Funding for Attorney s and Law Firms9108662

For a law that practices contingent litigation managing cashflow is quite crucial. Sadly managing ones cashflow is an afterthought for the majority of trial lawyers. Income is very sporadic since they only get money when cases are successfully concluded. With a lot of cases taking 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 a contingent case a strong may invest hundreds of attorney hours and tens of thousands of dollars into a case. If a firm loses a case it loses not merely its time nevertheless the cash invested in hard costs as well. It worsens, a firm just isn't allowed to deduct the money they have bound is case costs. Furthermore they have to fund the amount of money up front however 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 number of cases.

The missing ingredient in improving cashflow 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 the way 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 using borrowed money to invest in litigation expenses a firm can eliminate 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 that has been tied up in case costs available for firm expansion or outside investments. Nevertheless the biggest advantage has stopped being using after tax dollars to invest in case development expenses.

We're in a time where trial lawyers have more options than in the past when it comes to financing their practice, from traditional banks and specialty finance companies to legal finance consultants. Contingent lawyers can and should pay attention to the main point here if they need to continue helping their clients.