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Lawyers are known to hate math. But law practice is a business so you will need to enough about numbers to make sure that it is profitable. While you don’t need to have taken calculus in college, you will have to be familiar with basic accounting principles.

In a nutshell, accounting is a system for keeping track of income and expenses. It will help you keep track of who owes you money and who you owe money to. Also, it will help you estimate and possibly lower your income tax bill and make you more mindful of your expenses. Lastly, it can ensure that you are prepared for an audit, either from a bank if you want to get a loan, or from the IRS if they think your tax returns are a red flag.

The problem with accounting is that it can be a major time suck. Especially if you procrastinate. Without a proper system for documenting expenses, you will spend a lot of time trying to remember what you spent your money on. Are you going to remember a purchase you made a week ago? A month ago? How about two years ago?

This column will provide a few do-it-yourself bookkeeping tips to help you stay on top of your simple law firm’s finances. But at some point, you may need professional help.

Do not commingle personal and business accounts. When you start your practice, since you don’t have a lot of clients and transactions, you might think it’s fine to just have one bank account to deposit checks and pay bills. While this might be true, eventually you will start to forget what you spent your money and forget whether the expenditure was for business or personal reasons.

This is why it is important to have separate bank accounts for business and personal uses as soon as possible.

If you prefer to use credit cards, have one for business expenses and one for personal expenses. Once you keep track of your spending, you can get credit cards that can maximize points or refunds based on your spending habits. Some credit cards can even prepare expense reports for you.

Commingling income and expenses can be problematic with auditors, especially tax auditors. They will look at commingled accounts with great skepticism and possibly deny legitimate tax-deductible purchases. They cannot tell whether the Kuerig coffee maker you bought at Wal-Mart was for the office or the house when you use the same account to purchase groceries and duvet covers. This means time wasted fighting with auditors and their higher-ups trying to prove your case.

If you maintain a separate business account, while they will still scrutinize your expenses, at least you will have some credibility, which means you might get the benefit of the doubt in close cases.

Save your receipts. As the old saying goes, document everything. The problem is that a lot of us are not good about keeping receipts because we have better things to do.

The key is having good habits that can be repeated easily. Nowadays, try to keep your receipts paperless. Many businesses can e-mail receipts. It might be a good idea to set up a separate e-mail account for receiving receipts in order to avoid cluttering your normal e-mail account.

Alternatively, if you take a paper receipt, take a photo of it with your phone, and e-mail it to yourself. On the e-mail, be sure to include the date, what you purchased (if it isn’t clear on the receipt) and the purpose of the purchase.

There are smartphone apps that can help you record, categorize, and store receipts. But you probably won’t need them if you can consistently record your purchases.

Ultimately, do whatever works for you. As long as you can save your expense records and be able to produce them on demand. But try to make everything paperless.

Periodically check your income and expenses. You should have a habit of checking your income and expenses. Generally it is a good idea to check your bank account and credit card activities and balances once per day — and maybe more if you are expecting an important transaction to process.

Also, checking regularly allows you to record payments or income you may have missed while you still remember it. You are not going to remember it a year or two from now, which is when an IRS audit conveniently happens to come. Also, most banks do not make checks available online after two years which can make accounting much more difficult. This also prevents you from procrastinating.

At the end of every month, you should create a sum of your income and expenses to determine your net profit or loss for the month.

Be prepared to hire someone to do your books. At some point, your practice will grow to the point where you will need professional assistance recording your income and expenses. Your practice will have so many transactions that you cannot keep track of them all. Or you will be so busy drafting documents or going to court that you will not have time to record all of your expenses. It may even get so bad that you forget to bill your clients — and most will not be in a hurry to ask for your bill.

If you have practice management software, it may come with simple accounting programs. Or you may want to purchase accounting software such as Quickbooks, Freshbooks, or Xero. It is best to try them out as soon as possible to get a feel for them. You will be spending a lot of time on Google trying to find the best way to input an expense or to print out a report.

Unfortunately, I’ve found that most accounting software packages have steep learning curves. Thus, you don’t want to get software when you are inundated with transactions. If you are not familiar with the software, you can make data entry errors which can result in incorrect invoices, bills, and reports.

Bookkeepers and accountants generally provide the most comprehensive services. Some provide other services such as billing, tax planning, payroll, and tax return preparation. But they charge by the hour, and their services will vary. I suggest meeting with a few and finding out how each operates and their pricing. You will likely be billed monthly so budget accordingly.

