Michael J. Swanson – CEO Of Advocate Capital Inc. Shares The Benefits Of Financing Case Expenses For Contingent-Fee Attorneys on Business Innovators Radio

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MS: So we recognized that these two lawyers had a lot going for them, both from a legal standpoint, but also from a business standpoint. They had a real business understanding. We liked their business model, their business plan. We could tell that they weren’t just your typical plaintiff lawyer. You know, your typical plaintiff lawyer has an undergrad in history, or psychology, or sociology, or English; nothing wrong with those degrees, but they don’t teach you how to run a business. Then they go to law school. You don’t learn business there, so they’re kind of thrown into it. But these two, we really, we thought, “You know, they’re going places.” So we set up a line of credit for them, I think around $75,000, which is our minimum, right around there. And this is probably 10, 12 years ago.

MS: Well, they got on board, and they just ran with it. And they’ve done such a wonderful job. They’re dominating their market now. They have significantly added to the number of people they’re helping in their community. They’ve diversified the law firm into other types of cases. And they’ve grown their revenue and net worth, such that we’ve been able to recently renew them at their renewal time. And we’ve finally now increased their line of credit. It’s at $6 million. So they went from $75,000 of case expense needs to $6 million. And you know, their profits and their net worth have grown in a similar way, and so has the couple thousand people that they’re helping in their community; now are getting the kind of legal representation they deserve.

MS: And that’s just one example. And there are many, many others because that is typical; although it’s not usually from $75,000 to $6 million. That’s a pretty meteoric rise.

BIR: Well, it’s a great story. And it’s great that you were able to put people in a position to help more people. That’s what they do. So if there are plaintiff lawyers out there that are listening to this, and they’re looking for some capital to handle some of the expenses in their business, what kind of questions should they be asking the financing firm?

MS: Right. Well, it’s kind of interesting, we’ve talked a lot about finance. And of course, we are a finance company. We make loans to law firms, lines of credit. But you know really, anybody can make a loan, right? I mean, banks make loans all the time. Your uncle can loan you money. What’s really the key in this aspect of it, though, is that pass-through of the borrowing cost of the cases. And most people don’t realize it, but we are more of a tech company than a commercial lender. I mean, we do make loans, obviously, very successfully. But what makes Advocate Capital special is AdvoTrac.

MS: So AdvoTrac is our proprietary software that we built from the ground up, starting 19 years ago, that we’ve continuously improved. And AdvoTrac, we run our business on AdvoTrac. And we track all those 75,000 cases. We’re processing about 2.7 million transactions per year in AdvoTrac. So we’re running the business on that. But what’s really key is, is that value proposition I mentioned earlier, which is AdvoTrac gives us the ability, then, and our clients can go online and access their accounts to print out that all-important documentation to show their clients, “Here’s every step along the way in your case of what I borrowed, and the interest I paid my lender,” and it’s that receipt out of AdvoTrac that gives them the ability to get back what they’ve paid us.

MS: And that’s the basis of it. But we then wrapped a lot of different services around that technology for our clients. So because they sometimes need help with business aspects, we’ve built a team of training folks here at Advocate, who will go into a law firm, usually electronically, you know, remotely, and help them get started with our program, so they don’t have to figure out, “How am I going to do this?” No, we do that for them. In fact, we have, I think, five people now, five team members on staff who are certified by Intuit as QuickBooks Pro advisors.

MS: So we really go a long way to provide training to them. We provide free QuickBooks training, for example, to all of our customers on any topic. We can get them discounts. We have enormous amounts of reporting available to clients, right through our 24/7 secure web portal. We’re 100% electronic. So we have built into AdvoTrac the ability for our clients to go online, request funding for a case electronically with a click of a mouse, pay off a case with a click of a mouse. All this is done very rapidly, electronically. So they’re not having to deal with writing checks or receiving checks from us. So we’ve really wrapped a lot of the human, training, support aspect around the technology to deliver that “wow” experience for our clients.

MS: So if someone’s thinking about talking to a lender about case expense funding, it’s important to ask more than, “What’s the interest rate?” What’s the support that my staff’s going to receive from this lender? What’s the technology look like? Take it for a test drive. And then we actually, if folks are in the market for that, we’ve created a couple of important tools for that. One is a list of questions to ask a case expense lender. So we have developed a PDF, three or four pages long, to help people do their due diligence on a potential case expense lender. If they want to contact me, I’m happy to have a copy of that sent to them. So if they want to compare and contrast, it’ll show them, “Here are the things you need to ask about.”

MS: We’ve also developed a due diligence checklist for them that they can use to record the answers back from case expense lenders, and really do a side-by-side, apples-to-apples comparison. And again, we’re happy to send them a copy of that. We think the educated consumer is the best consumer. And if they take a good, hard look at what’s available in the marketplace, we know that they’ll see that our team and AdvoTrac is a superior solution.

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Neil Howe

Neil Howe is a 3-time #1 Best Selling Author, Online Media Strategist and business radio talk show host. He covers the most Innovative Business Leaders in Small and Local Business helping them share their stories with the world.