Your law firm is Your Business.
As a business, a law firm is really no different than most other closely held companies. You sell your prospective services, you perform your service and your firm is paid. Your business takes in revenue, meets its expenses and hopefully has something left over for the owners of the business to enjoy.
Over the years, your firm’s financial health has probably improved, but do you know why? The better question is will that trend continue? Or, are you finding that your firm’s financial health is in jeopardy? Are the people you’ve charged with expense management, billing, accounting and financial management doing an efficient and productive job to ensure that your law firm, your business, will maintain its financial health?
At Affinity Consulting Group, we’ve developed a unique and special offering to review your firm’s financial health. We call it the “Law Firm Financial Health Assessment.” And, it’s quite unique. The basic purpose of the assessment is threefold.
• First we confirm that procedures are in place to ensure optimum profits;
• Second is to verify compliance with your state or provincial bar to be sure you are in complete compliance with rules regulating attorney/lawyer trust accounts. Most of us have never had a trust account audit, but quite frankly, we should simply always be ready should an auditor surprise us one morning at the door to the firm;
• Third is to protect the lawyers whose names are on the door from risk of fraudulent practices. To that end, all businesses – whether a law firm or not – should conduct periodic review to protect their financial security.
Specifically, we concentrate on the following issues:
1. Revenue: Do you regularly concentrate your efforts on improving revenue and understand how each new case comes in the door and why? Are you working efficiently within the office to capture more revenue and are you able to forecast future income?
2. Expenses: Are you meeting expenses, or do you operate on a very thin margin? If the latter, we’ll make meaningful suggestions to help you improve your financial position.
3. Budgets and Financial Statements: A well-oiled business will always have a set of budgets and financial statements that permit monitoring and measurement of the firm. Budgets should forecast and financial statements should report and compare actual numbers to budgeted numbers. If you’re not meeting your budgetary goals, you should understand why so an informed decision can be made to adjust your behavior if necessary.
4. Trust Accounting: Are you operating in complete compliance with state bar rules or provincial law society rules? Many firms believe that they are, but surprisingly few actually follow the rules with precision. The last thing you need is a state bar auditor knocking at the door…and you know they’re going to come at the MOST inconvenient moment.
5. Transaction Consistency: Are you using your “back office” technology consistently and proficiently? If not, why not? Most law office billing and accounting software will not only keep you in compliance with state/provincial trust account rules, but will also have functions that help you do everything that we’re suggesting herein. If you’re not using your software well (or if you’re not using the right software…or if it’s old or the data is unreliable), we will give you constructive suggestions to repair that.
6. Separation of Duties/Oversight: “It is imperative to verify the separation of duties for all financial transactions, to provide internal controls that help prevent mistakes or fraudulent activity. For example, the person who writes a purchase order should be not be able to write a check to pay a supplier. In small companies, this can be challenging. However, finance staff can solicit personnel from other departments to support such checks and balances.” [Mulligan, Terry, Financial Audit Checklist, Small Business Chronical (2014).] You’re a busy lawyer and may not have the requisite time to dig into your financial software to review what your staff is doing. We will find the right balance between trusting your valued financial manager and maintain appropriate financial oversight as a business owner.
Plain and Clear Language: Our financial assessment culminates in a “plain English” report explaining our observations and detailing our constructive suggestions.
Your firm is your business. At Affinity Consulting Group, we make it our business to help you make sure that your business is improving your life, one financial efficiency at a time.
If you would like to learn more about how a Law Firm Financial Health Assessment will help your firm, join us on Friday, September 12, at 12:00 noon Eastern for a one hour webinar. Click HERE to register.