Funding for Attorney s and Law Firms9297898

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

Contingent firms typically advance all the cost of litigation upfront in substitution for a percentage from the recovery. Inside a contingent case a strong may invest countless attorney hours and tens of thousands of dollars into a case. If your firm loses a case it loses not merely its time but the cash dedicated to hard costs as well. It gets worse, a firm just isn't allowed to deduct the money they have tied up is case costs. Not only do they have to fund the cash up front nevertheless they have to fund it with after tax dollars. They repeat the cycle and plow the fees from successful cases to the next number of cases.

The missing ingredient in improving income for most contingent lawyers is something most businesses have been utilizing for decades. 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 main tools inside a plaintiff lawyers fight for justice. By utilizing borrowed money to finance 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 with the money that was tied up just in case costs readily available for firm expansion or outside investments. Nevertheless the biggest advantage is not using after tax dollars to invest in 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 financial institutions to legal finance consultants. Contingent lawyers can and should pay attention to the main point here if they need to continue helping their potential customers.