Global economic disruption, COVID-19, and social distancing has caused all businesses, law firms included, to quickly adapt to a new world. It’s more important than ever that your firm practices smart financial strategies and keeps that cash flow and capital running. So, what can your law firm do now to improve their finances? Here are 3 tips:
1. Realign your budget
In the blink of an eye times have changed. Take some time to rethink your budget for the rest of this year. Do you have any ability to cut back on unnecessary expenses? Do you need to rethink your office lease arrangements? Are there new opportunities for your firm to provide new marketing campaigns to tell a different story to clients who's lives have also been flipped upside down? Take some time to rebuild your budget with the number one focus on delivering value to your clients and helping solve their problems!
2. Track financial progressReviewing key financial management reports and analytics is vital – Successful firms monitor financial results on at least a weekly basis during the year, now more likely daily. Key reports include budget, profit/loss statement, balance sheet, billable hours report, billings report, cash receipts report, aged WIP report, aged A/R report, and billing and collections realization reports. Waiting for month-end reports prevents your team from acting quickly on critical information, make sure you have a platform like a legal business intelligence tool that allows you to send these items daily! Saul Ewing is one of our clients on Elite Enterprise and their CFO said it best: "We cant afford to wait that long to get the information to our firm and lawyers desktops."
3. Deliver personalized dashboards
When tracking your financial progress you need to make it easy and simple to use. By delivering the information most relevant to each individual person helps to ensure that each team member knows how they are contributing to the success the firm. When you perform a deeper analysis of the key performance indicators (KPI's) most relevant to each individual they get a better idea of the law firm’s finance picture. The personalized dashboards allow someone to see which matters, clients, etc are significantly more profitable than others. Or what items take up significantly more time compared to the profit they generate. These insights can help your firm to make better decisions. Pete Fuscaldo the Managing Partner at Leech Tishman shared “Managing billable hours in real time is even more critical now that we are all working remotely. Our practice group chairs use Attorney Analytics every day to help manage workloads of all the lawyers and staff.”
The financial goal of a law firm is to maximize profits and to maximize profits, you need a financial plan that will help you measure progress and signal any potential problems. What are the numbers telling you? What do your reports say? Can you access this information instantly? More than ever, law firms need to practice sound financial management to quickly identify problem areas and make necessary corrections to remain successful through this year and beyond!
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BigSquare is the leading provider of Business Intelligence for law firms and professional service organizations. We focus exclusively on law firm reporting, law firm BI, law firm profitability and law firm analytics.