Funding for Attorney s and Law offices6654232

For a court that practices contingent litigation managing income is vitally important. Sadly managing ones cash flow is an afterthought for most trial lawyers. Cash flow is very sporadic since they only get money when cases are successfully concluded. With lots of cases taking many 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 substitution for a percentage from the recovery. Inside a contingent case a firm may invest hundreds of attorney hours and tens of thousands of dollars right into a case. In case a firm loses a case it loses not only its time nevertheless the cash dedicated to hard costs too. It worsens, a firm is not allowed to deduct the money they have tangled up is case costs. Not only do 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 to the next band of cases.

The missing ingredient in improving cash flow for most contingent lawyers is something most businesses have 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 crucial tools in a plaintiff lawyers fight for justice. Through the use of borrowed money to invest in litigation expenses a company can eliminate the negative tax consequences of self funding. The firm actually realizes the wages it is receiving in fees. Any interest a strong pays can be offset insurance firms the money that has been tied up in the event costs available for firm expansion or outside investments. Nevertheless the biggest advantage is not using after tax dollars to finance case development expenses.

We have been 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 should pay attention to the bottom line if they need to continue helping their potential customers.