Funding for Attorney s and Lawyers981523

For a rights that practices contingent litigation managing cash flow is quite crucial. Sadly managing ones income is an afterthought for most trial lawyers. Cash flow is very sporadic as they only receive money when cases are successfully concluded. With a lot of cases taking several 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 of the recovery. In the contingent case a strong may invest countless attorney hours and thousands of dollars right into a case. If a firm loses an incident it loses not just its time but the cash invested in hard costs as well. It worsens, a firm isn't allowed to deduct the money they have tangled up is case costs. Not only do they have to fund the amount of 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 law firms is something most businesses happen to be utilizing for decades. 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 line of credit can be one of the most important tools inside a plaintiff lawyers fight for justice. By utilizing borrowed money to fund litigation expenses a company can eliminate 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 with the money that has been tied up in case costs available for firm expansion or outside investments. But the biggest advantage is not using after tax dollars to fund case development expenses.

We have been in a time where trial lawyers 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 should pay attention to the bottom line if they desire to continue helping their clients.