Funding for Attorney s and Lawyers9167144
For a chisinau that practices contingent litigation managing cashflow is very important. Sadly managing ones income is an afterthought for many trial lawyers. Cash flow is very sporadic as they only get money when cases are successfully concluded. With lots of cases taking years to bring to conclusion projecting ones income can be a daunting task.
Contingent firms typically advance all of the cost of litigation upfront in exchange for a percentage of the recovery. Inside a contingent case a firm may invest countless attorney hours and hundreds and hundreds of dollars into a case. If your firm loses an instance it loses not only its time but the cash dedicated to hard costs also. It gets worse, a firm isn't allowed to deduct the amount of money they have tied up is case costs. Practically they have to fund the cash up front but they have to fund it with after tax dollars. 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 already been utilizing for years. Leverage. Most lawyers have funded costs up front 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 a plaintiff lawyers fight for justice. By using borrowed money to invest in 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 firm pays could be offset insurance firms the money that has been tied up in case costs available for firm expansion or outside investments. However the biggest advantage is not using after tax dollars to invest in case development expenses.
We are in a time where trial law offices 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 ought to pay attention to the important thing if they wish to continue helping their potential customers.
