Funding for Attorneys and Law Firms
It is vitally important for a law firm that practices contingent litigation managing cash flow. For most trial lawyers sadly managing ones cash flow is an afterthought. When cases are successfully concluded cash flow is very sporadic as they only get paid. Cash flow can be a daunting task with many cases taking years to bring to conclusion projecting ones. Attorney financing is a convenient way. In exchange for a percentage of the recovery contingent firms typically advance all of the cost of litigation upfront. In a contingent case a firm may invest tens of thousands of dollars into a case and hundreds of attorney hours. It loses not only its time but the cash invested in hard costs as well if a firm loses a case. The money they have tied up is case costs is not allowed to be deducted by a firm, it gets worse. They have to fund it with after tax dollars but not only do they have to fund the money up front. Then they plow the fees from successful cases into the next group of cases a...