THE LANDSCAPE

South African attorney firms litigating personal injury matters against the Road Accident Fund on a contingency-fee basis can earn significant profits. The return on investment for litigating road accident claims often exceeds 60% per annum, around four times the average return of the JSE.

However, personal injury firms also face several challenges. Prior to litigation, attorneys need to pay out of their own pocket for medico-legal disbursements and advocate fees. The protracted cashflow cycle inherent in Road Accident Fund dealings can result in funds owed being locked up in matters for months and even years.

Traditional lenders typically have a low tolerance for risk and do not fully appreciate the unique nature of law firm financing. South African banks often don’t recognise value in a law firms’ most valuable assets such as its client base, contingent / deferred fees, book debts, court orders and taxed bills of cost.

This makes the task of sustaining or growing a personal injury litigation practice challenging for many firm partners.