Focus on Litigating for Your Client Instead of Being Their Lender
Managing Partner at Dudley DeBosier Injury Lawyers
President at Intake Conversion Experts
EVP & Head of Corporate Development at Esquire Bank
Self-financed firms pay the case expenses for their clients and can only recoup these expenses at settlement. In today’s high-inflation economy, this practice is a detriment for the firm because law firms are barred from applying interest to these expenses. That means that the real market value of the money you invest in case costs is diminished when you’re paid back two or three years later at settlement.
Instead of essentially giving your clients interest-free loans, explore case cost financing with a financial partner. When you finance the case costs, the client covers both the principal as well as the interest. Each state has its own rules for passing on the cost of financing, so you would need to consult your state’s ethics opinion. Additionally, this practice needs to be incorporated into your retainer.