As a result of recently undertaken survey and discussions with partners / managing partners in medium size law firms (up to 20 lawyers) we came up with a list of items which were indicated as most important and challenging in their practice in area of managing finances.
Cash flow – area of cash flow was indicated as either trouble spot or place for improvement. Common issue is lack of standardized reports. Stress testing and contingency scenarios are not used very often.
Billing – production of invoices involves numerous manual steps and material involvement of senior lawyers
KPIs – Quite often standardized set of KPIs is not prepared and analyzed. Future oriented and marketing-oriented indicators are not found very often.
Pricing strategies – consistent and structured approach to pricing causes many issues (some related to points below – profitability and estimating cost)
Estimating cost of complex projects – with long and complex projects estimation of total cost and coordination effort is causing issues, especially difficult if flat fees for project or project phase involved
Calculating profitability per client / lawyer – proper calculation of client / lawyer profitability (especially with fully loaded cost) is difficult mostly due to difficulty with setting up allocation keys
Billable hours – recording, calculation and reconciliation of billable hours, as input into billing and KPIs estimation, is causing issues, despite large amount of software aimed at this topic available on the market.