Financial Health Review Services for Law Firms

The main goals in running a law firm involve winning cases and helping clients with their legal matters. Yet, a law firm is still a business. You have to deal with the administrative and financial side of operations. With so many cases going on, you need to understand how your business is doing to track growth. Obtaining financial health review services for law firms provides you with a snapshot of your current financial status and illustrates ways to improve law firm financial management.

You are dealing with daily transactions, handling trust accounts, and invoicing vendors. Money is constantly flowing in and out of your operations. Without clear transparency and accountability regarding your cash flow, revenue, or expenses, you don’t know whether you’re hitting revenue goals or dealing with bottlenecks that can hamper sustainable growth.

At Firmly Profits, we provide financial health review services for law firms. Our services provide data-driven reports regarding the current financial health of your management processes. In addition to providing traditional bookkeeping, we provide in-depth financial analysis to identify inefficiencies that can hamper performance. We also help to uncover opportunities that can motivate profit improvements.

By having a fractional CFO and bookkeeping team working with your law firm, we provide actionable insights to eliminate gaps, make improvements to your financial work processes, and help strengthen your firm’s bottom line.

We offer our financial health review services for law firms across the United States. Learn how these services provide financial clarity so you can make strategic operational growth decisions.

Sustainability for Law Firms

Law firms have unique operational structures. They form lawyer partnerships that all have ownership in the company. This structure leads to lawyers getting paid with profit shares in the law firm. They also have more of their personal liabilities linked to the company’s financial success.

When the law firm grows, everyone’s shares increase. However, when there is financial instability, profit shares may fall. Even when doing well, it could take one partner leaving to pursue a career change that causes a decrease in profits since the firm is not bringing in as many clients. Then, more law partners leave in a domino effect until the law firm collapses from within. Unfortunately, any existing liabilities they created trickles down to those who remain.

Due to partners leaving and decreasing client revenue, law firms have a difficult time recovering. In the end, they dissolve.

Creating sustainability becomes your number one priority. When you understand the current financial health of operations, you can target inefficiencies and issues that could cause partner dissatisfaction. You also develop financial plans that can help you weather any operational uncertainties.

Enhancing your law firm financial management system also allows you to create realistic revenue goals based on the current law firm budget, cash flow, and projected profits. You’ll have strategies in place to boost long-term growth.

Financial Health Reviews for Law Firms

You need to know the hard numbers to develop a budget and financial goals. You have to see the operational data to understand revenue, expenses, and debts. Financial health reviews for law firms are a service that helps you gather important financial data all in one place. Then, you can analyze the measurements and generate reports to make smart financial decisions.

Financial health reviews report on several key performance metrics. These metrics include billing rate growth, realization rate, utilization rate, profit margin, profit per equity partner, revenue per lawyer, and overhead cost ratio. Going over these measurements helps to determine several factors. For instance:

• Legal billing rate growth demonstrates the strength of the law firm’s services and ability to raise pricing for billable hours.
• Realization rates show whether your law firm has ideal billing practices.
• Utilization rates determine efficient or inefficient resource allocation.
• The profit margin illustrates your law firm’s overall profitability.
• Profit per equity partner evaluates the generated profits for each partner.
• Revenue per lawyer allows you to see the generated average revenue for each lawyer.
• The overhead cost ratio helps determine the overall cost structure, aiding in implementing cost reductions.

Tracking the above key performance metrics gives you an overall picture of your company’s financial health. Our financial reporting also allows you to drill down on the actual numbers needed to look for performance gaps, create risk management policies, and perform financial forecasts.

A fractional CFO and bookkeeping team know where to find the data in financial statements, such as cash flow statements, balance sheets, and income statements. We provide analysis reports that can be used to help avoid unexpected bankruptcies.

Why Your Firm Needs a Financial Health Review

A firm’s financial health review is much like a periodic checkup you may have with your regular physician. It checks to make sure your law firm’s operations are running as expected. The review can also highlight areas of the firm’s financial performance that could use improvements. Then, you can make an ideal financial strategy.

You can use the review to streamline your analysis of every transaction, invoice, and trust account to evaluate for compliance. Another advantage of financial health reviews for law firms is that you can develop policies to implement to prepare for unexpected financial risks.

Why Use Our Services

Our CFO here at Firmly Profits has worked in and with law offices for several years. Having this inside knowledge regarding the working processes of law firms allows us to provide bookkeeping, records management, and financial analysis tailored to your desired goals.

You can seek financial stability and growth opportunities with our financial health review. We empower legal professionals by providing reliable and trusted financial services, so they can focus on assisting their legal clients.

Find Out the Health of Your Law Firm’s Finances With Firmly Profits

Receiving financial health reviews for law firms provides you with the data and tools to make your business profitable. Our fractional CFO and bookkeeping services can reconcile your financial books, measure key financial metrics, and perform an analysis of financial documents. We generate the reports you need to detect inefficiencies and seek out financial opportunities. Reach out to Firmly Profits today at 941-202-4062 or fill out our contact form.