For a law firm that practices contingent litigation managing cash flow is vitally important. Sadly managing ones cash flow is an afterthought for most trial lawyers. Cash flow is very sporadic as they only get paid when cases are successfully concluded. With many cases taking years to bring to conclusion projecting ones cash flow can be a daunting task.

Contingent firms typically advance all of the cost of litigation upfront in exchange for a percentage of the recovery. In a contingent case a firm may invest hundreds of attorney hours and tens of thousands of dollars into a case. If a firm loses a case it loses not only its time but the cash invested in hard costs as well. It gets worse, a firm is not allowed to deduct the money they have tied up is case costs. Not only do they have to fund the money up front but they have to fund it with after tax dollars. Then they repeat the cycle and plow the fees from successful cases into the next group of cases.

The missing ingredient in improving cash flow for most contingent law firms is something most businesses have been utilizing for decades. Leverage. Most lawyers have funded costs out of pocket since they started, only because that