I have a significant proportion of my personal wealth invested in my practice’s disbursements. Why would I want to borrow from BridgePoint?
Firstly, you may wish to increase your personal financial flexibility by “repatriating” or freeing up money that is tied up in your practice. Secondly, to take advantage of the tax savings offered by utilizing debt rather than equity financing (which is essentially what your “self financed” disbursement investments are) as previously discussed. While you may not be paying an interest charge when you re-invest your fees from settled files back into your practice, you are forgoing the income you could earn by investing that money elsewhere (an opportunity cost) while being denied for tax purposes a deduction on the interest charges as you would by having utilized borrowed funds instead. As a result, while most lawyers don’t realize it, reinvested earnings are generally the most expensive form of financing available.
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