Funding for Attorney s and Law offices7089849
For a moldova that practices contingent litigation managing income is very important. Sadly managing ones cashflow is an afterthought for many trial lawyers. Income is very sporadic as they only get money when cases are successfully concluded. With many cases taking several years to bring to conclusion projecting ones cashflow can be a daunting task.
Contingent firms typically advance all the cost of litigation upfront in substitution for a percentage of the recovery. In the contingent case a strong may invest hundreds of attorney hours and thousands of dollars in to a case. If a firm loses an incident it loses not only its time however the cash dedicated to hard costs too. It worsens, a firm is not allowed to deduct the cash they have bound is case costs. Not only do they have to fund the money 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 number of cases.
The missing ingredient in improving income for most contingent law firms 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 personal credit line can be one of the most important tools in the plaintiff lawyers fight for justice. By using borrowed money to finance litigation expenses a firm can eliminate the negative tax consequences of self funding. The firm actually realizes the wages it is receiving in fees. Any interest a company pays could be offset insurance firms the money that was tied up in the event costs readily 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 law firms have more options than in the past 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 important thing if they need to continue helping their potential customers.