R300 million finance available for personal injury lawyers facing extreme pressure during Covid-19


Media release

Tuesday, 28 July 2020: Many legal firms are under financial strain but few face the perfect storm of South Africa’s personal injury lawyers, according to Elad Smadja CEO, Taurus Capital a specialist legal financier. He says that even the larger and most well-known personal injury law firms which have never needed financing are facing a cash crunch. Taurus Capital has therefore created an alternative funding solution with a R300 million capital pool available for SA’s law firms during Covid-19.

South Africa reports around one million road accidents a year with 40 daily fatalities and 20 people left permanently disabled each day. These victims approach personal injury lawyers to represent their cases so that they can claim from the Road Accident Fund (RAF).

The perfect storm

RAF cash flow issues: The Road Accident Fund faces serious cash flow issues and currently owes claimants and their lawyers around R17.2 billion.

Trials delayed: Trial matters have been unable to proceed due to a directive as well as the RAF not being declared an essential service, and consequently unable to operate during lockdown.  During level 3, very few Road Accident Fund offices have reopened.

Fewer accidents: With many South Africans staying home and not travelling distances, there are fewer vehicle accidents which has significantly reduced the intake of new matters.

Reduced contingency fees: Personal injury firms are unable to proceed with trial matters and are being strongly encouraged to settle matters before proceeding to trial, which means reduced contingency fees.

Increased preparation and upfront payments: Due to the nature of the Road Accident Fund’s court process, a firm’s fees can be locked up in matters for months or even years. Personal injury firms are only paid if a matter is successful at trial.

If a claim is submitted to the Road Accident Fund containing contradicting or weak evidence, the claim will almost certainly remain unpaid. Poorly prepared applications are not considered by courts resulting in matters being thrown out at the crucial trial stage. Consequently, all claims and triable matters must be properly prepared. Personal injury firms need cashflow to cover intensive upfront expenses required to fund disbursements for expert assessments and to eventually litigate matters.

Smadja explains, “Because of all these factors and the inherent payment delays, personal injury firms are having to re-evaluate their practices and business strategies and they are facing challenges finding work. Taurus Capital has significant experience in personal injury firm financing. We are seeing great demand for working capital to sustain firms’ overheads through this period.”

Typically, banks turn away law firms because blanket loan criteria do not cater for the business of law. “Our solutions for personal injury lawyers are tailored to each firm’s needs, with facilities from R250,000 to R30 million available to firms ranging in size from boutique to large multi-partner firms.”

Capital is available within 24 hours upon receipt of a signed loan agreement. The application process begins with a consultation with Taurus Capital to understand the firm and its specific financial requirements. Key financial documents are submitted as well as applicable court orders, fee agreements, invoices and book debts. These are used by a team of legal and financial experts to conduct a financial analysis and develop bespoke solutions for each client.

Unlike traditional lenders, Taurus Capital assigns value to intangible assets such as book debts, mandate and fee agreements, invoices, court orders and taxed bills of costs. Taurus Capital also matches repayment with the cashflow cycles of the firms they partner with.

Taurus Capital has set up a webinar for industry stakeholders on The State of the RAF and the Future of the Personal Injury Attorney on Thursday, 13 August 2020 at 09h30 – 10h30.

For further information go to www.tauruscapital.co.za


About Taurus Capital

Taurus Capital delivers multi-faceted investment and financial solutions that drive sustainable business optimisation for law firms.

Legal firms need to mitigate risk and cost in the context of the unpredictable, lengthy and often illiquid nature of their work. Financing is often hampered by cumbersome processes which deters growth opportunities.

Taurus Capital specialist services include law firm finance, litigation funding and wealth and investment solutions for law firms.  Each is delivered after an extensive consulting process.


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