Funding for Attorney s and Lawyers9995889
For a corporate that practices contingent litigation managing cashflow is vitally important. Sadly managing ones income is an afterthought for many trial lawyers. Cash flow is very sporadic because 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 from the recovery. In the contingent case a company may invest a huge selection of attorney hours and tens of thousands of dollars into a case. In case a firm loses a case it loses not only its time however the cash invested in hard costs as well. It worsens, a firm just isn't allowed to deduct the money they have bound is case costs. Furthermore they have to fund the cash up front nevertheless they have to fund it with after tax dollars. Chances are they repeat the cycle and plow the fees from successful cases in to the next group of cases.
The missing ingredient in improving cashflow for most contingent lawyers is something most businesses have already been utilizing for decades. Leverage. Most lawyers have funded costs out of pocket 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 in the plaintiff lawyers fight for justice. Through the use of borrowed money to finance litigation expenses a company can remove 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 by having the money that was tied up in the event costs readily available for firm expansion and out investments. But the biggest advantage is no longer using after tax dollars to finance case development expenses.
We are 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 must pay attention to the important thing if they wish to continue helping their clients.
