Funding for Attorney s and Law Firms6159327

For a law that practices contingent litigation managing income is very important. Sadly managing ones income is an afterthought for the majority of trial lawyers. Income is very sporadic since they only receive money when cases are successfully concluded. With lots of cases taking many 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 from the recovery. Inside a contingent case a firm may invest countless attorney hours and hundreds and hundreds of dollars right into a case. In case a firm loses an instance it loses not just its time but the cash invested in hard costs too. It gets worse, a firm just isn't allowed to deduct the amount of money they have tangled up is case costs. Furthermore they have to fund the cash 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 cashflow for most contingent law offices is something most businesses happen to be utilizing for many years. Leverage. Most lawyers have funded costs out of pocket since they started, only because that's the actual way it has always been done.

A revolving credit line can be one of the most important tools in the plaintiff lawyers fight for justice. Through the use of borrowed money to finance litigation expenses a firm can get rid of 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 that has been tied up in case costs readily available for firm expansion and out investments. But the biggest advantage is not using after tax dollars to invest in case development expenses.

We have been 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 finance companies to legal finance consultants. Contingent lawyers can and must pay attention to the bottom line if they desire to continue helping their clients.