Funding for Attorney s and Law Firms805043

For a attorney at law that practices contingent litigation managing cashflow is vitally important. Sadly managing ones cashflow is an afterthought for many trial lawyers. Cashflow is very sporadic since they only get money when cases are successfully concluded. With many 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 return for a percentage from the recovery. In a contingent case a strong may invest countless attorney hours and tens of thousands of dollars in to a case. If a firm loses an instance it loses not merely its time but the cash invested in hard costs too. It gets worse, a firm is not allowed to deduct the cash they have bound is case costs. Furthermore they have to fund the money 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 into the next group of cases.

The missing ingredient in improving cashflow for most contingent law offices is something most businesses have already been utilizing for many 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 credit line can be one of the most important tools in the plaintiff lawyers fight for justice. By utilizing borrowed money to invest in litigation expenses a strong can remove the negative tax consequences of self funding. The firm actually realizes the income it is receiving in fees. Any interest a strong pays could be offset insurance firms the money which was tied up in case costs designed for firm expansion and out investments. However the biggest advantage has stopped being using after tax dollars to finance case development expenses.

We are 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 bottom line if they desire to continue helping their potential customers.