Funding for Attorney s and Lawyers1587460
For a chisinau that practices contingent litigation managing cash flow is vitally important. Sadly managing ones income is an afterthought for many trial lawyers. Cashflow is very sporadic since they only receive money when cases are successfully concluded. With a lot 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 return for a percentage from the recovery. In the contingent case a company may invest a huge selection of attorney hours and thousands of dollars in to a case. If your firm loses a case it loses not merely its time nevertheless the cash dedicated to hard costs as well. It gets worse, a firm isn't allowed to deduct the money they have bound is case costs. Not only do they have to fund the money up front nevertheless they have to fund it with after tax dollars. Then they repeat the cycle and plow the fees from successful cases into the next band of cases.
The missing ingredient in improving cashflow for most contingent lawyers is something most businesses have been utilizing for many 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 credit line can be one of the most important tools in a plaintiff lawyers fight for justice. Through the use of borrowed money to invest in litigation expenses a strong can eliminate the negative tax consequences of self funding. The firm actually realizes the wages it is receiving in fees. Any interest a firm pays may be offset by having the money that has been tied up in the event costs available for firm expansion or outside investments. But the biggest advantage is no longer using after tax dollars to finance case development expenses.
We're in a time where trial lawyers 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 bottom line if they wish to continue helping their clients.
