Posts Tagged ‘Universal Commercial Code’

Do you know what liens are filed on your law firm?

Friday, November 21st, 2014

You may be surprised at what is in on record with your secretary of state. We have a client in California that recently came up for its annual renewal of our agreement. As part of the renewal we did our standard check to make sure nobody else had filed UCCs on the firm’s accounts receivable. That routine check turned up a $2 million lien against the law firm! It was filed by a disgruntled former client of the firm.

This individual had logged on to the California Secretary of State’s website and created a fictitious UCC filing against the law firm for $2 million. The firm didn’t know it was there until we checked and let them know about it. I’m not sure they would have known until they had to go find some other financing and it could have potentially blown a deal for them. Because the firm had never granted a security interest to the filer of the UCC, the UCC was worthless, but it still raised a red flag during the renewal process and could have delayed any new transactions that the law firm had been seeking.

So it’s important to monitor liens filed on you and your law firm. It only takes a few moments to check UCC filings using LexisNexis® or Westlaw®. This is another good annual exercise. Even if you see the UCCs filed that you expect, such as from your current lenders, look closely at the description of collateral in the filings. It is very common for a borrower to think their line of credit is secured by their real estate but for the lender to actually file on the firm’s accounts receivable or even all the assets of the firm. Again, this can cause costly delays when applying for or renewing loans or leases and it costs nothing to monitor.

You can learn more about this and other law firm finance topics in my book, How David Beats Goliath – Access to Capital for Contingent-Fee Law Firms.

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The above material is excerpted from How David Beats Goliath – Access to Capital for Contingent-Fee Law Firms and is subject to copyright protection © by Michael J. Swanson, all rights reserved.

 

Photo Credit: 123RF Stock Photo

Tags: "Contingent Fee Law Firms", "How David Beats Goliath", "Law Firm Finance", Case Expense Financing, how david beats goliath, LexisNexis, liens, Michael J. Swanson, UCC, Universal Commercial Code, Westlaw
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