Employment law firms
Your time is recorded. Is it being recovered?
Employment work is lumpy, contentious and often priced on outcome rather than hours. That makes it one of the harder disciplines to run profitably. Here’s what firm owners ask, and the figures that answer it.
Your questions
The things firm owners actually ask.
“Are my retainers still worth what I charge for them?”
Some will be. Others will have quietly become loss-makers as the client’s usage crept up.
Report profitability and actual usage per retainer contract and the outliers appear immediately: the client absorbing three times the hours they pay for, and the one paying for advice they never take. Both need a conversation, and the second one is often the more valuable.
That’s what triggers an interim contract review rather than waiting for renewal and hoping.
“Which of my fee earners are actually profitable?”
Occupancy and profitability per fee earner answer different questions, and they often disagree.
Someone can be fully occupied and still unprofitable if the work is written down before it’s billed. Charge-out rate is aspirational. Recovery rate, what you actually collect per hour recorded, is the real number. Track both by fee earner and by matter type.
“Why is so much fee earner time non-billable?”
Break it down and a good share of it is usually administrative work being done by expensive people.
Bundle preparation, file admin, scheduling, chasing clients for documents. Shifting that to support staff raises occupancy across the firm without recruiting another solicitor.
“Will my client account pass its annual report?”
That depends entirely on how the ledgers have been kept for the eleven months before anyone looks at them.
Most client account problems start as bookkeeping problems and become regulatory ones through neglect. Reconciled on time, with a properly maintained breaches register, the Accountant’s Report is a formality. We work alongside your reporting accountant rather than in competition with them.
“Where is all my cash?”
Sitting in unbilled work in progress and aged debtors. Money you have earned and cannot spend.
In a firm paying drawings monthly and tax annually, that turns into a personal cash flow problem for the partners rather than an abstract one for the business. Measured in days, it becomes something you can manage.
“How much should I be putting aside for tax?”
More than most partners set aside, and the answer needs to be visible monthly rather than calculated in January.
Partner current accounts, drawings policy and tax reserves reported as you go means nobody discovers the money has already been spent.
What we do
Clean books, clear recovery.
Bookkeeping and client account
Office and client ledgers kept properly and reconciled on time, so your annual report is straightforward rather than an ordeal.
Management accounts
Occupancy and profitability by fee earner, recovery rates, retainer usage and margin, non-billable time broken down, and lock-up in days. Write-offs made visible rather than absorbed.
Partners and planning
Drawings, tax reserving and current account reporting, plus forecasting that allows for PII renewal and tax payment dates. Year-end accounts and returns for the firm and its partners.
Our background includes running the finance function of an employment law firm. The WIP conversations, the recovery rate arguments and the month-end where client account has to balance to the penny are familiar territory.
Let’s talk about your recovery.
We’re not taking on new clients at the moment. Join the waiting list and you’ll be first to hear when a place becomes available.