Funding for Attorney s and Law Firms2102809

For a law that practices contingent litigation managing income is very important. Sadly managing ones income is an afterthought for many trial lawyers. Cash flow is very sporadic as 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 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 hundreds and hundreds of dollars right into a case. In case a firm loses a case it loses not just its time however the cash dedicated to hard costs also. It becomes worse, a firm just isn't allowed to deduct the cash they have bound is case costs. Practically they have to fund the cash up front however 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 number of cases.

The missing ingredient in improving cashflow 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 actual way it has always been done.

A revolving line of credit can be one of the most crucial tools in the plaintiff lawyers fight for justice. By using borrowed money to fund litigation expenses a company can eliminate the negative tax consequences of self funding. The firm actually realizes the income it is receiving in fees. Any interest a firm pays could be offset insurance firms the money that has been tied up just in case costs readily available for firm expansion or outside investments. But the biggest advantage has stopped being using after tax dollars to finance 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 financial institutions to legal finance consultants. Contingent lawyers can and ought to pay attention to the main point here if they need to continue helping their potential customers.