Funding for Attorney s and Law offices4066630

For a attorney at law that practices contingent litigation managing cashflow is quite crucial. Sadly managing ones cash flow is an afterthought for the majority of trial lawyers. Cashflow is very sporadic because they only get money when cases are successfully concluded. With many 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 exchange for a percentage with the recovery. In the contingent case a firm may invest hundreds of attorney hours and thousands of dollars in to a case. If your firm loses an incident it loses not merely its time but 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 cash up front however they have to fund it with after tax dollars. Then they repeat the cycle and plow the fees from successful cases into the next band of cases.

The missing ingredient in improving cashflow for most contingent law offices is something most businesses have already been utilizing for years. Leverage. Most lawyers have funded costs out of pocket since they started, only because that's the way it has always been done.

A revolving line of credit can be one of the main tools in the plaintiff lawyers fight for justice. Through the use of borrowed money to fund 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 may be offset with the money that was tied up just in case costs readily available for firm expansion and out investments. Nevertheless the biggest advantage is no longer using after tax dollars to invest in case development expenses.

We have been in a time where trial lawyers have more options than in the past 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 main point here if they need to continue helping their customers.