South Carolina Lawyer
Vol. 13, No. 5, Pg. 38.
Catch (these) 22
38Catch (these) 22By Edward PollTwo tasks that are fundamental for law firm executive director/administrator success: managing people and managing money. Managing people fosters harmony and efficiency within the organization.
Managing money keeps the office operating and keeps the people paid.
Cash flow (or lack thereof) in most law firms acts as a barometer. And, in competitive times, cash-flow management is not only an art, it is an essential for the very survival of the firm. A cash-flow problem is, in many cases, only the result in a long chain of events that administrators can prevent with appropriate foresight.
What follows are some business practices that administrators - and the lawyers they work for - can adopt to stay out of serious cash-flow trouble.
40 1. Write a business plan.
In order to delineate your goals, you must have a business plan. If you already have a plan, review and update it. This plan is an important step to your future growth. The business plan sets the path for attaining firm objectives. Think of it this way: You want to travel by car from Los Angeles to Denver. You look at the map and see many alternative routes. The map is your guide, and it will help you find the most direct and efficient path. That is what a business plan does for your firm.
2. Develop a cash-flow statement.
The cash-flow statement can have many names: a cash-flow budget, a statement of cash or a forecast. Whatever the moniker, this statement is important for review on at least a weekly, if not daily, basis. It is the single most important tool for the success of any business activity.
3. Reduce variable expenses.
Many office expense items cannot be controlled or reduced once set in place. However, some expenses, such asrent, can be modified given the right circumstances. It is possible to negotiate a reduction of the rent schedule with your landlord.
Other savings items include library expenditures (you can share a library or use your county law library), payroll (to a more limited extent if a sole practitioner), and dues and subscriptions. Savings in these three areas alone can be substantial in many cases. Further, if you know when to anticipate low- and high-cash-flow periods, you can postpone, advance or finance equipment purchases.
4. Increase your hourly rate.
If your firm increases its billing rate a little at a time, you won't shock your clients with a big adjustment. You can raise rates until you are at least at the "market" level - the rate your competitors charge.
5. Consider flat-fee billing as opposed to hourly billing.
With flat-fee billing, you can deposit the entire fee into the general account upon receipt.
6. Change your billing cycle.
Bill one-fourth of the alphabet each week. In this manner, you will receive money from clients on a regular basis - probably weekly, rather than once per month.
7. Shorten your billing cycle.
If you remain on a monthly billing cycle, be sure your clients receive statements on or before the first day of the following month. To do this, your billing cyde must end on or about...