The success of a law firm is so often due to its management techniques. This book provides practical solutions rather than complex theory, identifying those operational areas where practical management strategies need to be applied. Many common practices are not cost effective. This common sense approach outlines the compliance and practice regulations of the various Law Societies state to state and across the Tasman, such as how to improve billings without hiring external management personnel or incurring new compliance costs.
Note: This book is an adaptation of Robert Mowbray’s Maximising the Profitability of Law Firms, 1997, Blackstone Press.
Table of Contents
The Starting Point: Solicitors’ Accounts
Annual financial statements/ Partners’ management information/ Measuring a firm’s financial strengths/ Draft Balance sheet and P&L account
The Keys to Profitability and Rules of Thumb
Earnings of equity partners/ Significance of accounting policies
Business Plans: Development, Involvement and Understanding
Reasons why firms go bust/ Preparing a master budget/ Fee income budget/ Professional staff costs budget/ Overheads budget/ What happens when the budgets have been set?
The Mechanics of Profitability: Gearing, Chargeable Hours, Charge-out Rates, Recovery and Margin
Gearing/ Chargeable hours/ Charge-out rates/ Recovery/ Margin/ Gearing, chargeable hours, charge-out rates, recovery and margin: who influences performance?/ Utilisation/ Industry averages for gearing/ Industry averages for chargeable hours/ Industry averages for charge-out rates/ Industry averages for recovery/ Margin
Working Capital Control
Problems of finite capital/ Importance of work in progress and average debt age/ Cost of “special relationships” when invoicing clients/ Calculating true cost of credit/ Role of management information in working capital control
Necessity for applying consistent investment criteria/ Methods of assessing capital expenditure appraisal/ Net present value/ Discounting future cash flows at different rates/ Asset control as key management tool
Benefits of disseminating financial data/ Right information for right people/ Timely production of data/ Training of information receivers/ Draft monthly information sheet
The Development of Personal and Management Skills
Introduction/ Significance of partners’ management skills/ What specific skills are needed?
The Role of Client Care in Profitability
Reviewing reality/ Internal communications/ Attending seminars/ Training partners and staff/ Pricing/ Marketing methods
Tax Planning: Keeping the Profits
Work-in-progress valuation/ Borrowing/ Service companies/ Retirement planning in solicitors’ partnerships/ Tax management/ Identification of non-professional or trading income/ Bank interest/ Directorships/ Rental income/ Capital gains tax/ Inheritance tax and estate duty