Funding for Attorney s and Law Firms6078810

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

Contingent firms typically advance every one of the cost of litigation upfront in return for a percentage of the recovery. In the contingent case a strong may invest hundreds of attorney hours and thousands of dollars right into a case. If your firm loses a case it loses not merely its time however the cash committed to hard costs as well. It becomes worse, a firm isn't allowed to deduct the cash they have tangled up is case costs. Not only do 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 in to the next band of cases.

The missing ingredient in improving cash flow for most contingent lawyers is something most businesses happen to be utilizing for years. Leverage. Most lawyers have funded costs with your own money since they started, only because that's the 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 invest in litigation expenses a strong 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 firm pays could be offset with the money that was tied up in case costs available for firm expansion and out investments. However the biggest advantage is no longer using after tax dollars to invest in case development expenses.

We're in a time where trial law firms have more options than ever when it comes to financing their practice, from traditional banks and specialty financial institutions to legal finance consultants. Contingent lawyers can and should pay attention to the bottom line if they need to continue helping their clients.