The legal market is changing rapidly. There is opportunity out there for those firms who are positioned to take advantage, but, for many, the investment required to rebuild after several years of austerity is a big ask. Both in the UK and in the US, there is evidence that law firms have paid almost all of their attention to profitability and PEP rather than to cash flow and balance sheet strength. There have been a number of well publicised insolvencies and significant attrition amongst the very smallest firms such that the number of firms in existence at the end of 2013 is less than it has been for several years – but there have not been the mass failures which were then predicted.
The Solicitors Regulation Authority SRA has been expressing concerns about the issue of ‘financial stability’ for some time. In mid-2013 the SRA introduced a RAG (Red, Amber, Green) rating system to assess the financial stability of firms and indicated that as many as 20 per cent of the top 200 firms could be showing evidence of financial instability.
Unique selling points:
- This report has been completely updated to reflect the changes in the legal market and the financial issues that law firms are facing.
- The report contains practical strategies for improving cash flow, including dedicated chapters on improving cash flow through: partners and communication; information and performance management; and techniques and processes.
- The report outlines how to establish cash and lock up profiles.
- It will help law firms to review current financial performance and identify improvement opportunities.
- It sets out an approach for assessing funding requirements and for managing outflows.
- It contains tables throughout to provide examples of performance tracking and financial information.
- It provides advice on managing bank relationships and includes useful insight into how banks view law firms with contributions from individuals at NatWest and Lloyds Bank.
- The report contains a number of case studies which show a range of approaches to the issues confronted and a new section of case studies which highlight what can go wrong.
Chapter 1: The context for cash flow management in law firms
Chapter 2: Key considerations in cash flow management
Chapter 3: Establishing appropriate cash and lockup profiles for teams and departments
Chapter 4: Reviewing current performance and identifying improvement opportunities
Chapter 5: Assessing funding requirements over different time periods
Chapter 6: Cyclical patterns and predictability of outcomes
Chapter 7: Managing outflows – Suppliers, disbursements, and periodic payments
Chapter 8: Practical strategies for improving cash flow – Partners and communication
Chapter 9: Practical strategies – Clients and staff
Chapter 10: Practical strategies – Information and performance management
Chapter 11: Practical strategies – Technique and process
Chapter 12: Funding structures – Matching funding to asset types
Chapter 13: Work in progress – Hero or villain?
Chapter 14: Looking to the future – Plans, forecasts, and resources
Chapter 15: Funding – Managing banking relationshipsCheck our Executive Summary and full table of contents here