Funding for Attorney s and Law offices3780502

For a litigation that practices contingent litigation managing cashflow is vitally important. Sadly managing ones cash flow is an afterthought for most trial lawyers. Cashflow is very sporadic since they only get paid when cases are successfully concluded. With a lot 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 substitution 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. In case a firm loses an instance it loses not just its time nevertheless the cash dedicated to hard costs also. It becomes worse, a firm just isn't allowed to deduct the amount of money they have bound is case costs. Not only do 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 to the next band of cases.

The missing ingredient in improving income for most contingent law firms is something most businesses have already been utilizing for many years. Leverage. Most lawyers have funded costs up front since they started, only because that's the actual way it has always been done.

A revolving line of credit can be one of the most crucial tools in a plaintiff lawyers fight for justice. By using borrowed money to finance litigation expenses a company can remove the negative tax consequences of self funding. The firm actually realizes the income it is receiving in fees. Any interest a company pays could be offset by having the money which was tied up in the event costs available for firm expansion or outside investments. Nevertheless the biggest advantage is no longer using after tax dollars to finance case development expenses.

We're in a time where trial law offices have more options than in the past 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 wish to continue helping their clients.