Al & Jeremy are partners in a small firm in midtown Manhattan. Both partners spend the majority of their time answering phones, running to court hearings and seeing clients; and were chronically behind in bookkeeping, casework and administrative tasks when they called me regarding my lawyer practice management services last summer.
They had been meaning to start entering their finances into a popular accounting software they purchased at the end the tax season 2 years ago; after having gone through a month of grueling work trying to re-construct what went on with their bank accounts that year; but neither of them has had the time or inclination to actually do it.
Bank statements piled up unopened, receipts are in manila envelopes tettering on the top of file cabinets, and they’ve often run behind in paying bills, which can be found in similar piles around the office. Clients weren’t billed until there was an urgent problem with their bank balance. Payments were coming in late.
When Jeremy first contacted me, things had come to a head when they realized they couldn’t deposit their draw checks, and were scrambling to put together the funds to make some estimated tax payments.
It took some convincing, because neither partner was comfortable having an outsider have access to their financial information; but ultimately they agreed to hire a part time bookkeeping service. Their first goal was to catch up with the first 6 months of the year. Once that was done, they went to a bi-weekly schedule to keep things up to date.
Client billing had also been a sore point. Neither partner was willing to give up control on this one either, so we first worked on a systematized process to gather all the information necessary to do the billing. Once they were in the habit of noting all work done for each client, my next step was to show them how easy it would be for the bookkeeper to take all of this information and create a bill. Finally, they were convinced and she added client billing to her monthly duties.
Armed with proper financial records, we now sit down regularly to analyze their financial picture. Seeing it in black and white has made it easy to see where superflous expenses can be cut, as well as realize that fees for certain legal services had to be raised.
As a result, cash flow has substantially improved and profitability has increased. They are paying their bills on time, clients are paying promptly, and most importantly, they can take home more money for themselves.
Now we’re working on time management.
Susan Martin, law firm management, small business financial management.
