Funding for Attorney s and Lawyers5595122

For a law that practices contingent litigation managing income is vitally important. Sadly managing ones cash flow is an afterthought for the majority of trial lawyers. Cashflow is very sporadic since they only get money when cases are successfully concluded. With lots of 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. Inside a contingent case a strong may invest countless attorney hours and hundreds and hundreds of dollars in to a case. If a firm loses an incident it loses not just its time but the cash committed to hard costs too. It becomes worse, a firm isn't allowed to deduct the cash they have tangled up is case costs. Practically they have to fund the money up front but they have to fund it with after tax dollars. They repeat the cycle and plow the fees from successful cases in to the next number 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 out of pocket 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 inside a plaintiff lawyers fight for justice. By using borrowed money to invest in litigation expenses a strong 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 may be offset with the money that has been tied up just in case costs available for firm expansion and out investments. However the biggest advantage has stopped being using after tax dollars to invest in case development expenses.

We have been in a time where trial lawyers have more options than ever before 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 bottom line if they wish to continue helping their clients.