For a simple law practice, so long as you have a system of recording your income and expenses, you probably don’t need to spend money on software or an accountant. Just make sure to check your financials regularly and record all of your income and expenses so that you can remember them when needed. But at some point, you will have better things to do than data entry at which point you may need professional help.

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Steven Chung is a tax attorney in Los Angeles, California. He helps people with basic tax planning and resolve tax disputes. He is also sympathetic to people with large student loans. He can be reached via email at sachimalbe@excite.com. Or you can connect with him on Twitter (@stevenchung) and connect with him on LinkedIn.

Realize that markets ebb and flow. With tenacity and perspective, where you are now is not where you will end up. During challenging times, be sure to be kind to yourself and the ones who love you. As the adage goes, “this too shall pass.” You are in this for the long haul. Do not for a second confuse your job title with your worth, both when you are job searching in an uncertain market and when you will later have what you deem to be “success.” Your worth is not determined by what is on a flimsy business card—careers are not always linear, instead they have many ups and downs. Take with you what you learn now and when your situation improves, remember to always help others when they may face uncertain job markets.

Life is like a Ferris wheel, sometimes we are at the top, and sometimes we are at the bottom, or not quite where we think we deserve to be, but it is during bleak times that we realize the mettle of which we are made.

— Deborah Beth Medows, a New York attorney who graduated from law school in 2011 when the job market for entry-level lawyers was still in shambles, offering advice to those whose future careers in the legal profession have become uncertain due to the COVID-19 pandemic.

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Staci Zaretsky is a senior editor at Above the Law, where she’s worked since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, comments, or critiques. You can follow her on Twitter or connect with her on LinkedIn.

Once upon a time, long, long ago, when air travel between New York and continental Europe was possible, we resided for a spell in the city of Frankfurt am Main. As regular readers of this blog will know, we were not overly fond of it. That being said, there were matters Hessian we came to appreciate: Apfelwein, Rippchen, the local wines, the regular fests, the high-speed trains that quickly whisked you away to better places—and the local XI, Eintracht Frankfurt.

As a consequence of this last, the following appeared in my Facebook feed yesterday.

A second admissions scandal is rocking Texas Southern’s Thurgood Marshall School of Law this year. Back in February, a law school pay-to-play admissions scandal led to the firing of university officials. Now, a former assistant dean of admissions, Edward Rene, has been charged with theft by a public servant, for allegedly devising a scholarship scheme that netted him ~$74,000. The criminal complaint in Rene’s case appears unrelated to the law school’s earlier scandal.

As reported by ABA Journal, according to the complaint, Rene’s alleged scheme saw him offer scholarships to two students, but they received funds in excess of the scholarship amounts. The students were then allegedly instructed to reimburse the extra money — via checks, cashier’s checks, or money orders… made payable to Rene.

In one instance, Rene told a student the excess funds would go to a foundation that helped minority students, according to the criminal complaint. The excess funds, which the student received from the fall 2017 term to the fall 2019 term, totaled $46,715, and were paid back directly to Rene, the document states.

Another student, who received $7,500 scholarships and additional payments as well, told an FBI investigator that Rene said the money was from his personal family foundation, and the student should directly pay him the additional money. There was no evidence of a family foundation, and the extra money, which added up to $26,942, was from Texas Southern’s scholarship budget, according to the criminal complaint.

Joan R. M. Bullock, dean since July 2019 at the law school, said in a statement that Rene had been terminated, and that the law school is focused on its educational mission:

“Since my arrival in July 2019, we have taken a hard look at our systems and processes, and we are doing what is necessary in order to ensure that we are providing an excellent legal education and learning experience to students who are deserving of our trust, commitment, and care,” she wrote.

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Kathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

I know it’s been a long time since Dog The Bounty Hunter went off the air and far longer since the peak 1980s glory of The Fall Guy, but bail is really pretty simple. It’s the coat check of the pre-trial criminal justice system: the government has already decided that it’s OK to drop the defendant off with the public, they’re just haggling over the price.

This cannot be stressed enough… at the point the government sets bail they have conceded that they’re cool with someone being released.

And yet we still have to deal with stories like this one from the Boston Globe breathlessly hyping that a bail fund is posting bond for a guy with a pending rape charge as though the bail funds are the ones who should feel responsible for putting the public at risk. And prosecutors and law enforcement from the state’s AG on down are right there in this article jumping up and down about it.

