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How this R300mn funding for SA’s law firms works
Due to Covid-19 restrictions, South Africa’s courts have limited proceedings to urgent matters only, hitting the pockets of law firms involved in other cases. Furthermore access to finance for many small law firms has been difficult because of blanket loan criteria unsuitable for the business of law. Elad Smadja, CEO of Taurus Capital joins CNBC Africa for more.
Mon, 18 May 2020 16:22:04 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- Limited court proceedings focusing on urgent matters have strained the finances of many law firms involved in non-urgent cases
- Access to finance has been difficult for smaller law firms due to blanket loan criteria that do not suit the unique financial needs of the legal industry
- Torres Capital provides innovative funding solutions by evaluating intangible assets such as court orders and fee agreements, offering tailored financial support for law firms
In the midst of the COVID-19 pandemic, South Africa's law firms have faced numerous challenges due to limited court proceedings that focus only on urgent matters. The restrictions have significantly impacted the pockets of many law firms involved in non-urgent cases. Additionally, access to finance has been a major hurdle for smaller law firms, as traditional lenders often have blanket loan criteria that do not cater to the unique financial needs of the legal industry. To address these issues, Torres Capital has stepped in to provide funding to the tune of R300 million to support small law firms in need of working capital or looking to capitalize on merger and acquisition opportunities.
Ila Dismagia, CEO of Torres Capital, shed light on the current state of business law, particularly for small law firms, during the COVID-19 lockdowns. She highlighted the mixed landscape where some firms are struggling due to court limitations and closures of essential institutions, while others are seizing consolidation and growth opportunities in the market. However, for smaller firms lacking capital, the challenges can be daunting.
Dismagia emphasized the unique approach taken by Torres Capital to address the financing needs of law firms. Traditional lenders often struggle to assess the value of intangible assets in law firms, given the absence of hard assets for collateral. To bridge this gap, Torres Capital leverages its expertise in the business of law to evaluate court orders, fee agreements, text bills, and mandates as alternative forms of collateral. By understanding the nuances of these intangible assets, Torres Capital can offer tailored funding solutions to law firms, enabling them to navigate cash flow challenges and pursue growth opportunities.
One key aspect that sets Torres Capital apart is its willingness to venture into riskier lending territory, akin to equity financing. While this approach may entail higher interest rates compared to traditional loans, it provides law firms with the flexibility to manage debt, fuel business growth, and retain full ownership of their firms. By filling this niche in the market, Torres Capital aims to empower law firms to overcome financial obstacles and emerge stronger from challenging economic conditions.
Overall, Torres Capital's innovative funding initiative comes as a beacon of hope for South Africa's law firms grappling with the financial fallout of the pandemic. As the legal landscape continues to evolve amidst COVID-19 disruptions, access to specialized financial support tailored to the needs of law firms will be crucial for sustaining operations and driving growth in the industry.
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