Funding for Attorney s and Lawyers9034333

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

Contingent firms typically advance all the cost of litigation upfront in exchange for a percentage with the recovery. Inside a contingent case a firm may invest hundreds of attorney hours and tens of thousands of dollars right into a case. If your firm loses an instance it loses not only its time however the cash invested in hard costs also. It worsens, a firm is not allowed to deduct the money they have tangled up is case costs. Furthermore they have to fund the money 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 cashflow for most contingent lawyers is something most businesses have already been utilizing for years. Leverage. Most lawyers have funded costs out of pocket since they started, only because that's how it has always been done.

A revolving personal credit line can be one of the most important tools in a plaintiff lawyers fight for justice. Through the use of borrowed money to finance 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 firm pays may be offset insurance firms the money which was tied up in case costs designed for firm expansion and out investments. However the biggest advantage is not using after tax dollars to finance case development expenses.

We are in a time where trial law firms have more options than ever when it comes to financing their practice, from traditional banks and specialty financial institutions to legal finance consultants. Contingent lawyers can and should pay attention to the main point here if they desire to continue helping their clients.