Funding for Attorney s and Lawyers3197057

For a services that practices contingent litigation managing cashflow is very important. Sadly managing ones income is an afterthought for the majority of trial lawyers. Income is very sporadic as they only get money 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 of the cost of litigation upfront in return for a percentage from the recovery. Inside a contingent case a strong may invest hundreds of attorney hours and tens of thousands of dollars into a case. In case a firm loses a case it loses not just its time however the cash dedicated to hard costs also. It gets worse, a firm isn't allowed to deduct the cash they have bound is case costs. Furthermore they have to fund the cash up front however they have to fund it with after tax dollars. Chances are 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 years. Leverage. Most lawyers have funded costs out of pocket since they started, only because that's how it has always been done.

A revolving credit line can be one of the most crucial tools inside a plaintiff lawyers fight for justice. By utilizing borrowed money to fund litigation expenses a company can remove the negative tax consequences of self funding. The firm actually realizes the income it is receiving in fees. Any interest a strong pays could be offset with the money which was tied up in the event costs designed for firm expansion and out investments. But the biggest advantage has stopped being using after tax dollars to finance case development expenses.

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