Funding for Attorney s and Law Firms5982306

For a moldova that practices contingent litigation managing income is quite crucial. Sadly managing ones cash flow is an afterthought for many trial lawyers. Cash flow is very sporadic since they only get money when cases are successfully concluded. With a lot of cases taking years to bring to conclusion projecting ones income can be a daunting task.

Contingent firms typically advance all the cost of litigation upfront in exchange for a percentage from the recovery. In the contingent case a firm may invest hundreds of attorney hours and tens of thousands of dollars right into a case. If a firm loses an instance it loses not just its time but the cash committed to hard costs as well. It becomes worse, a firm is not allowed to deduct the cash they have tangled up is case costs. Practically they have to fund the cash up front however they have to fund it with after tax dollars. They repeat the cycle and plow the fees from successful cases to the next band of cases.

The missing ingredient in improving income for most contingent law firms is something most businesses have already been utilizing for decades. Leverage. Most lawyers have funded costs with your own money since they started, only because that's how it has always been done.

A revolving credit line can be one of the most important tools in a plaintiff lawyers fight for justice. By using borrowed money to invest in litigation expenses a strong can eliminate the negative tax consequences of self funding. The firm actually realizes the income it is receiving in fees. Any interest a strong pays can be offset by having the money that has been tied up in case costs available for firm expansion and out investments. But the biggest advantage is no longer using after tax dollars to fund case development expenses.

We have been in a time where trial law firms 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 must pay attention to the main point here if they need to continue helping their clients.