The holidays are almost in full swing. Don’t get lost in the shuffle—now is the time to start prepping for the New Year and get your law firm’s financial plan in order.
Here are 3 steps to help you start the process.
Step 1: GET RID OF THE SHOEBOX
The old adage of the “shoebox” filing system sometimes is more of a reality than we’d like to admit. There’s no time like the present to get organized and on top of your firm’s financial health. Reviewing your balance sheet, cash flow and income statements can help you assess the firm’s fiscal condition. By analyzing your assets, liabilities, equity, revenue and expenses, you can evaluate just how efficiently firm operations are running. This gives you a starting point for creating your 2019 financial strategy.
Tip: If you’d rather review thousands of pages of discovery materials than your firm’s financial condition, consider using a professional tax advisor, financial planner or accountant.
Step 2: GOAL SETTER = TREND SETTER
Get ahead of the pack by setting goals. Everyone wants to be the best, so think about what you want to achieve in the coming year. You might want to expand the firm by taking on new cases, or you might venture into a new practice areas, such as mass torts or class actions. Perhaps you want to build upon your team and hire new staff. Whatever the case may be, writing down your goals is always a good place to start.
Next, get a good estimate of how much in legal fees you expect your current case inventory to produce, and when you anticipate the fees to be paid. Using the previous year’s financial statements as a guide, map out the expenditures you’ll need to cover for firm operations so that you can accurately predict cash flow needs and accommodate your new goals.
Tip: Track your monthly expenses and use past data to help forecast future cash flow needs.
Step 3: SMOOTH OUT YOUR CASH FLOW
Contingent fee firms typically do not see their revenues and expenses line up nicely—it’s the nature of the beast. Unpredictability in litigation plays a big role—delays in settlement distributions, cases that are slow to resolve and unanticipated litigation costs are inevitable.
Having a flexible financing solution available to your firm can help you circumvent these issues. You’re putting a significant capital investment into your cases up-front, but normal firm operations don’t have to suffer as a result. Having working capital ready when you need it enables your firm to pay expenses as they come due and focus on long-term growth and advancement. In turn, you’re able to best advocate for your clients, and your firm.
Tip: Explore the financial solutions that can be tailored specifically to your firm offered by Counsel Financial—the nation’s leading plaintiffs’ firm financing company.
