Posts Tagged ‘Michael J. Swanson’

Pay Down the Most Expensive Debt First

Thursday, September 25th, 2014

Pay Down Expensive Debt FirstAs we process applications from law firms, it is not at all unusual to see a firm or partner that has $20,000 of cash in the bank and at the same time is carrying a $20,000 balance on multiple credit cards.

Obviously in a situation like that there is an opportunity to eliminate a lot of interest expense by simply paying off some credit cards rather have them sit out there with $20,000 on them for another year at 18 percent (or even higher).

If you have excess cash at the end of the month, review any outstanding debt you have and consider paying some of it down.

You can learn more about this and other law firm finance topics in my book, How David Beats Goliath – Access to Capital for Contingent-Fee Law Firms.


The above material is excerpted from How David Beats Goliath – Access to Capital for Contingent-Fee Law Firms and is subject to copyright protection © by Michael J. Swanson, all rights reserved.

 

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Create a Rainy Day Fund

Tuesday, September 23rd, 2014

Rainy Day FundAvailable borrowing capacity on credit cards is NOT a rainy day fund!

Many, many law firms and their partners are maintaining six-figure credit card debt over 10 to 15 cards because they have used them as a “rainy day” fund. Obviously it’s extremely expensive to do that and it just digs a deep hole that is difficult to ever escape. Many others simply have multiple credit cards with open balances available in case of unforeseen need. But I’ll say it again…a credit card is not an emergency fund.

An emergency fund is cash in the bank. A credit card is the pathway to easy but expensive future debt. It is prudent move personally and professionally to put aside some cash so that you can deal with the unforeseen without having to dig a deep, expensive hole.

You can learn more about this and other law firm finance topics in my book, How David Beats Goliath – Access to Capital for Contingent-Fee Law Firms.


The above material is excerpted from How David Beats Goliath – Access to Capital for Contingent-Fee Law Firms and is subject to copyright protection © by Michael J. Swanson, all rights reserved.

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Don’t Wait Until You Need Capital to Secure It

Tuesday, September 16th, 2014

Don't Wait Until You Need Capital to Secure ItMany law firms wait until they have their worst year ever and are stuck in a cash-flow crunch before trying to access capital through a loan of some type. Even if they can secure a loan under those conditions, it’s going to be very expensive.

Access capital from a position of strength. Don’t wait until your credit score goes down, or you need the money, or you’re having a soft revenue year. The old adage that banks don’t lend money to people who need it is true. In fact, any smart lender would not do business with a law firm that really needed money. They key is to establish capital relationships during your best years, not your worst.

You can learn more about this and other law firm finance topics in my book, How David Beats Goliath – Access to Capital for Contingent-Fee Law Firms.


The above material is excerpted from How David Beats Goliath – Access to Capital for Contingent-Fee Law Firms and is subject to copyright protection © by Michael J. Swanson, all rights reserved.

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Nevada Justice Association Lunch Presentation

Thursday, September 11th, 2014

Mr. Swanson presenting at Nevada Justice Association lunchI had a terrific time at the Nevada Justice Association (NJA) headquarter in Las Vegas yesterday.  My presentation “Law Firm Finance 101” was well received and I met many new friends among the plaintiff bar. Click here to see a few photos of the luncheon.  NJA Executive Director Julie Ostrovsky and her team put on a great event and made me feel very welcome. Also speaking at the event was Rafi Arbel, the President of MarketJD. His presentation was very informative and engaging.  I am looking forward to seeing the NJA team at their annual convention in Napa, CA next month.  It should be an excellent meeting!

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Minimize Net Interest Costs

Tuesday, September 9th, 2014

How David Beats GoliathAs a general rule, you should strive to minimize the amount of interest you pay each year by borrowing in a very strategic, controlled way. Here’s a good exercise: At the end of each year (or right now!) total up the interest that appears on your income statement from loans at your firm, along with any interest from credit cards that your firm may have. Subtract the interest that you recoup from your cases (if any) and take a look at that number. Ask yourself: What did I get for that money? If you’re not sure…there’s a problem!

Too many firms borrow money for short term needs (advertising, bonuses, etc.) but then never pay it back during the good times. The result is effectively a permanent debt that does nothing but steal profits out of the partners’ pockets without giving back much in the way of tangible benefits.

If your firm is going to borrow money, especially for case expenses, consider recouping the interest from your cases. It’s legal, it’s ethical and there are lenders in the marketplace that can track the interest for you on a case-by-case basis to make it easy on your staff.

You can learn more about this and other law firm finance topics in my book, How David Beats Goliath – Access to Capital for Contingent-Fee Law Firms.


The above material is excerpted from How David Beats Goliath – Access to Capital for Contingent-Fee Law Firms and is subject to copyright protection © by Michael J. Swanson, all rights reserved.

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