While usually not financial experts, Managing Partners of small and mid-sized law firms still need to be able to set expectations of their finance and accounting team. Skill sets vary amongst finance teams and leaders but still Managing Partners should frame their expectations around fulfilling the following needs of the firm:
– Financial Strategy: The capability to devise and analyze the strategy of firm. The finance team supplies information and advises the key decision makers in areas such as people and partner strategies, revenue/rate approach, expense optimization, investments and capitalization requirements.
– Accounting Operations: The need to design and operate a department that enables the effective capture and processing of all transactions required to operate the firm.
– Data and Analytics: The ability to measure the results of operations and underlying processes, supply such information to leaders of the Firm, analyze the results and provide recommendations to decision makers.
While the lines are often fuzzy, a CFO will usually contribute most to supporting strategy and analyzing the business while a controller will focus on maintaining sound accounting operations. Set expectations of your people accordingly but be clear about the area in which they should most closely focus.
Year-End Financial Tips for Law Firms: Part 3
November 26, 2024
Phantom income is a concept that can complicate year-end financial planning for law firms. It refers to taxable income reported by a firm without a corresponding cash outflow to owners. For law firm partners, this can mean owing taxes on income they haven’t yet received in cash, affecting both the partners’ personal finances and the firm’s overall financial stability.
