Successful trial attorneys focus on winning their cases — which is how it should be. But too often, this focus on the meat of their work leads them to overlook an important business task: managing their money in a way that optimizes the availability of capital. Without paying attention to this important detail, many contingency-fee attorneys end up endlessly tying up their profits in case expenses, losing opportunities to run or expand their business with that money. Some attorneys even have to refer away new cases because they can’t afford to take them on. And because that money is after-tax profit, these attorneys lose the opportunity to claim it as legitimate business expenses on their taxes. Until recently, trial lawyers didn’t have much choice about this. Traditional banks cannot offer loans secured by future verdict or settlement profits — even if everyone agrees that you’re sure to receive that money. Without many other options, attorneys would settle into a cycle of collecting a big fee, then plowing most or all of it right back into the next case. That money tied up in litigation represented a lost opportunity to meet day-to-day expenses; lower their tax burden; expand their business; take on more challenging cases; or invest in their own or their children’s future. There are now many different ways out of this cycle. From loans secured by your portfolio of cases that can be four to five times larger than a traditional bank could offer to structured fee options that can eliminate the severe peaks and valleys in a contingent fee law firms cash flow.
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