Funding for Attorney s and Law offices1846861

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

Contingent firms typically advance all the cost of litigation upfront in exchange for a percentage of the recovery. Inside a contingent case a strong may invest a huge selection of attorney hours and tens of thousands of dollars into a case. If a firm loses an incident it loses not merely its time however the cash dedicated to hard costs as well. It gets worse, a firm isn't allowed to deduct the cash they have tangled up is case costs. Furthermore they have to fund the amount of money up front but they have to fund it with after tax dollars. Then they repeat the cycle and plow the fees from successful cases in to the next group of cases.

The missing ingredient in improving income for most contingent law offices is something most businesses happen to be utilizing for decades. Leverage. Most lawyers have funded costs up front since they started, only because that's how it has always been done.

A revolving line of credit can be one of the most important tools in a plaintiff lawyers fight for justice. By utilizing borrowed money to finance litigation expenses a strong can get rid of the negative tax consequences of self funding. The firm actually realizes the wages it is receiving in fees. Any interest a firm pays could be offset by having the money that has been tied up in the event costs available for firm expansion or outside investments. However the biggest advantage has stopped being using after tax dollars to finance case development expenses.

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