CASE STUDY
The Client:
A Southeast U.S. law firm with a prominent practice handling high-stakes litigation including complex class action matters requiring substantial time investment, extensive travel for depositions and court appearances, and the resources to sustain multi-year legal battles against well-funded defendants. Operating in the competitive legal services market where business development, client responsiveness, and the ability to travel efficiently between courts, client locations, and case venues can determine success in landing and managing major engagements, the firm had invested in private aircraft to support partner productivity and maintain the schedule flexibility essential to managing complex litigation across multiple jurisdictions. The firm’s involvement as lead plaintiffs’ counsel in a multi-billion dollar class action suit against the U.S. Government involving contaminated water on military bases in the Southeast represented exactly the kind of high-profile, socially significant litigation that defines a firm’s reputation—but also the kind of contingency-based engagement that can create substantial income volatility during years of case preparation before settlements or verdicts generate fee income.
The Challenge:
The law firm faced an approaching balloon payment on its aircraft financing at precisely the wrong time—after several years of reduced income directly attributable to the firm’s deep engagement in the massive military base contaminated water class action litigation. While the case represented potentially transformational fee generation if successful, the contingency nature meant years of substantial expense and partner time investment without corresponding current income, creating a classic cash flow timing mismatch that characterizes large-scale plaintiffs’ litigation. The existing aircraft lien holder would evaluate refinancing based on recent financial performance, seeing only the income reduction without fully understanding the strategic context—that the reduced earnings reflected investment in a potentially massive case rather than business deterioration. Traditional aircraft lenders reviewing several years of declining income would be deeply uncomfortable refinancing a balloon payment, likely declining the transaction or imposing punitive terms that failed to recognize the underlying strength of the law practice and the probability that substantial fee income would materialize once the litigation concluded through settlement or verdict.
Solution:
First National Capital recognized that sophisticated law firms managing complex contingency litigation often show reduced current income that doesn’t reflect true economic strength or future earning capacity, and that the multi-billion dollar class action case represented substantial future value that justified continuing aircraft financing support. FNC structured a creative refinancing solution that was presented to the current lien holder on the aircraft as a collaborative workout rather than a competitive refinancing, proposing terms at both an increased rate and fee structure tailored to compensate both the existing debt source and First National Capital for the elevated risk profile created by the temporary income reduction. By involving the existing lender in the solution rather than simply refinancing them out, First National demonstrated relationship-oriented problem solving that preserved existing lending relationships while providing the capital necessary to retire the balloon payment. The client was happy to accept the increased rate and fees, recognizing that the terms were reasonable given the recent financial profile and that the refinancing accomplished the critical objective of eliminating the balloon payment threat without requiring aircraft disposition that would have impaired the firm’s ability to manage the complex multi-state litigation requiring frequent travel. This collaborative refinancing enabled the law firm to maintain its aircraft, continue prosecuting the landmark contaminated water case without operational constraints, and position itself to reap the substantial financial rewards when the litigation eventually concluded—all while establishing First National as a financing partner who understood the unique economics of contingency-based legal practice.
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