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Finance Articles

2010

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The Economics of Partnership for New and Aspiring Partners

Industry veterans discuss the strategies driving partner compensation while highlighting the need for associates and partners alike to understand what is expected of them to increase earning potential and status in their firms.

Are You Prepared for Your �Second Season�?

The time leading up to and beyond the closing of a practice can be called the lawyer�s �second season.� Preparing for your �second season� requires a clear personal retirement plan, that is separate and distinct from a practice estate plan.

The Billable Hour Zombie: Why You Need to Act Now to Avoid an Attack on Your Business

Various factors seriously threaten the traditional hourly billing system�but some easy-to-implement strategies will help you realign.

Make Time Work For You: Handling Cases on a Fixed-Fee Basis

There are multiple reasons why handling cases on a fixed-fee basis is better for both our clients and ourselves.

Fixed-Fee Engagements in Litigation Cases: Why and How

Making the argument for why fixed fees are better than hourly billing, along with practical tips for how to make the switch.

Client-Directed Billing: Shifts in Who Defines the Value of Legal Services

More and more, clients are directing how the value of the legal services they use is determined and many of them are looking at alternatives to hourly billing.

From Practice to Business: Flat-Fee Relationship Engagements for Transactional Lawyers

Getting beyond the hourly billing trap requires admitting there�s a better way�and then acting to implement it.

Making Alternative Fee Arrangements Work in Corporate Litigation

Why and how to employ an alternative billing philosophy in which lawyer and client share risk based on the case�s outcome.

�Can We Talk?� Ensuring Consensus Through Communication

Unless there is candid partner communication and buy-in for the firm�s business plan, the firm�s continued existence could be in doubt.

Making Staff Integral to Your Mission: A Successful Firm Is an All-Inclusive Firm

Involving everyone in the office so they feel a sense of inclusiveness will produce more harmony and productivity and therefore increase the firm�s profitability.

Managing the Risks of Engaging, or Not, in Legal Process Outsourcing

A look at the potential pitfalls in approaches when considering whether to reject or embrace LPO options.

Outsourcing Legal Support Services

Outsourcing can contribute to work and cost efficiencies, if used correctly as a transparent resource. Here is an overview of the economics and ethics of this HR innovation.

Competent Lawyers Are Business Competent

Ideas and resources to help lawyers enhance their business sense, with the goal of improving their management, marketing and finance skills and beyond.

2009

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What Do Your Bills Say About Your Value?

Lawyers� billings are client communication tools. The perfect bill is one that clearly and directly conveys to clients how you have provided a benefit to them.

The Double-Edged Sword of Suing a Client

When all other collection efforts fail, suing a client for nonpayment of your fees may be an unpalatable but necessary step. You must, though, tread carefully and look closely at all the corresponding dangers.

How to Make Alternative Billing Part of Your Marketing Strategy

Satisfied clients are clients who will bring you more work. The best way to satisfy clients with alternative billing is to make it an interactive process.

Do You Think You Can Buy Client Loyalty?

A delinquent client account spells more than less cash flow for your practice. It can also be a sign that the relationship is in trouble.

Selling a Properly Valued Practice Can Turn Fear Into Opportunity

In the wake of the economic downturn, some lawyers are finding that selling their practice is a viable option for replacing lost nest eggs.

The Key to Success: Preparing a Business Plan and a Budget

Before you open the doors to your practice, creating a solid business plan and budget are critical steps to helping ensure your firm will be successful.

Both Sides Now: Mirror-Image Don�ts and Dos for a Businesslike Law Firm

Every business needs to adopt and follow a business model to be successful � law firms are no different.

Capital Ideas � Raising Money During a Credit Crunch

Money is essential to keep a law firm running, and Ed Poll explains some tips for creating capital even during tough economic conditions.

How Much Money Do You Need to Start a Law Firm

It's a question many of us ask, but few of us can answer. Erik Mazzone offers practical advice for attorneys ready to set out on their own.

Legal Fees: How to Address the Client Pressure to Lower Fees

In a recession, all service industries are under pressure to lower fees. Here are recommendations to help you retain both clients and income.

