Law Firm Financing: 7 Tactics Used by Attorneys in 2025
Let’s face it, you can have a client-centered vision, top-tier lawyering skills, and a foolproof business plan.
But without the funds, you’re not getting anywhere.
In this post, we asked eight highly experienced lawyers about their go-to funding strategies.
Read on to learn real-world funding strategies that can get your law firm off the ground.
1. Bootstrapping Your Law Firm
There are plenty of lawyers who started their firms using only their personal funds.
This, of course, comes with limitations in terms of the availability of growth opportunities. But it also helped lawyers like Ramzy Ladah, founder of Ladah Injury & Car Accident Attorneys, pursue sustainable growth while being worry-free from financial burdens.
I initially sidestepped traditional loans, opting for bootstrap financing, relying on personal savings and minimal operational costs. This lean approach kept me debt-free and sharpened my focus on building strong client relationships, a solid case portfolio, and concentrating on high-stakes cases where I could leverage my inside knowledge of insurance defenses to maximize returns per case, which fueled organic growth.
Being the sole decision-maker in your firm also comes with other perks.
For Edward Hones of Hones Law Employment Lawyers PLLC, it’s all about maintaining leadership and control.
When I founded Hones Law, I bootstrapped the firm from the ground up, relying on personal savings and reinvesting initial revenues back into the business. This approach allowed me to maintain full control over the firm’s direction and values, which was critical in establishing a strong foundation focused on advancing workers’ rights.
Just remember that, as the sole investor in your firm, you’re also in charge of widening your horizon and plotting a growth roadmap. Knowing industry experts and thought leaders to follow is a huge advantage in this regard.
2. Finding the Ideal Financing Partner
In most cases, bootstrapped law firms eventually seek additional funds from financing partners to accelerate growth.
However, there’s more to it than just payment terms and interest rates.
C.L. Mike Schmidt, partner at Schmidt & Clark, elaborates:
The initial capital was invested from personal funds and with the support of a small credit from a bank. The right financing partner is one who will not only provide you with the most favorable rates but also one who gets and supports you. The first tip is to find partners that are active in your industry, as it dramatically changes the quality of the advice they can offer.
Ramzy Ladah also talks about the importance of financial partners who aren’t just in it for the money:
Keep overheads low, focus on high-impact cases, and choose financial partners who believe in your long-term vision, not just your current balance sheet. This strategy managed risks and ensured sustainable growth, keeping the firm agile and focused on what truly matters—client justice and care.
3. Building a Cash Cushion to Support Growing Pains
As a budding law firm, it pays to be prudent in terms of financial security.
C.L. Mike Schmidt advises new firms to build a cash cushion as soon as possible.
Not only will this help your firm through difficult times, it will also position you for better financing options in the future.
It is always advisable to have some extra capital to buffer unforeseen contingencies; it puts your business in good stead, and finances also demonstrate to financiers that you are prepared for any eventuality.
To quickly build your backup funds, Windrose Law Center PLC managing attorney, Kristin Moye, recommends practical solutions:
Of course, saving money is not enough. Having a solid plan for revenue generation is even more important. To do this, it is important to establish strong referral partnerships with complementary industries and to have a well-drafted fee agreement in place.
Of course, it’s also ideal to explore other ways to generate income to build up your firm’s financial standing. Read our guide on making $1M as a lawyer for the best money-making practices.
4. Managing Debt Wisely
There are two sides to effectively managing your law firm’s finances: getting the money and ensuring you don’t shoot yourself in the foot doing so.
Mark Hirsch, co-founder of Templer & Hirsch, imparts the following advice:
Managing debt well is very important. We focused on being careful with our cash flow and ensuring we did not take on too much debt. Initially, we reinvested profits back into the business instead of taking on more debt to grow. This strategy helped us expand in a sustainable way and kept us from paying excessive interest.
The key takeaway here is to maintain a steady pace. Rather than seeking additional sources of funding, consider using your own profits to fund your firm’s growth initiatives whenever possible.
Remember, taking on additional debt when it’s not necessary is considered harmful in personal finance—let alone in running a law firm. It’s particularly dangerous if you overlook the actual, long-term financial risks of getting loans.
