Additional Tools to Help Attorneys Help Their Clients

Unfortunately once an attorney hears from his/her client the trouble has already started. A proactive counselor however can be an asset.

It is usually following a prolonged period of financial distress that a business owner seeks counsel to begin the process of protection under the bankruptcy laws. One can ask the obvious question, “where was this counsel during the entire time that the business was suffering?” It is well known that business usually grow themselves into bankruptcy taking more orders or customers than they have the ability to finance. Yes, finance. A business that offers customers terms is financing those customers. The more money that is sitting in accounts receivable, the less ability the business has to grow.

An attorney acquainted with the nature of factoring could be of extreme value to his client that may be in growth mode. Recommending this strategy (although somewhat expensive) can provide the temporary boost in cash flow needed to sustain and even stimulate growth. The question then becomes as a business owner do I give away 3% to 5% of my bottom line in order to increase my business by 30%, 40% or even 50%? So long as the bottom line has that kind of margin, the answer is obvious. A good layer will explain that through factoring, the business owner is taking on a temporary equity partner that is funding its growth. After a year or two, when factoring in no longer required then the equity partner goes away unlike other investors or partners.

So the finance-savvy attorney earns his/her fees by preventing the catastrophe and not trying to get the client out from under it.