Think Before You Leap into De-Equitization

Removing partners from equity status may seem like a good way to improve finances, but there are many things to take into consideration before taking such a step.

Will the Recession Kill the Billable Hour?

A recent New York Times article, among others, has called the billable hour into question. What follows is a discussion of how lawyers can value and bill their work accurately and appropriately to provide value to their clients and a reasonable fee structure to ensure profitability.

2008

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Cash and Carry: Cash Management Carries Your Firm Through Tough Times

Ed Poll offers wise counsel about how to insure that your firm will operate successfully in a tight credit market and ways to remain solvent in a troubled economic climate.

The New RULES of Law Firm Profitability: Follow the Data within Your Financial Management System towards Greater Success

Robert J. Arndt developed a system called the RULES to help firms evaluate profitability. They allow you to analyze multiple data points rather than look at one piece of the puzzle, which can be misleading. In this article, James S. Schnieders explains how the RULES can help your firm.

Give Credit Where It’s Due – By Accepting Credit Cards in Payment

Credit card payments are convenient for you and your client. Learn the rules to developing a system for accepting credit so your firm can benefit.

Two Techniques to Dramatically Improve a Law Firm’s Net Profit

Write-downs and ineffective collections practices hurt many law firms’ bottom lines. Understanding these processes and how they work will help your firm increase its net profit.

2007

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Managing People, Process & Strategy for Increased Profitability: How Human Resource Departments Can Leverage Technology to Become a Strategic Profit Center

Studies have shown that companies using software to efficiently manage their human capital components are seeing a greater profit and competitive stance. By automating routine HR tasks, you can focus on developing your workforce and building your strategic direction. What is the key component of your firm�s ongoing success? Your HR department.
Best of ABA TECHSHOW

Capturing More Time... And Keeping Your Clients Happy While Doing It

Accurate time tracking is important not just for billable time, but for all working time. It seems like a daunting task, but once you set realistic goals and make the process a habit, it could provide significant benefits for you, your firm and your clients. Use a pen and paper, a Blackberry or supporting software, but whatever your method, start by reading these useful tips for tracking your time.

2006

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The Dynamics of Billing, Profits and Compensation

Many law firm compensation models are designed for individual gains rather than long-term growth and sustainability. Yet if a firm wants to promote the kind of cooperative effort that increases billings and profitability, it must change to a more cooperative compensation model.

Financial Metrics for Law Firms

If you want to measure your team�s effectiveness and efficiency you need to understand and apply the basics of financial metrics. Read more for a short summary on the process.

Beyond Today's Income � What Constitutes a Firm's Future Earnings Potential?

Are your long-term investment projects focusing on building the firm's future earning potential? Will your firm be able to attract the best and the brightest by demonstrating how safe their investment of sweat equity will be in the future?

The Art of Time Entries

The collection process is one that is proactive. Learn more about the practical steps you should take to ensure clients keep their promises to pay their bills.

The Art of Time Entries

Imagine creating bills clients rush to pay. In this article you will learn how to showcase your work, accomplishments and professionalism through carefully crafted time entries. With a better understanding of what is being billed, your clients may just reward this behavior with faster payment and increased loyalty.

Solos Should Create a Partnership — With Their Banker

Most soloists know they can't go it alone. A successful practice requires teamwork. Yet many don't list their banker as part of their team. This could be a costly mistake.

Long Hours Limit Partner Income

Simply piling up billable hours does not create more income. In fact, it reduces it for a few simple reasons.

Flat Fee Nation

With the emergence of a flat fee society and a Wal-Mart approach to profits firms need to learn how to leverage technology and workflow to beat the billing squeeze.

Teaching Associates the Business of Law

Understanding the business side of practicing law will do more than help you manage a practice� it will also improve the results of your marketing efforts.

Implement Appropriate Internal Controls

Internal controls for financial transactions reduce the opportunities for mistakes or misconduct. Use this checklist to ensure your office is doing all that it can and should to avoid potential problems.

Partnerships and Access to Capital

Can you create an environment where partners have access to capital yet there is true liability protection?

Not If, But When

Disaster is inevitable, but law firms can recover through effective planning.

