Understanding Law Firm Finance

Course objectives

This course is designed for lawyers to remind them of the key issues and objectives when looking to run a legal practice as a successful, commercial concern. By the end of the course the attendees will appreciate the options that are available when setting financial goals and targets and how to better manage themselves and their teams to meet these targets. The course will also improve attendees’ ability to read, understand and use the financial information used internally in management accounts and reports.

Typical content

• Key financial performance indicators for a law firm and a reminder of how the financial statements are presented
  • Fee income, measuring profit and profit per equity partner (PEP)
  • Management of working capital including WIP and debtors
  • Presentation of assets and liabilities on the balance sheet, what is and what isn’t included.
• Understanding how to manage working capital
  • How charge out rates are calculated and why are the useful even if you only ever charge fixed fees
  • Setting utilisation and recovery targets – what are the benefits and how this should be managed
  • WIP, billing and debtors – how are these items valued and reported and how can they be managed. The benefits to the firm arising from good working capital management
• Long term financial planning and options
  • Setting and agreeing target clients and profit margins
  • Financing the business – debt or equity considerations
  • Gearing or leverage including what is meant by human capital leverage

Typical practical work and case studies

• Analysis and identification of key performance indicators from law firm financial statements – which can be internal records if preferred
• Calculation of working capital measurement targets such as current ratios, debtor days and WIP holding periods
• Illustration of the financial benefits of leverage both through use of debt and staffing and other resources

Duration and guideline fee

Typically 3 hours although can be increased to 6 hours for more junior staff who may also need some reminder of core financial issues first.

3 hours – £850

6 hours – £1,700

Recommended maximum group size – 30 (can be of all ranges of experience)