Funding for Attorney s and Law offices929082

For a arbitration that practices contingent litigation managing income is vitally important. Sadly managing ones income is an afterthought for most trial lawyers. Cashflow is very sporadic since they only receive money when cases are successfully concluded. With many cases taking 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 return for a percentage of the recovery. In the contingent case a firm may invest countless attorney hours and hundreds and hundreds of dollars in to a case. In case a firm loses a case it loses not merely its time but the cash dedicated to hard costs too. It worsens, a firm isn't allowed to deduct the amount of money they have tangled up is case costs. Practically they have to fund the amount of money up front however they have to fund it with after tax dollars. They repeat the cycle and plow the fees from successful cases into the next number of cases.

The missing ingredient in improving cashflow for most contingent law firms is something most businesses have been utilizing for many years. Leverage. Most lawyers have funded costs up front 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 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 wages it is receiving in fees. Any interest a firm pays could be offset insurance firms the money that has been tied up in the event costs readily available for firm expansion or outside investments. However the biggest advantage is no longer using after tax dollars to fund case development expenses.

We're 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 banks to legal finance consultants. Contingent lawyers can and should pay attention to the main point here if they desire to continue helping their customers.