FAQ For Solicitors

Disbursement Funding

What is the interest rate charged to the client?

The rate charged to the client under each loan contract is specific to the law firm’s facility (that is, all clients of each law firm are charged the same rate).

The rate of interest is calculated based on the strength of the law firm’s underlying guarantee, security offered and prevailing consumer interest rates in similar products.

At the time of publishing, client interest rates ranged from 14.50% to 20.00% per annum.

What is the maximum amount my firm can apply for?

At the time of application, a law firm will need to request a maximum facility limit. This figure is usually commensurate with the total value of disbursements being carried by the firm at the time of application.

A request to increase this limit can be made at any time.

What is a law firm’s ongoing obligation to ASK?

ASK carries out an annual review of each facility to ensure the ongoing credit-worthiness of the law firm and the recoverability of each underlying file.

When does the client pay interest?

Interest starts accruing upon the draw down of each tranche under the loan agreement. For example, if the solicitor only requests an immediate draw down of $2,000 under a contract with a limit of $8,000, the client only pays interest on the $2,000 drawn. Interest will start to accrue on further draw downs once they are paid to Trust.

Does each client’s case need to be assessed by ASK before funding is provided?

No. As each contract falls under the over-arching guarantee between ASK and the law firm, the firm is able to ‘approve’ each client without reference back to ASK. That is, if your firm is willing to act for this client on a deferred fee basis, ASK is prepared to provide funding up to the firm’s maximum facility limit.

Will ASK vary the clients interest on individual loan contracts?

No. The interest rate will stay the same throughout the life of the loan on each individual contract.

Will the client object to paying an interest on disbursements?

The feedback we have received from existing firms using the facility suggests that the client very rarely objects to paying interest. Clients are used to signing credit contracts for household purchases with retailers, e.g. Harvey Norman for a fridge, television, washing machine or signing up for the latest mobile phone contract.

How do I explain the product to the client? 

We have developed a Disbursement Loan information leaflet which explains the facility and how the application process works, this will give the client some comfort and the solicitor a helping hand in getting the client signed up. 

What can the funds be used for?   

Funds borrowed by a client under a Disbursement Facility can be used to pay the cost of any hard disbursements. For example, medico-legal reports, barrister’s fees and court filing fees can be included, while postage and photocopying are not included. 

Professional Fee Funding

What firms are suitable for this facility?

All firms with a significant commercial practice will benefit. It is expected that most if not all accredited firms will have three or more partners. Any firms offering or considering credit terms to private businesses for lumpy or one off fees

Are there any exclusions?

Personal debtors - this is currently a business-to-business facility only. Litigation matters will be considered but on a case-by-case basis.

What is the maximum amount my firm can apply for?

At the time of application, a law firm will need to request a maximum facility limit. This figure is usually commensurate with the total value of debtors and other assets being carried by the firm at the time of application.

A request to increase this limit can be made at any time.

Why doesn't ASK perform a Credit Check on clients?

The purpose of this funding is to make it as easy as possible for you to enter into a positive dialogue with you clients. Because your firm provides a guarantee and indemnity, ASK relies on your firm to conduct credit checking procedures.

What happens if the client doesn’t pay a Direct Debit?

ASK will check for administrative errors, but in the event that the direct debit fails a second time, ASK will notify you of the default. ASK requires payment of the outstanding principal within 5 business days. Your firm either pays, or you can undertake to pay against original schedule. You can pursue the client for the balance of the fees if you elect to do so.

Will ASK help my firm with our credit management?

The basis of the facility is that you know your clients much better than ASK. At the establishment of the facility we can assist you with your rollout strategy including the integration with your existing credit management.

What is the maximum amount for any one client?

The usual maximum facility granted per client is $50k or 20.00% of a firm’s facility whichever is lower. Specific law firm practices may require exceptions to this rule. Higher amounts can always be considered with a manual submission and ASK approval. This may take longer and further admin charges would apply.

Is there a minimum amount?

Minimum facility per client is $10,000, but multiple invoices can be raised.

Can you cater for a monthly payment cycle?

Yes, subject to the minimum facility per client.

What is the interest rate charged to the client?

The interest charge is based on the prevailing wholesale rate fixed for the 12 months and includes a reasonable risk factor. For example a credit charge of 10.00% for the facility translates into between 18.00% and 22.00% on an annual basis.

How does the interest rate compare to alternative funding?

It is similar to other unsecured facilities including business-to-business credit card facilities. Most other funding requires security and an extensive credit approval process. ASK is positioning this rate in order to attract mainstream business clients.

How does this compare to factoring?

This is not factoring. ASK effectively loans the client the money to pay the law firm, so the debt is paid. In factoring, the law firm is lent only a percentage of the outstanding debt.

Isn’t this an expensive way to finance?

It is more expensive than secured finance, but does not require any additional security, leaving more headroom for existing facilities in place. Most companies enter into leasing agreements and other monthly payment options such as insurance premium funding, even though paying for these items up front would be cheaper. The reason companies do this is it improve cash flow and return on capital.

Isn’t this really for those who have a credit problem?

Spreading cash flow helps all companies and this facility is useable by businesses with both strong and weak balance sheets. It is sound cash flow management for all businesses. A business with a strong balance sheet usually has the benefit of evaluating a number of options, of which Professional Fee Funding could be one.

Why should I be interested if I have a supportive bank?

You may wish to use the bank facility for other activities that absorb cash, but banks are unlikely to offer an unsecured facility. While law firms can offer extended credit without finance, using ASK allows them to comply with finance regulation by using a reputable third party funder and ensure they are not disadvantaged themselves.

Will ASK raise interest rates?

ASK funding is subject to its own financing structures and is not immune to changing wholesale rates so will review its charges on a regular basis. The repayment interest charges are locked in at the beginning of any repayment of an invoice.

Is this limited to law firms?

ASK Funding is the largest specialist lender to the law industry and this remains our focus. Professional service firms that are interested in our services should contact us for a discussion on their needs.

If a law firm has been accredited by ASK to offer Professional Fee Funding what does this mean?

An Accredited Law Firm is of adequate financial standing to offer extended credit. ASK does not assess or warrant the quality of advice.

Will you offer this to sole practitioners?

Not in the foreseeable future.