Not a Loan, A Sale
The most important thing to understand about a pre-paid forward is what it isn't: it is not a loan. You're not borrowing money and paying it back with interest. Instead, you're selling a defined portion of your future fee revenue at a discount in exchange for immediate cash. The buyer takes ownership of that fee stream and collects directly from your settlements as they resolve. There are no monthly payments, no interest charges, and no debt recorded on your balance sheet.
The Economics
Here's how the numbers work. Say your firm has a portfolio expected to generate $10M in fees over the next 3 years. A buyer offers to purchase 25% of those expected fees at a 20% discount. You receive $2M immediately (25% of $10M = $2.5M, minus 20% discount = $2M). As cases settle, the buyer collects their $2.5M share directly from proceeds. Your effective cost depends on how quickly cases resolve, faster settlement means a higher annualized cost, but you've had the $2M working for your firm the entire time.
When Forwards Make Sense
Pre-paid forwards are ideal for firms that want capital without debt. If you're planning a major investment, acquiring a competitor, launching a new practice area, or funding a massive marketing campaign, a forward gives you the capital without the obligation of monthly payments during the investment period. They're also valuable for firms approaching bank covenant limits who can't add more debt to their balance sheet.
The Tradeoff
The tradeoff is straightforward: you're giving up a portion of your future upside in exchange for certainty today. If your cases perform better than expected, you've given away more value than you needed to. If they underperform, the buyer absorbs the loss. For firms that value certainty and want to eliminate repayment risk, this tradeoff is often worth making.
Working with Tortlink
Finding buyers for litigation fee streams requires a specialized network. Most law firms can't access this market on their own. Tortlink connects you with capital providers who actively purchase fee forwards, and our platform generates the portfolio analytics buyers need to price your forward accurately. We create competitive tension between multiple buyers to ensure you get the best discount rate available.