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8 tips for spring-cleaning your law firm

28 March 2017

Now that spring is officially here, you may be planning to spring-clean your home. But what about your business? Accountant Rosy Rourke highlights eight elements of your business to address.

1. Costs and suppliers 

Review your costs, particularly if they have not been considered for some time. Are you incurring costs unnecessarily?

Ask your people what resources they use, and how often. Are you paying for technical subscriptions that are rarely used? Are there duplications within what you are paying for – such as both paper copies and online versions?

Consider requirements around continuing competence. Is there a policy for approving training expenditure? Consider more cost-effective options, such as webinars or in-house training tailored to your firm’s requirements, rather than costly external courses which may not be completely relevant to your business.

Other costs to review could include mobile phone contracts, energy suppliers, and even bank interest rates and charges.

2. Work in progress 

We recommend billing on at least a monthly basis on matters which allow this. Ideally, bills should be raised mid-month to ensure receipt by clients before month end: for business clients in particular, this makes it more likely that you’ll be paid in an earlier payment run, aiding cash flow.

Work in practice should be reviewed every month, and irrecoverable amounts regularly written off – this should not be a once-a-year exercise.

3. Charge-out rates 

Review the marketplace and compare your standard charge-out rates to other competitors, particularly if your rates have not increased recently. Could you introduce a higher rate for higher level, specialist work?

4. Outstanding cheques 

Review outstanding cheques as part of your month-end routine. Write back any old cheques to the ledgers and deal with them appropriately – don’t leave them as unresolved balances on accounts.

5. Storage 

Have an actual spring clean! Review the paper files that you hold in your offices and establish a file destruction policy. Could you implement a paperless office system, where documents can be stored electronically?;

6. Secret profits 

Make sure you are not generating ‘secret profits’; if you are, you are not complying by the SRA Code of Conduct. The most breached is around disbursements: if a firm incurs a sum on behalf of a client and passes that directly onto the client, that can be classed as a disbursement, but any increase in the actual sum expended, is a profit to the firm, and should be described as such on any bill. Examples of common secret profits are, copying charges, telegraphic transfer fees and postage.

7. Client care letters 

The starting point of any engagement with a client is the client care letter: this is the document that will govern your relationship. Review your standard templates for appropriateness, and that any reference to polices or accounts rules are up to date and correct. This may include payment terms, interest or commissions policies, and charge-out rates.

8. Residual balances 

Implement a client file closure policy which ensures balances are returned to clients when matters are concluded – this will prevent new residual balances occurring. Circulate residual balances around fee-earners at least once a month, and ensure accountability between peers if balances remain unresolved. Obtain client bank account details at the outset of matters to allow ease of repayment of small balances.

In terms of old balances, focus on balances that occurred post-14 July 2008: the date the rules changed, and when your obligation to return balances commenced. Aim to resolve a set number per week, working methodically, and if you want to pay any amounts over £500 to charity, don’t forget to request Solicitors Regulation Authority approval.

These tips may seem simple and basic, but if you get your policies and systems right, it will help you manage your practice more effectively – this spring and beyond.

Read Armstrong Watson’s update for the Small Firms Division on the spring budget

Find out more about the Law Management Section, our community for partners, leaders and practice managers in legal businesses

Tags: finance | productivity

About the author

Rosy Rourke is a legal sector director at Armstrong Watson, and part of its specialist legal sector team. Armstrong Watson is the Law Society's endorsed provider of accountancy services to law firms in the Northern regions of England.

Follow Rosy on Twitter.

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