Pricing Legal Services

Billing for legal services is an art, whereas pricing it more a science. Is it time for your firm to evaluate its pricing policies to better respond to the needs of the your clients and marketplace conditions?

2005

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London Calling? Beware the Cultural Small Print

A lot of nonsense is talked about the "culture" of a firm. Most of it misses the point. Get it right and it is the glue that binds people together. Get culture wrong and the consequences are disastrous.

Remember, Technology is a Supporting Player, Not the Star

When looking for that competitive edge, many firms turn to the latest technology. Yet technology is not the panacea for your firm's marketing woes. Author Anne Parys offers important considerations when contemplating the purchase of new technology.

Owner or Employee? Financial Literacy and Openness Build a Partner's Perspective

Early in 2005 the U.S. Equal Employment Opportunity Commission made headlines by filing a class action suit against Sidley Austin Brown & Wood - the first of its kind against a law firm. The suit alleged that the firm had maintained an illegal "age-based retirement policy" since at least 1978 and had arbitrarily forced out 32 partners in 1999.

"So, why are you here?" Structuring an Effective Compensation Plan

Compensation and incentives are only effective if the recipient understands and values the cause and effect. Structuring a fair and effective plan, however, isn't easy. Read more to find out what your firm should consider when restructuring its compensation strategy.

Develop a Revenue Mind-set

Before you can make the correct business decisions when it comes to revenue for your firm, first you must understand the value of your current cost structure. This excerpt from Aurthur Greene's latest book, The Lawyer's Guide to Increasing Revenue, will help steer you in the right direction.

Steer Clear of Common Pitfalls in Leasing Decisions

Losing money in your firm's real estate is avoidable if you know the right steps to take during the leasing process. Nancy Packer, President and COO of U.S. Equities Realty guides you in the right direction.

2004

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LPT Interview with Rick Simses

Ed Poll finishes his series on alternative billing by interviewing attorney Rick Simses.

LPT Interview with Jeff Carr

Ed Poll interviews Jeff Carr on the profitability and practicality of alternative billing practices.

Yesterday’s Strategies Rarely Answer Tomorrow’s Problems

If consumers can find what they need to know on the Internet, will they still need lawyers? The answer, of course, is yes, but in what capacity? Read more about how firms are changing to meet the evolving needs of their clients.

Making Money: Your Practical Guide to Profit™ Part I

Do you have a profitable law practice? Do you know how to measure success? Ed Poll’s “measurement sticks” will guide you as you examine your own firm current management practices.

Alternative Resources for Alternative Billing

Dennis Kennedy provides a second round of valuable resources on Alternative Billing.

Retiring Unfunded Obligations

Unfunded Obligations (UO) are a necessary enticement and a liability for many law firms. In some cases, UOs have caused firms to dissolve rather than carry this burden. What should your firm do if it is faced with UOs? Ward Bower has some ideas.

Alternative Billing Requires Alternative Resources

Dennis Kennedy and Tom Mighell team up to provide you with valuable resources on Alternative Billing.

Alternative Billing for the “Main Street Lawyer”

Are you a "Main Street Lawyer" with a fee structure based on large firm billing practices? Do you work with unsophisticated clients—clients who are inexperienced in dealing with lawyers? Your clients may appreciate the simplicity and clarity of an alternative fee arrangement.

LPT Interview With Hugh Gottschalk

Ed Poll discusses alternative fee arrangements, or, as one attorney describes them, alternative pricing structure, with seasoned attorney Hugh Gottschalk.

LPT Interview With Ralph Palumbo

Attorney Ralph Palumbo examines how to align the goals and incentives of the lawyer with those of the client through alternative billing structures.

Alternative Billing and Law Partnering: A Three-Act Play

This Three-Act Play offers an informative yet humorous glimpse at how one organization examines the pros and cons of creating an alternative billing structure.

Why Is Budgeting The Hardest Part of Litigation?

The business side of managing a firm is not taught in law schools. So it's not surprising that for many firms, budgeting is more an afterthought than a significant part of planning. How can you change this? Patrick Lamb has some ideas.

