Should Your Firm Keep Two -- or More -- Sets of Books?
December 01, 2003
Most law firms operate as general partnerships, limited liability partnerships or limited liability companies (together, "partnerships", whose members having capital in the firm herein are "partners"). Does your partnership keep two sets of books ' or more? Al Capone kept two sets of books, and the judge sent him to the Federal Pen for doing so. Yet many law firms (and other professional businesses) legally keep two or more sets of books, arising from different accounting systems prescribed by 1) their partnership Agreements; 2) generally accepted accounting principles (GAAP) audited statements (which are required by some lenders and landlords), and 3) the tax laws. As a result, the firm's net assets ' and the partners' ownership of the law firm, as reflected in the partners' capital accounts ' may be substantially different under each set of books. Moreover, the amount and timing of the firm's cash distributions to partners, the amount of the partners' annual income taxes, and the availability and amount of bank loans to the firm may all be affected by the firm's applicable accounting methods ' all items that may substantially affect the partners' pocketbooks.
Strategies to Enhance Cash Flow
December 01, 2003
Managing partners, financial partners, members of executive committees and administrators must devote more of their time today, than in the past, to planning and managing their firms' finances and those functions that improve the cash flow. Part One of this article described the first three of six aspects of law firm management and economics that the author has recommended to assist them in improving their firm's cash flow: 1) cash flow; 2) a business plan; 3) budgets for revenues, expenses and client advances. Part Two examines the remaining aspects: 4) partner compensation; 5) a recommended new business and billing committee; and 6) partners' capital and borrowing.
Pennie to Close Doors by End of December
December 01, 2003
Intellectual property boutique Pennie & Edmonds will ring in the New Year by closing its doors and firing some of its lawyers and staff. Ahead of a likely announcement of a deal for many ' but not all ' Pennie & Edmonds lawyers to join the New York office of Jones Day, Pennie & Edmonds' management informed associates and staff members Monday that the 190-lawyer firm will cease practicing law and wind up affairs by Dec. 31.
How to Get Paid for Your Services and Enjoy Practicing Family Law
November 30, 2003
The practice of family law can be fulfilling and profitable if you ensure that your clients pay you. If you are paid for your work, your practice will be successful and you will be happy; if you are not paid for your services, you will abhor family law.
Improving Law Firm Profitability Without Working Longer Hours or Raising Rates
November 01, 2003
Last month, in Part One of this article, I discussed three major approaches to enhancing law firm profitability: expanding your client base; assertively managing billing, receivables and payables; and unbundling operating costs from bills for fees. Previously, in the August 2003 edition of this newsletter, I described a fourth major profitability approach: management of alternative billing strategies. This month's article concludes my overview of profitability improvement methods by summarizing 10 more techniques.
Selling a Law Practice: Prospects and Pitfalls
November 01, 2003
Large firms have long had well-defined methods for transferring ownership interests in a practice via "mergers," "retirements," "breakups," etc. Attorneys in larger firms have also always had mechanisms in place that provided them and their heirs with funding for the value of their individual interests in the firm. By contrast, the outright "sale" of a law practice from one attorney to another was prohibited for decades. In 1991, however, the ABA dropped its opposition. California had already permitted such sales since 1989, and more states have now followed suit; so the mechanisms for selling a practice have been developing, albeit slowly. These changes are economically vital for small-firm and sole practitioners. Many of these attorneys tend to conclude their law practice without any transfer of ownership, by just closing their office doors one day and never returning. By doing so, an attorney forgoes "cashing in" on a valuable asset that has taken many years to build. That no longer has to happen. Like their counterparts in large firms, sole and small-firm practitioners ' and their heirs ' can now reap the rewards of years of effort. This levels the economic playing field for retirement and estate planning.
Product Review: ProLaw
November 01, 2003
After considerable analysis of our firm's existing software and case management practices, we went shopping. We chose tradeshows like the ABA Techshow to familiarize ourselves with software options. Anyone who's ever attended a tradeshow knows how overwhelming the vendor presentations can be, and how after a while all products appear to blend in one's mind. It's inevitable, given the amount of information every vendor attempts to convey in each short, intense demo session. We solved that by picking up demo disks wherever possible, and then looking them over in the comfort of our own offices once we'd returned. ProLaw stood out for many reasons, including its ability to integrate all firm practice management functions under one database - something nobody else at the time was doing well, if at all.
