Funding for Attorney s and Law Firms4718413

For a rights that practices contingent litigation managing cash flow is very important. Sadly managing ones income is an afterthought for the majority of trial lawyers. Income is very sporadic as they only receive money when cases are successfully concluded. With a lot 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. In the contingent case a company may invest countless attorney hours and tens of thousands of dollars right into a case. If a firm loses an instance it loses not only its time nevertheless the cash committed to hard costs also. It becomes worse, a firm just isn't allowed to deduct the amount of money they have tied up is case costs. Furthermore they have to fund the 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 to the next group 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 with your own money since they started, only because that's the actual way it has always been done.

A revolving personal credit line can be one of the most crucial tools in the plaintiff lawyers fight for justice. Through the use of borrowed money to fund litigation expenses a firm can remove the negative tax consequences of self funding. The firm actually realizes the income 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 readily available for firm expansion and out investments. However 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 when it comes to financing their practice, from traditional banks and specialty finance companies to legal finance consultants. Contingent lawyers can and should pay attention to the main point here if they wish to continue helping their potential customers.