Funding for Attorney s and Lawyers6533334

For a legal that practices contingent litigation managing cashflow is very important. Sadly managing ones cashflow is an afterthought for many trial lawyers. Income is very sporadic since they only get money when cases are successfully concluded. With lots of cases taking years to bring to conclusion projecting ones cashflow can be a daunting task.

Contingent firms typically advance every one of the cost of litigation upfront in exchange for a percentage of the recovery. In the contingent case a firm may invest hundreds of attorney hours and thousands of dollars right into a case. If a firm loses an incident it loses not merely its time nevertheless the cash committed to hard costs also. It gets worse, a firm is not allowed to deduct the amount of money they have tied up is case costs. Practically they have to fund the cash up front nevertheless they have to fund it with after tax dollars. They repeat the cycle and plow the fees from successful cases into the next group of cases.

The missing ingredient in improving cashflow for most contingent law firms is something most businesses have been utilizing for 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 credit line can be one of the main tools inside a plaintiff lawyers fight for justice. Through the use of borrowed money to fund litigation expenses a firm can eliminate the negative tax consequences of self funding. The firm actually realizes the wages it is receiving in fees. Any interest a strong pays could be offset by having the money that has been tied up in case costs available for firm expansion or outside investments. Nevertheless the biggest advantage is no longer 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 banks to legal finance consultants. Contingent lawyers can and should pay attention to the important thing if they wish to continue helping their customers.