Funding for Attorney s and Lawyers5355744

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

Contingent firms typically advance every one of the cost of litigation upfront in substitution for a percentage with the recovery. Inside a contingent case a company may invest hundreds of attorney hours and tens of thousands of dollars into a case. In case a firm loses an incident it loses not merely its time nevertheless the cash invested in hard costs also. It worsens, a firm is not allowed to deduct the amount of money they have tied up is case costs. Practically they have to fund the amount of money up front but they have to fund it with after tax dollars. Chances are they repeat the cycle and plow the fees from successful cases in to the next band of cases.

The missing ingredient in improving income for most contingent law offices is something most businesses have been utilizing for years. 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 line of credit can be one of the most important tools in the plaintiff lawyers fight for justice. By utilizing borrowed money to fund litigation expenses a company can get rid of 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 just in case costs readily available for firm expansion or outside investments. However the biggest advantage is not 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 before when it comes to financing their practice, from traditional banks and specialty finance companies to legal finance consultants. Contingent lawyers can and ought to pay attention to the bottom line if they need to continue helping their potential customers.