Funding for Attorney s and Lawyers4830233

For a litigation 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 receive money when cases are successfully concluded. With many cases taking many years to bring to conclusion projecting ones income can be a daunting task.

Contingent firms typically advance all the cost of litigation upfront in exchange for a percentage with the recovery. In the contingent case a company may invest countless attorney hours and thousands of dollars into a case. If a firm loses a case it loses not just its time however the cash dedicated to hard costs also. It becomes worse, a firm is not allowed to deduct the cash they have bound 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 in to the next number 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 up front since they started, only because that's the way it has always been done.

A revolving personal credit line can be one of the main tools in a plaintiff lawyers fight for justice. By utilizing borrowed money to fund litigation expenses a strong can remove the negative tax consequences of self funding. The firm actually realizes the income it is receiving in fees. Any interest a firm pays could be offset insurance firms the money which was tied up just in case costs available for firm expansion and out investments. But the biggest advantage is not using after tax dollars to finance case development expenses.

We are in a time where trial law firms have more options than ever 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 need to continue helping their clients.