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For a [http://www.vpi3pl.com/index.php?option=com_k2&view=itemlist&task=user&id=1832420 legal] that practices contingent litigation managing cash flow is vitally important. Sadly managing ones cashflow is an afterthought for most trial lawyers. Cashflow is very sporadic as they only get money when cases are successfully concluded. With lots of cases taking many years to bring to conclusion projecting ones cash flow can be a daunting task.


Contingent firms typically advance all of the cost of litigation upfront in return for a percentage with the recovery. In the contingent case a company may invest countless attorney hours and thousands of dollars into a case. If a firm loses an instance it loses not merely its time however the cash invested in hard costs too. It gets worse, a firm isn't allowed to deduct the amount of money they have bound is case costs. Furthermore they have to fund the cash up front however they have to fund it with after tax dollars. They repeat the cycle and plow the fees from successful cases into the next number of cases.

The missing ingredient in improving cash flow for most contingent law offices is something most businesses have been utilizing for decades. Leverage. Most lawyers have funded costs with your own money since they started, only because that's how it has always been done.

A revolving credit line can be one of the main tools in the plaintiff lawyers fight for justice. By using borrowed money to finance litigation expenses a company can remove the negative tax consequences of self funding. The firm actually realizes the income it is receiving in fees. Any interest a company pays may be offset insurance firms the money which was tied up in case costs available for firm expansion or outside investments. However the biggest advantage has stopped being using after tax dollars to finance case development expenses.

We have been in a time where trial lawyers have more options than ever before when it comes to financing their practice, from traditional banks and specialty banks to legal finance consultants. Contingent lawyers can and must pay attention to the bottom line if they desire to continue helping their customers.