Funding for Attorney s and Lawyers9123115

For a arbitration that practices contingent litigation managing income is very important. Sadly managing ones income is an afterthought for many trial lawyers. Cash flow is very sporadic as they only receive money when cases are successfully concluded. With many cases taking years to bring to conclusion projecting ones income can be a daunting task.

Contingent firms typically advance every one of the cost of litigation upfront in substitution for a percentage with the recovery. In the contingent case a strong may invest a huge selection of attorney hours and thousands of dollars in to a case. If your firm loses an instance it loses not merely its time but the cash invested in hard costs as well. It gets worse, a firm just isn't allowed to deduct the money they have tangled up is case costs. Not only do they have to fund the cash up front but they have to fund it with after tax dollars. They repeat the cycle and plow the fees from successful cases into the next band of cases.

The missing ingredient in improving cash flow for most contingent lawyers is something most businesses have been utilizing for years. Leverage. Most lawyers have funded costs with your own money since they started, only because that's how it has always been done.

A revolving credit line can be one of the main tools in the plaintiff lawyers fight for justice. Through the use of borrowed money to fund 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 by having the money which was tied up in the event costs available for firm expansion or outside investments. However the biggest advantage is not using after tax dollars to fund case development expenses.

We are 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 finance companies to legal finance consultants. Contingent lawyers can and must pay attention to the main point here if they wish to continue helping their customers.