Tag Archive: Cash Flow – Finances

Law firm virtual banking

During a discussion amongst law firm chief financial officers that I moderated for the American Bar Association, one of the best practices mentioned was the use of check scanners. Coincidentally, not more than 7 weeks after that event, my bank installed a check scanner into my office.

It is a remarkable instrument that further reduces the bank float from your clients and gives you almost immediate access to "good funds." No more waiting for the "check to clear" or other excuse for delaying your use of funds. (more…)

View page

Lawyers Need Work

Can lawyers find jobs in today’s market?  The Wall Street Journal (page 1, Sept. 24, 2007) suggests that it’s not so easy today. That’s consistent with my earlier blog post that lawyers are “between a rock and a hard place.”

It is also consistent with my assertion that law is a business, or framed in the context of my registered trademark, The Business of Law® is governed by the principles of economics. Yes, law is a profession, but as Tower Snow, once managing partner of the former Brobeck, Phleger & Harrison law firm in San Francisco said, “Law is subject to the same laws of economics as any other business…” (more…)

View page

Associate lawyer compensation: Have we yet hit the vomit point?

Many years ago, a good friend of mine said that the problem with aging is that we’re mired in history rather than focusing our perspective on today.

Thus, today’s article in The American Lawyer by David Brown may shock those of us who are over the age of 30!

He talks about the “paycheck report,” a survey of “mid-level” associate compensation. Associates’ paychecks exceed $200,000 per year and, in some instances, reach $350,000!

View page

Legal fees rising to vomit point

According to NALP, 14% of law school graduates earn $135,000 (now $160,000) starting compensation. 42% earn $55,000 or less.

This is consistent with statistics that show experienced lawyers earning less than the public believes lawyers earn: 50% at less than $100,000 and 25% at less than $50,000!

Thus, lawyers are "between a rock and a hard place!"  The public believes that figures reported in the Wall Street Journal of August 22nd to the effect that lawyers are now charging $1,000 per hour is the norm or standard. Yet, only a few lawyers are commanding that fee level, and then only in the "bet the company" kind of cases. Commoditized work cannot command that rate. Even in extraordinary matters, that rate approaches what one New York law firm partner said is clients’ "vomit point."

View page

Law firms impacted by current credit crunch

I was asked if the current credit crunch/crisis is affecting law firms.

My response was that the credit crunch, I think, is somewhat artificial … and folks that are being hurt are ones that extended themselves too far in the first place without a safety net …. Or ones whose business just evaporated without warning (although there usually is some kind of warning if observant).

Law firms with a line of credit will …. (more…)

View page

Financial planning for law firms

At the ABA conference in San Francisco last week, I had the pleasure to moderate an outstanding panel of experts about the financial management of their firms and their “best practices.”  The panel consisted of Bob Hirshon, CEO of Stoel Rives in Portland, OR (and former ABA president); Marcia Wasserman, COO of Nossaman Guthner Knox & Elliott; Larry Kleinberg, CFO of Munger Tolles & Olson; and Ron Yano, CFO of Loeb & Loeb.

Reid Trautz  mentioned his observations from our panel:

“From a terrific panel of firm financial managers moderated by Ed Poll, comes these interesting ideas:

  • Firms are taking advantage of the new check scanners offered by some banks to more quickly and securely deposit client checks.
  • More firms are closing their billing on the 25th day of each month to get their bills into the “first of the month” billing cycle of clients–both businesses and individuals.
  • Law firms are putting more pressure on partners to collect bills sooner (nothing new there!), but they are using automated e-mail and other added technology features now available in many time & billing programs to keep the pressure on, well, automatically!
  • Larger firms are doing more to ensure that each new client matter has a signed representation letter or agreement before starting any work. This is a smart practice, and is just one area where large firms tend to lag behind smaller firms.”

View page

Law firm goes public

No longer is there a debate about whether a law firm is in business. It is clear that the answer is yes!

In Australia, a class action law firm has filed an IPO. This is the first for a law firm following new legislation in Australia that allows firms to raise funds on the public markets and allows non-lawyers to invest. A similar bill is under consideration in the United Kingdom.

While safeguards must be in place to prevent non-lawyers from practicing law, why shouldn’t they be allowed to invest in law firms just as they do in other professional service or manufacturing entities? As the proverb suggests, "these are interesting times."

View page