This shouldn’t require explanation, but if prosecutors think a defendant shouldn’t be released then the prosecutors can have that argument in court.

The Globe story bemoans that a registered sex offender was released on a measly $15K bond. That does seem bad! An accused rapist with past convictions absolutely falls into the category of someone who should be considered for pre-trial detention. So perhaps the bail shouldn’t have been set at $15K?

Massachusetts lets prosecutors seek a finding of “dangerousness” that would preclude any possible bail. They didn’t seek that in this case and that fact should put a full stop to their complaints that he got released.

“It was dangerous and irresponsible for the Massachusetts Bail Fund to post bail for [Shawn] McClinton, who was facing serious felony charges and has a violent criminal past,” said [Massachusetts Attorney General Maura] Healey, who oversees nonprofit groups statewide, in a statement.

Maybe, just maybe, the bail fund shouldn’t be the one making private determinations of who is and isn’t a threat and instead that power should go to — and I’m just spitballing here — prosecutors armed with evidence making a petition to a judge.

Suffolk District Attorney Rachael Rollins said her office did not seek a dangerousness hearing to hold McClinton without bail in part because prosecutors feared the hearing itself could traumatize the victim.

That risk of trauma is very real and very serious but inevitable if they’re planning to try this case. But rather than have the separate hearing they just set the bail amount to a figure they assumed the guy couldn’t pay. So… avoiding this trauma is a luxury you only get if your attacker is poor? Because make no mistake, the Jeffrey Epsteins of the world get to pay whatever bail they want if prosecutors don’t do the hard work of keeping people in jail the right way. That responsibility shouldn’t be skirted if the government thinks the defendant is light on cash.

Rollins referred to the fund’s decision to cover this guy’s bail as “the act of a coward… I would have so much more respect for the Bail Fund if they had bailed him out and then let him stay in one of their homes.” And we would have more respect for you if you’d actually performed your legally required duty of undertaking a dangerousness hearing in this case, but here we are.

This — rather that the existing Globe angle — is the actual story here.

Prosecutors are unconstitutionally abusing the cash bail process to use it as a substitute for dangerousness hearings because they don’t want to go through the hassle of doing things by the book. That’s a very troubling place for this country to be.

This is the whole farce of the cash bail system as applied throughout the country: it’s just a workaround for jailing poor people who are then more likely to be convicted because people in custody do measurably worse at trial. We’ve seen a lot of ranting about New York’s cash bail reform (which was limited to nonviolent defendants so wouldn’t even apply in this case) but none of the critics ever grapples with the basic concept that if the government believes someone should be able to buy themselves out of jail AT ALL then quibbling over amounts is just about buying off the justice system. Cash bail critics don’t think everyone should be immune to pre-trial detention, just that it’s bonkers that freedom is subject to a credit check and that accused of the exact same crime an upper middle class guy would’ve had no issues covering that charge. If someone shouldn’t get out then just don’t put a price tag on it!

And somehow the media is echoing this rhetoric of abuse as if it’s acceptable. Check out this paragraph from the Globe story:

Boston police Commissioner William Gross said he was “absolutely appalled” that someone with McClinton’s history would be freed. “We’re getting to a point in society where we’re giving more credence to criminals than victims. We’re talking about violent offenders. Why would you bail someone who committed rapes?”

Let’s edit it for accuracy with additions in italics:

Boston police Commissioner William Gross said he was “absolutely appalled” that someone with McClinton’s history would be freed granted bail at all by the prosecutor’s recommendation. “We’re getting to a point in society where we’re giving more credence to criminals than victims just as the United States Constitution explicitly provides. We’re talking about violent offenders. Why would you set bail someone who committed rapes?”

It’s time for some honesty about what’s going on here: in the wake of America watching police riot on TV for a week people for the first time were giving to bail funds en masse and suddenly the jig was up on the whole cash bail scam they had running. Now there’s money in the system and the arbitrary “high” numbers they’d been setting to avoid real work weren’t obstacles anymore and rather than fess up to their role in this, officials are just whining to the press.

In the entire article there’s only one person quoted who comes asymptotically close to the real issue, a BU journalism professor who says:

The notion of providing bond for folks who are in for heavy crimes is crazy and needs to be reformed — a serial rapist and sex offender? The DA’s office made a mistake in allowing him to be eligible for bail. But once that decision was made, the bail fund has some discretion in where they allocate their funds — whom they decide to bail.