Alternative Billing Practices Beyond the Billable Hour

Basing income solely on a minute-by-minute accounting of your day is tantamount to being an hourly employee, albeit one with a significant hourly rate. This article examines how rethinking your current billing practices and offering clients an alternative arrangement could bring more life to your practice, and more life to your life.

After the Party: What To Do When Your Major Client Leaves

It is the topic no one wants to talk about, but what would your firm do if it lost one of their major clients?

Retirement Basics for Law Firms

2004 All organizations, including law firms, must deal with the issue of retirement. James Cotterman of Altman Weil provides a primer on the topic and related issues.

Retirement As A New Career/Life Development Stage

Retirement is a journey, not a destination. Stephen Gallagher explains how to develop an Exit or Retirement Plan for senior attorneys, key partners, and shareholders.

Can Your Firm Afford You? How Profitability Helps Associates Keep Their Jobs

It takes an average of three to five years for a new lawyer to break-even on their firm's investment in them. See how you contribute to the net profits of your firm by knowing your own personal financial formula.

The Real Economics of Your Practice

Looking to increase profits at your firm for the next year? Don't rely on faulty assumptions such as past performance when projecting future budgets. The key is realization, not increasing the volume of hours billed.

A Rose By Any Other Name: Characteristics of an Efficient Practice

Of the many ways to make a law office efficient, managing your finances is one of the most important. Here is some advice on how to achieve financial efficiency.

Prepping for the Recovery

With the economy picking up, it is time to think about how you are going to take advantage of it. Being prepared will prove to be your best offense this year, ultimately gaining more revenue for your firm.

Ten Keys to Success in a Small Law Practice

Ward Bower examines today's solo and small firm competitive environment and gives some tips on how to be successful.

Turnarounds, What It Takes To Make It

There are several elements that have been consistently present in successful turnarounds. Learn what it takes to make it.

What Do Law Firms Sell? What Do Clients Buy?

Competition among law firms is intensifying with the reality that companies are reducing the number of services of fewer law firms. Steven Lauer discusses how you can respond to this successfully.

2003

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What Women Need to Know About Health and Benefit Plans

More and more American workers rely upon employer-provided retirement, health, disability and life insurance plans to provide protection for themselves and their families and to enhance their total compensation packages. What do you need to know to be savvy? Here's some key facts that all women need to know about employee benefit plans.

The Billable Hour: Putting a Wedge Between Client and Counsel

Most corporate law departments are charged with managing the legal exposure of the company. As part of that task, legal departments assure that the cost of the legal service is proportional to the overall corporate objective for which the legal service is deployed.

Getting The Capital Structure Right

"How much capital do we need to have to be properly capitalized?" is a question I am often asked. In this time of economic uncertainty, it is an even more appropriate question.

Owners' Capital: The Questions Never Stop

New partners and old partners alike often have questions about how capital accounts work in a law firm setting. John summarizes some of the key issues for those struggling with how to establish or administer these accounts for their partners or shareholders.

Lawyers & Bank Loans: Understanding the Four C's

Like any other business, a successful law practice requires cash to operate. Sometimes, however, cash is in short supply. That's where bank loans come in.

Troubled or Thriving Business?

How do you tell if your firm is financially doing great? There are some obvious indicators, but do you know which ones can also be indicators that you are in financial trouble? Joan explains what to look for.

Build a Better Fee Agreement

Are you sure your current fee agreements are covering all the points you need? Check out his comprehensive list to double check.

How am I doing? Cash flow planning/statements

Are your current fee agreements detailing all your services and billing practices? These tips will help you reevaluate your current agreements and build better ones.

Cash Versus Accrual Financial Reporting

I've never encountered a law firm which did not operate on a cash basis. That means that your revenues are not earned from a tax perspective until they arrive in the door. It doesn't matter if you sent an invoice one day or one year ago. You have no taxable income to declare until you receive payment.

Responsible Leadership / Financial Management Savvy

Merriam Webster's interpretation of 'savvy' is 'practical know-how'. To have practical know-how in financial management is a crucial component of responsible leadership. In today's competitive environment being a responsible leader in a law firm takes even more than practical know-how in financial management.
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