

  1. Bankrate 
  2. BestEgg
  3. Upstart
  4. Lending Club
  5. Citibank
  6. SoFi
  7. Credible
  8. Affirm

Negotiate Before Signing a Loan Agreement

Once you’ve identified the best loan for your needs, it is important to negotiate with the lender before signing a contract. Make sure you understand all of the details in the LOA and that you’re comfortable with the terms. It’s also important to ask about any discounts or special offers that may be available, as well as any hidden costs or fees that may not be immediately apparent in the agreement. Negotiating allows you to get the best rate on your loan and save money over time.

When it comes to legal fees, it’s also important to talk to the lender in advance. These fees can be significant and they should never be overlooked in your loan agreement. In some cases, lenders may be willing to waive certain legal fees or allow you to pay them over time in installments. This is a great way to save money on finance legal fees, as it will result in lower out-of-pocket costs for you. Ask your lender about what options are available and make sure any terms are clearly spelled out in the contracted documents before signing.

What types of legal fees can be financed?

Legal fees can vary depending on the type of case that you’re dealing with. Some common types of legal fees that can be financed include litigation fees, defense attorney fees, and criminal lawyer fees. Some law clients use legal financing for probate matters in order to “unlock” their family property so they can sell it to pay bills. It’s important to work with your lender to ensure that any legal costs associated with your case are covered by the loan you choose. Furthermore, make sure to double-check the loan agreement for other possible charges or penalties that may not have been included in the original cost estimates. 

Companies like Affirm do not ask what type of legal case you have, they simply have you fill out an application and either fully approved, partially approved, or denied. If you are approved, Affirm will send your payment to your lawyer of choice and then you will owe Affirm and not your attorney. You will then be allowed to pursue your case without worrying about paying the law firm. 

Other legal fees that may be financed include transactional expenses, like those related to bankruptcy filings and estate planning; contract writing and document preparation fees; class action and settlement fees; as well as non-litigation expert opinions. Depending on the scope of your case, you’ll also want to factor in miscellaneous costs like filing fees, detective work, court reporter services, photocopying costs, and related administrative charges. Ultimately, if you’re considering financing legal fees associated with your legal case, it’s important to understand all the costs upfront so you can budget accordingly.

How to Obtain Financing for Legal Fees

You will either need to ask your lawyer if he or she offers legal financing through their law firm or contact a legal financing company on your own. You will need to submit a credit application similar to other types of credit. The company you choose will check your credit score, income, age, debt-to-income ratio, and other factors to determine if you qualify for a legal loan. 

In conclusion: 

Financing for legal fees has drastically improved over these past few years. Law clients are able to pay a little at a time each month versus having to fork up thousands of dollars upfront for legal representation. This allows you to move forward with your case and pay a smaller monthly amount.