So close!

Stop farming out the justice system. If you say someone is eligible to be released for $15K then you’ve authorized them to be released for $15K. Don’t ask private actors to adjudicate the “worthiness” of one $15K bond over another. Let judges do that.

Every public official quoted in this Globe article is abdicating their responsibilities and shockingly being given a cookie for their effort. Hold them to a higher standard because this whole endeavor falls apart real quick when the people in charge get patted on the back for ignoring the rules.

Supporters pull back after Massachusetts Bail Fund posts bond for registered sex offender who had pending rape charge [Boston Globe]

Earlier: Bail Reform Opponent Proves Lawyers Are Terrible At Math

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Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.

Last week, we learned of the unfortunate death of Seraphina Harrell at the tragically young age of 8 years old. Prior to, and shortly after, her birth, Harrell — once known as “Baby S” — was at the heart of a surrogacy dispute that resonates to this day. Ground zero for this dispute and controversy over surrogacy in the United States continues to be the Great Lakes State — Michigan.

The Baby S Case. The Baby S Case started like many surrogacy arrangements. A Connecticut couple hoped for a child — in this case, another child, as they already had three. The couple had two cryopreserved embryos, but had received medical advice against attempting another pregnancy themselves. So, they turned to surrogacy.

Crystal Kelly, a former nanny, mother of two, and fellow Connecticut resident, was introduced to the couple through a surrogacy matching organization. She agreed to be a surrogate for the couple and an embryo transfer procedure successfully resulted in a pregnancy. Unfortunately, about halfway through the pregnancy, doctors delivered the news that the fetus had a number of serious medical complications, including a cyst in the brain and a complex heart abnormality. The intended parents requested that Kelly terminate the pregnancy, and Kelly declined. She then moved, with her two children, to Michigan to given birth to the child.

Why Michigan?

Today, Michigan is the only remaining state in the United States to criminalize compensated surrogacy. Although, only eight short years ago, Michigan had company. New York, for instance, only recently reversed its law criminalizing compensated surrogacy this past legislative session. Washington State, New Jersey, and the District of Columbia — themselves once having statutory opposition to surrogacy like that of Michigan — each recently embraced regulated compensated surrogacy only in the past few years. Michigan state law remains, however, and continues to provide that compensated surrogacy is against public policy, and moreover, that any surrogacy contract, compensated or not, will not be enforced within the state.

Participants to a compensated surrogacy arrangement — meaning the intended parents or the gestational carrier — are subject to criminal liability. Such participants can be found guilty of a misdemeanor, including consequences of up to $10,000 in fines and up to a year in jail. A nonparticipating party who “induces, arranges, procures, or otherwise assists in the formation of a surrogate parentage contract for compensation” (such as surrogacy matching organization or an attorney), faces even more severe consequences. They could be convicted of a felony punishable by a fine of up to $50,000, and up to five years in prison. Or both.

By becoming a Michigander and giving birth within the state, Kelly was able to be recognized as the legal parent of the child — despite having no genetic connection to the child, and having affirmatively entered into a contract specifically to carry the child for another couple. Kelly then facilitated the adoption of Baby S to other parents, who had prior experiences raising children with special needs.

The story of Harrell’s bumpy beginnings is an important one for all those considering entering into a surrogacy arrangement. Most parties and facilitators now understand how critical it is to have everyone fully informed and on the same page when it comes to medical complications and termination issues. Maybe even more importantly, Harrell’s situation brings to light the serious issues presented by Michigan’s surrogacy laws, unrelated to termination.

I had the chance to speak with Michigan attorney Dion Roddy, to understand if this was merely an issue of the past. It is not.

A ‘Safe Haven’ For Surrogates to Keep The Baby?

Roddy explained that although legislative efforts have been made to change the law in Michigan, those efforts have not yet seen success. That means that if a gestational carrier from any state were to move to Michigan and give birth, she would appear on the child’s birth certificate and likely be recognized as the child’s legal parent.

Under Michigan law, if there was a dispute, the party with physical custody of the child (most likely the surrogate) would retain custody until a court ruled otherwise. The court is instructed to look to the best interests of the child. That, Roddy described, could be very fact dependent. If the surrogacy arrangement were altruistic and at least one of the intended parents were genetically connected to the child, and there were no other significant factors weighing against them, a court would likely find the child’s best interest were served by being with his or her intended parents.

