Funding for Attorney s and Law Firms5083347

For a court that practices contingent litigation managing cash flow is quite crucial. Sadly managing ones cashflow is an afterthought for most trial lawyers. Cash flow is very sporadic as they only receive money when cases are successfully concluded. With lots of cases taking many years to bring to conclusion projecting ones cashflow can be a daunting task.

Contingent firms typically advance all of the cost of litigation upfront in exchange for a percentage from the recovery. Inside a contingent case a strong may invest hundreds of attorney hours and thousands of dollars into a case. If your firm loses a case it loses not only its time but the cash committed to hard costs as well. It worsens, a firm is not allowed to deduct the amount of money they have tangled up is case costs. Not only do they have to fund the cash up front nevertheless they have to fund it with after tax dollars. They repeat the cycle and plow the fees from successful cases in to the next band of cases.

The missing ingredient in improving cashflow for most contingent law firms is something most businesses have already been utilizing for decades. Leverage. Most lawyers have funded costs with your own money since they started, only because that's the actual way it has always been done.

A revolving credit line can be one of the main tools in a plaintiff lawyers fight for justice. Through the use of borrowed money to finance litigation expenses a strong can remove the negative tax consequences of self funding. The firm actually realizes the wages it is receiving in fees. Any interest a company pays may be offset insurance firms the money that was tied up in the event costs available for firm expansion or outside investments. But the biggest advantage is no longer using after tax dollars to invest in case development expenses.

We have been in a time where trial law firms have more options than ever when it comes to financing their practice, from traditional banks and specialty banks to legal finance consultants. Contingent lawyers can and should pay attention to the important thing if they wish to continue helping their potential customers.