| As with any other small business, a law practice needs the right financing to move forward and grow. However, there appears to be a sociological bias inherent in the thinking of most banks and other lenders against attorneys. It is quite likely that this bias originates from a perception that, in general, attorneys are comfortable defaulting on their contractual obligations, and defending themselves to avoid incurring out-of-pocket attorney’s fees, while the lender must pay their attorney to collect. If so, it would explain why many small firms and solo practitioners find it difficult to obtain the financing they need to grow their law practice.
In fact, the opposite is probably true: Most attorneys are schooled in the sanctity of contract, and actually take their contractual obligations more seriously than the average citizen. So, even though attorneys make good borrowers, small firms and solo practitioners have trouble finding good small business loans.
A law practice is like any other small business – you need to have space, staff, equipment, hardware, software, copiers, fax machines, supplies, and all of the typical resources of a small business. In addition, you need to constantly acquire new clients – this requires advertising, marketing, and other out-reach efforts to continually locate, entertain, and retain new clients. However, a law practice is at a disadvantage to other small businesses: A law practice has a more difficult time finding a good business loan.
What are the advantages of a business loan (as opposed to a personal line of credit or a home equity line)? First, the loan is to the law practice itself and not you personally, and although you are typically required to guarantee the loan, it appears as an obligation of the law practice. Second, interest rates tend to be lower, and typically range from Prime + 2% to Prime + 5% (The prime rate is currently around 5% per year). And, third, business loans are available in amounts which are significantly larger than personal lines of credit. And, finally, a home equity line results in a lien on your real property, whereas most business lines do not require real estate collateral.
How do solo practitioners and small firms find good business loans? LegalMatch (www.legalmatch.com), the premier provider of nationwide attorney/client services found that many of its attorney members needed good business loans. So, LegalMatch created LegalMatch Financial Services, with the goal of helping its Member Attorneys obtain financing, along with other financial products and services, with favorable rates and terms.
In turn, LegalMatch Financial Services found a lender who shares our view of attorneys: Attorneys make good borrowers. That lender is Telesis Community Credit Union (“Telesis”). Telesis, through its subsidiary Business Partners, LLC, has established a relationship with LegalMatch, under which Telesis can provide our attorneys with small business loans and other types of credit lines at favorable terms and rates.
This program is available to all attorneys. If you would like more information, please contact the LegalMatch Financial Services Group at (415) 946-0864 or finance@legalmatch.com. |
