Funding for Attorney s and Law Firms7701477

De GEATI - Grupo de Estudos Avançados em TI
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For a legal that practices contingent litigation managing income is very important. Sadly managing ones cashflow is an afterthought for most trial lawyers. Cashflow is very sporadic as they only get money when cases are successfully concluded. With a lot of cases taking several 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 exchange for a percentage from the recovery. Inside a contingent case a firm may invest a huge selection of attorney hours and hundreds and hundreds of dollars in to a case. If a firm loses an incident it loses not merely its time however the cash dedicated to hard costs also. It becomes worse, a firm isn't allowed to deduct the cash they have bound is case costs. Not only do they have to fund the amount of money up front however they have to fund it with after tax dollars. They repeat the cycle and plow the fees from successful cases in to the next band of cases.

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

A revolving line of credit can be one of the most important tools in a plaintiff lawyers fight for justice. By using borrowed money to finance 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 company pays can be offset insurance firms the money that was tied up in the event costs designed for firm expansion or outside investments. Nevertheless the biggest advantage has stopped being using after tax dollars to invest in case development expenses.

We are in a time where trial lawyers 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 ought to pay attention to the bottom line if they need to continue helping their customers.