Martin Gasparian, owner and managing attorney at Maison Law, explains this best:
I encourage business owners of all types to enforce a practical plan to manage and pay off business debt as diligently as possible. While business loans can range from small to large amounts, beware of balloon loans (significantly high amounts due toward the end of the loan) that may quickly blow up in an entrepreneur’s face if business is slower than previously projected.
That’s why it’s important to be proactive when managing debt.
Edward Hones suggests two things:
In terms of managing debt, it’s essential to keep a close eye on your cash flow and prioritize paying down high-interest debt as quickly as possible. Regularly reviewing your financial position and adjusting your strategy as needed can prevent debt from becoming a burden.
Andrew Pickett from Andrew Pickett Law also shares his top two priorities for effective debt management:
Managing debt effectively requires a disciplined strategy. Implementing a robust budget ensures that loan repayments align with your firm’s cash flow. I found that prioritizing expenses and refining billing practices can lead to improved cash management, which, in turn, reinforces your standing with financial partners.
5. Scrutinizing and Negotiating Offers
One of the biggest funding mistakes that new lawyers can make is signing a deal as soon as an offer reaches the table.
Andy Gillin, managing partner at GJEL Accident Attorneys, mentions the dangers of not reading between the lines when evaluating offers. He also shares a few tips on how to gain negotiating power when dealing with potential financiers:
Always pay close attention to the interest rates and the terms of repayment. Look beyond the numbers to understand any hidden fees or conditions. Negotiating better terms often involves demonstrating your firm’s potential for steady revenue streams; be specific about your growth plan and how the financing will help you achieve it.
Andrew Pickett echoes the same views when it comes to maximizing your negotiating power:
Negotiating is imperative; institutions are often willing to adjust their terms based on your business’s performance projections and overall market potential. Transparent communication about your firm’s trajectory can demonstrate stability and reliability, qualities lenders seek in a partnership.
6. Keeping Startup Costs Low
Never underestimate the value of prudence when starting a business, especially in the high-stakes legal industry.
For Kristin Moye, the benefits of a lean approach far outweigh the downsides. She also shares a few tips for lawyers looking to start small:
As a business law and estate planning attorney with extensive experience advising lawyers starting a law firm and other new business owners, I’ve seen firsthand the benefits of starting lean. Keeping your startup costs low allows you to make deliberate decisions about the clients and cases you take on, reducing stress, burnout, and potential ethics issues. Starting small might mean opting for a virtual office or sharing space rather than committing to expensive office space. It could also involve using a legal-specific answering service instead of hiring full-time staff.
7. Prioritizing Local or Community Bank Loans
If you urgently need more funds, seasoned lawyers recommend exhausting more cost-effective alternatives first.
This includes combining multiple funding sources, like personal savings and small loans from local banks, to hit your capital targets.
My partners and I began GJEL Accident Attorneys with a blend of personal savings and small loans from local banks. Building good relationships with community banks proved invaluable for us. These institutions are often more flexible and willing to work with you compared to larger banks.
Still on the fence on whether you should work with community banks?
Unlike big banks, community banks tend to be more flexible as long as you maintain a clear and solid position.
Here’s Mark Hirsch on his experience negotiating with local banks:
Local banks were more willing to work with us because they understood how hard it is for a law firm to keep track of their cash flow. Getting better terms often came down to showing the lender that our business plan was viable and getting to know them personally. For example, we secured a lower interest rate by committing to paying off the loan faster, which saved us a lot of money in the long run.
Final Thoughts
Obtaining funding is one of the early roadblocks you need to clear on your way to building a thriving law firm.
Whatever funding strategy you choose, always remember to proceed with caution.
Your decisions at this point will have a profound, lasting impact on the trajectory of your law firm. As such, it’s better to start late and have a robust business plan than get money fast while setting yourself up for future failure.
“The decisions you make at the start of your business journey will shape its future,” says Kristin Moye. “Finding the right experts and resources to help is vital.”
Table of Contents
Related Articles
Dominate Your Market with Digital Marketing Services That Deliver
Talk to a certified professional today, and we will design a strategy specific to your case.
