Often law practices look great from the outside. There are lots of clients, the lawyers are always on the run, and from all outward appearances the firm is successful. Sometimes, though, these firms – rather than being a picture of health – are more like a patient with a fatal disease, a silent killer the symptoms of which have not yet begun to show.
That silent killer is unbilled fees and disbursements. As a consequence, all firms should be monitoring the state of their unbilled work and disbursements just as someone with diabetes constantly monitors his or her blood sugar level and takes action to either boost or lower it as needed.
The unbilled fees and disbursements report should be compiled by lawyer, client and area of practice, even though some members of the firm may not like it. This will help the firm to spot results which are starkly out of line with the other members of the firm, and take steps to correct them as soon as possible.
Unbilled fees and disbursements today can easily turn into a cash flow problem tomorrow. If you’ve done the work or advanced the costs, take timely steps to start turning that work and those expenses into profits rather than non-interest bearing loans.