Authored By: Candace Whitman |
Managing cash flow is a common challenge for law firms, especially those operating on a contingency fee basis. The unpredictable nature of case settlements and payments can lead to financial strain, making it difficult to cover ongoing expenses and invest in essential resources. However, with the right financial strategy, your firm can maintain stability, deliver excellent results for clients, and focus on firm growth.
Here are strategies law firms can implement to improve cash flow:
Create a Cash Reserve
Establishing a cash reserve can help your firm manage unexpected expenses and revenue gaps. Setting aside a percentage of income from settled cases can build a financial buffer over time. This reserve ensures that your firm can continue operating smoothly during periods of delayed case settlements or slower business activity.
Leverage Technology
Use legal tech tools to automate administrative tasks, improve efficiency, and reduce operational costs. Technology can also enhance client communication, speeding up the payment process. For example, case management software can help track expenses and revenue.
Create a Forecasting Model
Developing a cash flow forecasting model allows your firm to anticipate periods of financial strain and plan accordingly. Use historical data to predict revenue patterns, identify potential cash flow gaps, and allocate resources efficiently. This proactive approach enables your firm to prepare for upcoming expenses and make informed financial decisions.
Diversify Case Types
Balancing your caseload between high-value cases with long timelines and smaller, quicker cases can provide a steadier stream of settlements and payments. Diversifying case types ensures your firm has a mix of short-term and long-term revenue sources, reducing reliance on a single case for financial stability.
Invest in Quality Resources
Having funds readily available allows your firm to invest in the best experts, technology, and trial preparation, improving case outcomes without financial strain. By ensuring high-quality resources, your firm can build a reputation for excellence and attract more clients. This is where case expense funding can help!
How Case Expense Financing Can Help
Advocate Capital’s case cost financing offers a practical solution to cash flow challenges by providing access to funds specifically for case-related expenses. When you use Advocate Capital's case cost funding to reimburse yourself for the money you spent on your case expenses, you free up significant cash. This cash can then be used to invest in opportunities to grow your wealth, expand your business, or give back to your team. It's your money—you earned it, you've already paid taxes on it, and now you can put it to work for you. Here’s how it works:
1. Access to Funds:If your firm is approved by our credit committee for our line of credit, you will have the ability to reimburse yourself for the money spent on your cases by submitting a funding request through AdvoTrac®, our proprietary software platform. Interest is paid monthly on your line balance. When a case concludes, your firm will use the proceeds from the case to pay the principal borrowed for case expenses.
If implemented properly, the cost to your firm is next to nothing because AdvoTrac® allows you to track your case expense line of credit on a case-by-case basis to get reimbursed from your cases for 100% of the cost of our services on the cases that you win.
2. Preserving Working Capital: By using financing to cover case expenses, your firm’s working capital remains available for day-to-day operations, ensuring financial stability.
3. Predictable Financial Management: With case expense financing, your firm can better manage cash flow, reducing the stress of unpredictable revenue streams.
4. Investing in Quality Resources: Having funds readily available allows your firm to invest in the best experts, technology, and trial preparation, improving case outcomes without financial strain.
Why Choose Advocate Capital?
Advocate Capital has decades of experience partnering with law firms to provide financial solutions tailored to their needs. Our case expense financing program offers:
1. Dedicated support from a team that understands the unique financial challenges of law firms
2. A proven track record of helping firms achieve financial stability and growth
3. A proprietary software platform called AdvoTrac® created by Advocate Capital, Inc. for the tracking of case expense lines of credit on a case-by-case basis. It is the case-by-case tracking of borrowing costs that makes it possible for Advocate Capital, Inc. clients to reduce their net cost of capital to below 1%* (on average) by recouping their borrowing costs from their won cases.
The Benefits of Stabilized Cash Flow
When your law firm’s cash flow is stabilized, you can:
1. Focus on Your Clients: Spend more time on case strategies and less time worrying about finances.
2. Plan for Growth: With a steady financial foundation, your firm can pursue new cases and expand its reach.
3. Reduce Stress: Financial stability provides peace of mind, allowing you to concentrate on what matters most—advocating for your clients.
Start Stabilizing Your Cash Flow Today
If your law firm is facing cash flow challenges, Advocate Capital’s case expense financing can provide the financial support you need. By stabilizing your cash flow, you can focus on delivering exceptional client service while ensuring the long-term success of your practice.
Contact us today to learn how our financing solutions can transform your firm’s financial health. Our Directors of Strategic Solutions can help you get started. Click here to find your rep. They will learn about your firm, answer any questions you have about our case expense financing service, give you a demo of our AdvoTrac Case Expense Financing Software, and help you apply.
Call toll-free today at 1.877.894.9724, contact us online, or apply now.
