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 …

Ralph Waldo Emerson once said: “Money often costs too much.”

It is, unfortunately, true that you have to work over $1.00 worth of time to collect $1.00.  The question is:  how much more?  How do you measure this?

One of the ways of measuring the cost of making money is to look at your realization rate. Accordingly our next cash flow report is:

#7 – Realization Rate

A lawyer’s realization rate is the percentage of actual income paid to the firm for the billable hours of each timekeeper.  For example:

Let’s look at Partner X:

• Assume Partner X bills 200

Ahh the age-old problem of lawyers:  collecting accounts receivable.  The bane of the lawyering class. The inconvenient truth is that if you are working on the basis of an account receivable, you are most probably working for less – and in some cases far less – than your standard hourly rate.

Woody Allen once said: “Money is better than poverty, if only for financial reasons.“

So, if money is better than poverty, our next cash flow report to produce (and examine) on a monthly, if not more frequent, basis: Aged Accounts Receivables.

Your accounts receivable should be grouped …

Where are the money pits in your practice?  One of the biggest is called: “Unbilled Disbursements”  These disbursements represent expenditures on behalf of clients that you expect will be recovered in due course.  Of course, therein lie the assumptions: that you will be able to bill for them and you will be able to recover them in time.  But there is a quote of Ayn Rand that is appropriate here:

Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.

Yes you need to expend funds on files you …

Johann Wolfgang von Goethe once said:  “Many people take no care of their money till they come nearly to the end of it, and others do just the same with their time.”

There is an old adage that time equals money.  But unbilled time doesn’t equal money until it is billed and collected.  Accordingly, our cash flow report #4  in this series of posts is: Work In Progress:  Is your WIP increasing or decreasing?

What does your WIP report say about time that you have banked?  Is it trending larger or smaller or staying about the same?   If your WIP …

Edward Gibbon once said: “I am indeed rich, since my income is superior to my expenses, and my expense is equal to my wishes.”

In our prior posts we have looked at income projections from a couple of different perspectives.  This third post in our Cash Flow series starts to look at expenses in a bit more detail.

You can have billings (and fee collections) that exceed your wildest dreams, but if your expenses exceed your fee collections, you will be in financial trouble.

Accordingly, our tip this week is as follows:

#3 – Compare your Actual versus …

This is the second in a series of ten tips dealing with cash flow reports and cash flow management.

Gregory Nunn once said: “Never underestimate the value of cold cash.”

While our first cash flow management tip looked at comparing your actual billings as measured against your projected monthly billings, this week we are taking things one step further in terms of looking at how well you are doing in terms of collecting your billings as measured against your projected cash needs.

Accordingly, our second cash flow report that you should be generating from your accounting system is:

#2 – …

Following on our earlier Top 10 Financial Errors posts, this is the first in a series of 10 posts dealing with Cash Flow Reports and in particular, cash flow management.

Mark Ruffalo once said: Certainly, it’s very easy to fall in love with cash. If you’re going to make all your decisions based on cash, you’re going to have a pretty naffy career.

In my MBA days, I took a series of accounting courses. One of the courses was entitled ‘managerial accounting’ but it really was about how to manage cash. I still recall the professor walking in and saying: …

Our lives as lawyers are hectic enough even before we factor in busy family events. Accordingly our tip is to create a ‘family’ calendar where every family member can enter (and see) the entire spectrum of upcoming family events. Schedule movie nights! Put in Grandmother’s birthday party! The school play (where your daughter is on stage!). Also enter the evenings where you have business events to let everyone know Mom (or Dad) won’t be available until later (no need to put in confidential client info – just a notation that you have a business meeting is just fine).

If the …

If you spend any time on the web, you should be aware of the fact that you can be tracked by websites that you do not visit.  This can include analytic services, advertising networks and social platforms.  Few of these offer any reliable way of opting-out.  Accordingly, we are left with working with a voluntary op-out procedure that is honoured by third-party web tracking sites.

One of the ways to prevent this tracking *at least by third parties who agree to honour a user’s Do Not Track preference* is by installing a plug-in for Firefox, Internet Explorer, Chrome, and Safari.  …