However, if the surrogacy arrangement was compensated, Roddy explained, the participants could be facing criminal prosecution in Michigan. And, while an attorney may be able to help with the custody piece, most Michigan attorneys would not touch any other part of a compensated surrogacy arrangement, including any actions to obtain a birth certificate or have the intended parents named as legal parents, either pre- or post-birth, out of risk of falling within the criminal provisions of the statute.

Of course, a surrogacy arrangement is all about trust. Hopeful parents are trusting a surrogate not to do drugs, go skydiving, or … move to Michigan. Hopefully, Michigan will update its laws. In the meantime, beware of the Great Lakes State.

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Ellen Trachman is the Managing Attorney of Trachman Law Center, LLC, a Denver-based law firm specializing in assisted reproductive technology law, and co-host of the podcast I Want To Put A Baby In You. You can reach her at babies@abovethelaw.com.

Last year, we saw one of the first truly positive law school job reports in about a decade, where we were looking at employment outcomes that “approach pre-recession levels.” This year, the numbers are even better, with the job market for law school graduates the best we’ve seen in the 12 years since the Great Recession. Alas, thanks to the coronavirus crisis, this may be the last time we see employment numbers reach such great heights.

According to the latest entry-level employment figures from the National Association of Law Placement (NALP), the class of 2019’s employment outcomes were very strong. The overall graduate employment increased to 90.3 percent (0.9 percent over the class of 2018), which is the highest employment rate recorded since the the class of 2007 saw an overall rate of 91.9 percent. On top of that, the number of graduates employed in full-time, long-term jobs where bar passage was required was 74.3 percent (an increase of more than 3 percent), a percentage that’s even higher than rates measured before the recession. In fact, it’s the highest level ever recorded.

More than half (55.2 percent) of the class of 2019 found jobs in private practice firms, and this is the closest we’ve come to 2009 figures (55.9 percent) since that time. Once again, much of the class of 2019’s success in the job market was thanks to Biglaw employment, with 30.2 percent of jobs at firms with more than 500 lawyers (an increase of 1.1 percent from last year), which is higher than levels seen pre-recession in 2008 and 2009, which were just over 25 percent. On the flip side, the percentage of solo practice jobs was at a historic low of 1.5 percent — just 0.8 percent of all jobs.

This is all fantastic news, but unfortunately, it’s coming at a time when the most recent graduating class is facing an incredibly difficult job market thanks to the pandemic. That said, here’s a tempered take from James Leipold, NALP’s executive director, on the latest employment figures:

The good news is that employment outcomes and salary findings for members of the Class of 2019 are among the strongest ever measured and set several new highwater marks. The bad news is that they are not likely to be predictive of the employment outcomes for the next several classes, as the recession and other changes brought about by the COVID-19 pandemic are likely to provide a much more challenging job market for some years to come.

It can’t be that bad, right? Wrong. Here are some additional depressing quotes from Leipold in NALP’s latest report (emphasis added):

• “[A]ll bets are off in terms of predicting employment outcomes for the next several classes. We know that the COVID-19 pandemic is wreaking havoc with the entire labor market, and certainly the legal services sector is not immune.”
• “[M]embers of the Class of 2020 face uncertainty about when and how they will take the bar exam and become licensed, with different jurisdictions making different decisions, sometimes continuing to postpone bar exam plans as the virus levels surge in different parts of the country. Many members of the Class of 2020 that have jobs as entry-level associates at law firms have already had their start dates deferred at least until early 2021.”
• “Members of the Class of 2021, many of whom would ordinarily be summer associates this summer, have had their summer programs foreshortened, and delivered virtually, and in some cases canceled altogether, and those without job offers at the end of this summer are likely to face an uncertain job market as 3Ls in the fall.”
• “Members of the Class of 2022, most of whom had only one semester of grades before schools moved on an emergency basis to remote teaching and pass/fail grading systems, face perhaps the most uncertainty of all, with their OCI programs now mostly delayed until winter, and continued uncertainty about whether they will be able to return to campus at all in the fall.”

So what do we have to look forward to in terms of law graduate employment in the wake of the pandemic? Not much. “[I]t is all but inevitable that the employment outcomes for the Class of 2019 will stand as a high-water mark for some time to come,” says Leipold. “Of course even some of the jobs they had secured are at risk in the current environment.”

