Law firm cash flow: Improve your firm’s financial health

law firm cash flow

 

 

As the end of the financial year approaches, many solicitors will likely review their cash flow and consider ways to improve their financial health – positive cash flow is essential for your firm to be successful in such a competitive market.

For those facing cash flow problems, there are a number of things firms should consider for improving cash flow and achieving long term success.

Tips for improving law firm cash flow

  1. Get your finances in order – Understanding your finances is essential for cash flow management. Use cash flow forecasting and figure out which types of cases are bringing in the most money and which are not. Review your outgoings and make decisions on which expenses can be cut to improve cash flow and reduce costs for your firm. Get advice as early as possible to ensure you make the best decisions for your firm.
  2. Remote working – The pandemic forced us to adapt in our ways of working and has shown us that working remotely as a law firm is possible, and in some circumstances, a more viable option. Allowing your staff to work from home, either part time or full time could allow you to reduce the size of your offices and reduce your outgoings on real estate, heating, and electricity, cutting costs and improving flow of cash.
  3. Exit an unprofitable market – The legal services industry has faced many challenges over the past decade. It is unsurprising that some law firms have made the strategic decision to exit specific practice areas to allow them to focus on more profitable markets. With the help of Recovery First, you can ensure a smooth, compliant exit from any market, placing files with the most suitable firms from our panel of solicitors, allowing you to preserve the value of your locked-up WIP
  4. Free up value locked in your WIP – If you decide to exit an unprofitable or less profitable market, you could choose to transfer your existing files to an alternative firm of solicitors. Using the Recovery First method will ensure you recover the maximum value locked in your work in progress, thus helping to improve cash flow when you need it most.
  5. Consider a merger or acquisition – It has become clear in recent years that larger firms have more power to compete in such a competitive legal market. Due to this, the number of mergers and acquisitions in recent years has increased substantially. In some circumstances, the merging or acquiring firm may not wish to continue in a specific legal market. If this is the case, Recovery First can assist firms in leaving an unsuitable market and placing files with a suitable firm on our panel.

 

How can Recovery First assist?

Recovery First understand the importance of having positive law firm cash flow. We can work alongside your firm to help you leave a less profitable market, improve your cash flow by releasing value from your work in progress, and assist if you choose to take the merger or acquisition route for your firm.

In the worst-case scenario, you may be required to close your firm due to cash flow issues. Recovery First can assist you in this situation to ensure a compliant closure of your firm.

Our process involves discreetly selling a firm’s cases to multiple purchasers on our panel of solicitors. This mitigates the risks to the buying firms and results in a higher value for the work in progress being recovered and provides you with a share of any success fee, whilst ensuring SRA compliance.

Our team manage the whole process from transfer of files to appropriately qualified panel firms suited to deal with your unique client matters through, to collection and management of costs at conclusion.  Our fees are only payable as a proportion of what you recover, so there is no risk to you.

If you would like to find out more about Recovery First’s process, feel free to get in touch with our Managing Directors on a confidential basis: David Johnstone at david.johnstone@recoveryfirst.co.uk, or 01357 440140, or Sally Dunscombe at sally.dunscombe@recoveryfirst.co.uk or 01357 440140.

It's never too late to speak to Recovery First. Contact us now in the strictest confidence

Sally Dunscombe:

sally.dunscombe@recoveryfirst.co.uk

David Johnstone:

david.johnstone@recoveryfirst.co.uk

Telephone:

01357 440140

Manchester Address

106 Kennedy Building

Murray Street

Manchester

M4 6HS

Registered Address: 

North Torfoot

Drumclog

Strathaven

ML10 6QG