Funding for Attorney s and Law Firms222993

For a arbitration that practices contingent litigation managing cash flow is vitally important. Sadly managing ones cashflow is an afterthought for many trial lawyers. Cashflow is very sporadic because they only get money when cases are successfully concluded. With a lot of cases taking several years to bring to conclusion projecting ones cashflow can be a daunting task.

Contingent firms typically advance all the cost of litigation upfront in return for a percentage with the recovery. Inside a contingent case a company may invest hundreds of attorney hours and hundreds and hundreds of dollars right into a case. If a firm loses a case it loses not just its time however the cash invested in hard costs too. It becomes worse, a firm isn't allowed to deduct the amount of money they have tied up is case costs. Practically they have to fund the amount of money up front however 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 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 line of credit can be one of the main tools inside a plaintiff lawyers fight for justice. Through the use of borrowed money to finance litigation expenses a strong can get rid of the negative tax consequences of self funding. The firm actually realizes the wages it is receiving in fees. Any interest a company pays could be offset insurance firms the money which was tied up in case costs available for firm expansion and out investments. Nevertheless the biggest advantage is no longer 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 important thing if they desire to continue helping their customers.