Biglaw jobs will still be around, but associate classes are likely to be smaller. Graduates in search of employment will likely start their own law firms, and the number of school-funded jobs are sure to climb as they did during the last recession. “The need for lawyers will persist, but the current historic events unfolding around us are likely to change the legal sector, like every sector, in ways that are hard to foresee or predict with any accuracy,” cautions Leipold.

Great work, class of 2019. As for everyone else, good luck.

Jobs & JDs: Class of 2019 [NALP]
Class of 2019 Attains Highest Employment Rate in 12 Years as Uncertainty Looms for Class of 2020 [NALP]
Employment for the Class of 2019 — Selected Findings [NALP]

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Staci Zaretsky is a senior editor at Above the Law, where she’s worked since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, comments, or critiques. You can follow her on Twitter or connect with her on LinkedIn.

Ed. note: Litigation finance is transforming the fields of both law and finance. To help our readers gain a better understanding of what litigation finance entails, we’ve partnered with Lake Whillans to present a new series so you can better understand how litigation funding works, its pros and cons, and its past, present, and future.

In its early days (not so long ago), litigation finance entailed a straightforward proposition.  A claimholder with a meritorious claim, but without the resources to litigate it, would seek funding from a litigation finance provider.  The funder would conduct due diligence on the claim and negotiate investment terms.  If the claim succeeded, the funder would recoup its principal, plus a return; if it failed, the claimholder would walk away with no liability.  Funder and claimholder had no particular expectation of any longer-term partnership.

This type of one-off, single-case funding is still going strong today.  But the field of litigation finance has expanded considerably, and funding now comes in a variety of flavors.  A growing proportion of funding deals involve neither a single case nor a poorly-resourced claimholder.  Today, entities seeking funding are often more concerned with managing risk than with acquiring sufficient resources to litigate.

This article will explore three growth areas in the current funding landscape: (1) deals involving funding for larger corporations, (2) law firm portfolio funding, and (3) acquisition of claims by litigation funders.  Lake Whillans has extensive experience investing in each of these structures.

Large corporate deals

At first glance, it may not be obvious why a well-resourced corporation would be interested in litigation funding.  Can’t a big company finance its own litigation?  Well, the fact that it likely could doesn’t mean that it should.  For any corporation, regardless of the strength of its balance sheet, there is an opportunity cost to paying litigation expenses: resources that could be spent on building the company’s core business are instead diverted to litigation.  Optimal resource allocation is particularly critical in this time of economic uncertainty, when most executives — including general counsel — are under pressure to trim their budgets, mitigate risk, and maximize resources.

Even in the most stable economy, large corporations find value in litigation finance as a risk management tool.  Every lawsuit, no matter how meritorious the underlying claim, is costly and to some degree unpredictable both in terms of outcome and timing.  Even if the decision to pursue the claim was entirely rational, skeptical corporate stakeholders may not see it that way in the wake of an unforeseen loss.  Litigation finance removes this risk because funding is structured as a non-recourse investment: if the claim fails unexpectedly, the company owes nothing.

Another risk/reward analysis that favors using litigation funding by corporations of any size arises from the accounting treatment given to litigation expenses and recoveries.  Expenses incurred in litigation directly reduce the corporation’s profits because they must be reported on the company’s statement of profits and losses.  The corporation cannot offset this profit hit by recognizing the expected future value of a favorable outcome.  Realizing the return on litigation expenses may take years.  And even when the company achieves a litigation victory, the value of the recovery must be reported as an “extraordinary event” that doesn’t improve the market’s view of its profitability or valuation.  By externally funding its litigation expenses, the company can improve profitability and ultimately its valuation in two ways: (i) remove the legal expense drain on its profits,which will directly improve its balance sheet and (ii) put capital that otherwise might have been used for legal costs towards uses that drive performance and revenue. (And in some cases, a litigation finance transaction may even increase the company’s available capital with an up-front monetization).

Litigation finance deals involving larger corporations often depart from the familiar single-case model.  A large company may have several current or potential litigation matters proceeding at any given time; often the company will be on the claimant side in some matters and the defense side in others.  Such a corporation has the option to negotiate funding for a portfolio of cases all at once.  This enables it to obtain funding at a lower cost than in a single-case scenario because a portfolio of distinct cases carries less risk for the funder than a single-case investment.  A portfolio funding agreement can also include infusing the company with capital that can be used to support defense-side cases, thereby reducing the legal department’s spending across the full range of cases involving the company.

