Rising Litigation Costs: How Trial Law Firms Can Manage Increasing Case Expenses

For trial lawyers, every new case comes with an investment. Before a contingency-fee law firm ever collects a fee, it may spend thousands of dollars, or much more, on experts, depositions, medical records, investigations, travel, and other litigation expenses.

As cases become more complex and litigation takes longer, those costs can add up quickly.

For successful trial law firms, rising litigation costs can create a cash flow challenge. The firm may have strong cases and a healthy business, but a significant amount of capital can remain tied up in cases for months or even years.

So, how can law firms continue investing in their cases without putting unnecessary pressure on their operating capital?

Rising Litigation Costs Can Put Pressure on Cash Flow

The cost of pursuing a case isn't always predictable.

A case may require an additional expert. A deposition may take longer than expected. New evidence may require additional investigation. Or a case that was expected to settle may ultimately require extensive trial preparation.

Each of these decisions can be important to the outcome of a case, but they can also increase the amount of money a firm has invested before receiving a fee.

For contingency-fee firms, this creates a unique cash-flow challenge. The firm pays the expenses today, while the potential recovery may be years away.

And when a significant portion of a firm's capital is tied up in cases, there may be less available to take on new cases, hire additional team members, invest in technology, or grow the practice.

Don't Let Litigation Costs Dictate Case Strategy

The financial side of a case should never be the reason a trial lawyer avoids taking a necessary step for a client.

Firms can benefit from having a strategy for managing case expenses so that available operating capital isn't unnecessarily tied up in litigation.

That's one reason some plaintiff law firms turn to case expense financing.

What Is Case Expense Financing?

Case expense financing allows qualifying law firms to finance the costs of pursuing contingency-fee cases rather than paying each case expense directly from the firm's operating capital.

For example, a firm may use financing to cover eligible expenses such as expert fees, litigation-related services, medical records, and other case costs.

As those expenses are reimbursed, the firm's capital can remain available for other business needs.

This can be particularly useful for firms handling several large cases at once. Instead of having substantial amounts of money tied up across multiple matters, financing can help provide greater flexibility in managing the firm's cash flow.

How Advocate Capital Helps Trial Law Firms Manage Case Expenses

At Advocate Capital, our proprietary software, AdvoTrac® Case Expense Funding Service, allows clients to upload eligible case expenses for reimbursement and track them on a case-by-case basis, so they can ultimately be recovered at the conclusion of won cases.

By helping firms access capital tied up in litigation, Advocate Capital enables them to continue investing in their cases while keeping more of their operating capital available for other priorities.

That could mean pursuing another case, hiring additional staff, investing in technology, or simply maintaining a healthier cash position while cases move toward resolution.

Keep Control of Your Cases

For trial lawyers, maintaining control over litigation strategy is critical.

Case expense financing shouldn't mean giving up that control.

Advocate Capital does not make litigation or settlement decisions for its clients. Attorneys remain responsible for determining how their cases are handled and what is in their clients' best interests.

The goal is to provide financial flexibility so rising case expenses don't unnecessarily limit a firm's options.

Build a Case Expense Strategy for Your Firm

Trial law firms can't always control how long litigation will take or how much a complex case will ultimately cost. They can, however, control how they prepare for those expenses.

As litigation costs continue to rise, having a plan for managing case expenses can help firms protect cash flow, continue pursuing strong cases, and create room for growth.

Case expense financing isn't about taking on cases your firm can't afford. It's about giving successful firms another tool for managing the capital they already have invested in litigation.

Advocate Capital has helped plaintiff law firms manage the financial side of litigation since 1999. If rising litigation costs are putting pressure on your firm's cash flow, talk with Advocate Capital about whether case expense financing could be a fit for your firm. To get started, fill out our contact form below, use our live chat, visit our Find Your Rep page, or call us at 615-377-6872.

 Photo Credit: 123RF - deagreez

About Donna A. Jones

Donna Jones is the President at Advocate Capital, which became a part of Pinnacle in 2019. Ms. Jones is a member of the Board of Directors of Advocate Capital and serves as a member of the Credit Committee. Her responsibilities include education and training of Advocate Capital staff regarding civil litigation, coaching new clients on the fundamentals of Advocate’s online services, as well as its proprietary software application, AdvoTrac®, and all activities related to existing and prospective clients.