Listing Agent: Contingency Law Firms Should Utilize a Payoff Sheet

Contingency firms scratch a bunch of lottery tickets, and sometimes get a (big) hit.  I mean, it’s a little better than the lottery, because there is some skill involved; but, it is a lottery. 

 

So, when that endorphin rush of a big hit, um . . . hits – it’s easy to just plow that money into a new Maserati.  But, you have other obligations, as well. 

 


The best strategy to employ, then, is to create a payoff sheet for settlements.  You can use whatever format you want: a document, a spreadsheet, notes in your case management system – but, it would look something like this: 

 

First, get any disbursements out that need to be made on the case, eg – medical bill payments on behalf of the client.  (This process almost always festers in law firms; and so, you want to move through it as quickly as you can.)  Next, allocate the appropriate percentage for payments of taxes (federal and state, if applicable) from the settlement – contingent attorneys always get out over their skis with this, and end up having to make extra tax payments at the end of the year; so, get it done right away, instead.  After that, pay off any lines of credit you used to float the practice, while you supported the working up of this case (and other cases).  Then, decide whether you’d like to shovel some of that money back into your practice, as retained earnings, to supplement carrying costs, or to buy a new piece of technology, etc.  After all that – then go buy your Maserati; but, maybe it’s a Volkswagen Passat now.   

 

Or, save your money, and get the boss vehicle you want, over time.  In fact, that could be a line item on your payoff sheet – money set aside for the purchase of a vehicle, or a boat, or an ATV, whatever.  Some expensive toy, just for you.  That’s good motivation for the long slog of processing cases. 

 

Good things come to those who wait, and to those contingent attorneys who use a payoff sheet. 

 

. . .

Wanna talk financial strategies for your law practice?  We can help! 

Through a unique partnership between the bar association and Jared Correia's Red Cave Law Firm Consulting, National Creditors' Bar Association members have access to experienced law practice management consultants at a special discount rate.

To get started, visit Red Cave's NCBA landing page, and start running your law practice like a business.

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