Law firm portfolio funding

A growing number of funding agreements do not directly involve claimholders at all.  Rather, the funder enters into an agreement with a law firm that represents claimholders on contingency.  In a law firm portfolio deal, the funder provides capital to the firm in exchange for a portion of the future contingent fees that the firm will eventually recoup from the portfolio of cases.  The capital is generally used to support the cases in the portfolio and bridge the gap for the firm until the cases are monetized.  Contingent fee cases can be lucrative, but cash flow from these matters is often choppy and unpredictable both in terms of amount and timing.  As in standard claimholder funding, a law firm portfolio funding deal is a non-recourse investment; the funders’ recourse is limited to the fees achieved in the agreed-to portfolio.

Portfolio funding is especially useful for law firms that are expanding their volume of contingent fee cases, particularly where resolution of those cases is likely to take years.  A funding arrangement can support a case acquisition strategy where more funding is released as the firm acquires clients and files cases.  A portfolio funding agreement gives the firm the security of consistent, predictable short-run cash flow, in exchange for a somewhat reduced upside on its contingent fees.

Claim acquisition

In the traditional funding model, the funded claimholder continues to litigate its claim, and the funder acquires a minority stake in the anticipated proceeds from the claim.  However, in certain situations, it can be more sensible for the claimholder to sell its entire interest in the claim to a litigation funder.  This is especially attractive in the bankruptcy context: a bankruptcy estate is permitted to sell litigation claims in the same way that other assets are sold in the bankruptcy process.  It may be advantageous for the bankrupt entity (and its creditors) to monetize such claims immediately, rather than incurring the uncertainty and delay of a years-long litigation process.  A company’s monetizable claims may include both unique claims and claims arising as members of a class action.

A similar dynamic may prevail for a claimholder that, while not bankrupt, is experiencing severely constrained cash flow.  With a growing number of companies now finding themselves in this situation due to the economic effects of the pandemic, claim acquisition is becoming increasingly common.

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Litigation finance continues to evolve and be used in unique and complex ways.  Lake Whillans is well-positioned to discuss the individual circumstances of a company or law firm, drawing on its years of experience structuring similar deals.  The best way to determine if your company or firm could benefit from litigation finance is to contact us.

Some people just don’t get it. Whatever your liberal bona fides, when you start suing over so-called reverse discrimination, well, I certainly think your perspective on race relations is suspect.

Anyway, I bet faithful Above the Law readers remember law professor Paul Zwier. Zwier’s the Emory Law prof who used the n-word in class…. no, not that one, the other one.  Anyway, way back in 2018, in the very first week of classes, Zwier was teaching his torts class about offensive battery. Though the case under discussion does not use the actual n-word, Zwier, however, used that word when he called on a student — a Black woman to boot — to ask about the fact pattern in the case. In explaining the situation, Zwier initially said that while he doesn’t specifically recall using the racial slur, he may have gotten the facts of the case confused with the facts of a different case, next on the syllabus where the slur was used. He later justified the use of the word (from the report of the Emory Office of Equity and Inclusion): “in using the n-word, [Zwier] intended to suggest that the court record was sanitized and that the plaintiff had actually been called the inflammatory epithet.”

Later that semester, the school began an investigation into allegations Zwier used the n-word. Again. This second incident was not in class, but in office hours when he told a student he didn’t mean to disparage anyone, and said he’d been called an n-word lover in the past. Except, you know, he didn’t say “n-word” he actually used the term. Zwier was put on administrative leave and barred from returning to campus.

A Faculty Hearing Committee was convened to determine what should happen to Zwier. The professor launched a full-out defense of his behavior, calling in the American Association of University Professors and the Foundation for Individual Rights in Education making the case for his use of the n-word as academic freedom. Ultimately, Zwier kept his job, was allowed to return to campus and was barred from teaching mandatory 1L classes until the fall of 2021.

But that punishment, which I described at the time as “a wrist, being lightly tapped,” is now being characterized by Zwier as discriminatory. Last week, Zwier filed a lawsuit against Emory, as well as former dean James Hughes, alleging discrimination, retaliation, and libel. He argues that Black colleagues are able to use the n-word without consequences in and out of the classroom, therefore his experience must be discriminatory because he is white.

I’ll pause while you roll your eyes.

