Funding for Attorney s and Law offices3660025

For a corporate that practices contingent litigation managing cash flow is vitally important. Sadly managing ones cash flow is an afterthought for many trial lawyers. Cashflow is very sporadic because they only get paid when cases are successfully concluded. With lots 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 substitution for a percentage of the recovery. In a contingent case a company may invest countless attorney hours and tens of thousands of dollars in to a case. If a firm loses an instance it loses not only its time nevertheless the cash committed to hard costs also. It worsens, a firm is not allowed to deduct the money they have tangled up 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. They repeat the cycle and plow the fees from successful cases in to the next band of cases.

The missing ingredient in improving cash flow for most contingent lawyers is something most businesses happen to be utilizing for decades. Leverage. Most lawyers have funded costs up front since they started, only because that's the way it has always been done.

A revolving personal credit line can be one of the main tools in the plaintiff lawyers fight for justice. By using borrowed money to invest in 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 can be offset by having the money which was tied up just in case costs readily available for firm expansion or outside investments. However the biggest advantage has stopped being using after tax dollars to finance case development expenses.

We have been in a time where trial lawyers have more options than ever before when it comes to financing their practice, from traditional banks and specialty financial institutions to legal finance consultants. Contingent lawyers can and must pay attention to the main point here if they need to continue helping their customers.