As reported by Law.com, the lawsuit characterizes the disciplinary process as problematic:

According to the suit, after Zwier was suspended, he complained to the chairman of the university’s Faculty Hearing Committee that the disciplinary action imposed was discriminatory. As a result, the suit claims that the law school’s then-interim dean, James Hughes, recommended the committee fire Zwier and strip him of his tenure.

According to the suit, after an October 2019 private hearing that lasted two days, the faculty committee issued a decision finding that neither the interim dean nor Emory had demonstrated adequate cause to revoke Zwier’s tenure and directed that Zwier be reinstated.

But according to the suit, the committee withheld its determination for several months “because of unfounded fears pressed upon it by the law school that a favorable decision in Zwier’s favor would cause a wave of antipathy and negative publicity for the law school and Emory.”

Zwier also takes issue with letters Hughes wrote to the Emory community that paint Zwier’s use of the n-word as a result of white supremacy.

A Emory spokesperson said the school “disagrees with the characterization of what occurred, and will vigorously defend itself against this lawsuit.”

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Kathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

This past weekend, Donald Trump visited the Trump National Golf Club in Bedminster, New Jersey, marking his 285th documented visit to a golf course during his term as president. The White House stays fairly quiet about what Trump’s actually doing at all these trips to the golf course, given how much he excoriated his predecessor for playing golf (Obama played an estimated 333 rounds of golf over the eight years of his term, compared to Trump’s 285 often multiday visits to various golf courses during his first three-and-a-half years).

We do know that Trump spent some of his time at his New Jersey club speaking to his golf cronies, all of whom reportedly paid a six-figure initiation fee for the right to be there. While social distancing and other COVID-19 preventative measures did not seem to be prioritized among the crowd of more than 100 gathered at the golf club on Friday, when reporters asked whether any of the assembled Trump fans had been tested for coronavirus before coming to see Trump speak, no one in the crowd responded.

Every litigator knows that when a witness is nonresponsive to the question, it’s almost as good as a direct admission. Given the rigorous coronavirus testing that everyone even remotely close to Trump’s inner circle is consistently subjected to, it would be a deviation from protocol if the White House hadn’t required some kind of testing among attendees in advance of the relatively intimate event. People from Trump’s national security advisor down to a cafeteria worker at two eateries frequented by West Wing staffers have tested positive for COVID-19, as a result of the frequent tests performed on everyone the president might have contact with, and on the people they might have contact with.

But, while Trump sure seems to think it is a good idea for those around him to get repeatedly tested for coronavirus, he sure doesn’t seem to think it is a good idea for anyone around you to get tested. The White House sought to block billions of dollars in funding for COVID-19 testing and contact tracing in any new economic stimulus bill, and Trump himself has repeatedly claimed that the United States is doing too much testing.

“I said to my people, ‘Slow the testing down please,’” Trump said at a campaign rally in June. He later said that this comment was “semi-tongue in cheek,” which it wasn’t. Trump went on to say, at pretty much every chance he’s had since June, that we are doing too much testing, and we wouldn’t have so many coronavirus cases if we weren’t doing so much testing.

Most recently, Trump has downplayed the seriousness of children getting sick from the virus, and urged schools to reopen for in-person instruction in the fall. This is despite there being no comprehensive structure in place for testing or contact tracing in schools, despite a study that found nearly 100,000 U.S. children were infected with coronavirus in just the last two weeks of July, and despite evidence that children carry high amounts of the virus once infected and could serve as significant spreaders of the disease when placed within the confines of a classroom environment.

A few weeks ago, my girlfriend called the local clinic to ask about getting a coronavirus test. She was told it would take a week to schedule the appointment for the test, and then another week after that to get her results. The CDC says you can be around others 10 days after first having symptoms, as long as symptoms have abated, or 10 days after a positive COVID-19 test if you have no symptoms. Meaning a test result that takes 14 days to get is essentially useless. These sorts of testing delays seem to be fairly widespread.

Trump keeps saying that we don’t need to be testing as much as we are and that more and better coronavirus testing is not necessary to proceed with reopening schools and businesses. But actions speak louder than words. Trump’s political cronies get quickly and constantly tested. For the rest of us though, Trump thinks a test result two weeks out (when it’s too late to be of much use to us or our loved ones), or maybe even no test at all, is good enough.

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Jonathan Wolf is a litigation associate at a midsize, full-service Minnesota firm. He also teaches as an adjunct writing professor at Mitchell Hamline School of Law, has written for a wide variety of publications, and makes it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at jon_wolf@hotmail.com.