As the year draws to a close, law firms are presented with a unique opportunity—a chance to reflect, recalibrate, and refocus.  

While the end of the year is associated with holiday festivities and time away from the office, it’s also a critical period for law firms to assess their financial health, client relationships, and future growth strategies. The questions you ask now can set the tone for your firm’s success in the upcoming year.  

In this guide, we’ll walk you through questions to ensure a comprehensive, compliant year-end close. These questions are designed to help your firm transition from one year to the next with a two-phase review: a check-up on your firm’s financial health and organization and an analysis of client relations and growth opportunities. 

Phase one: financial health and organization 

Will your law firm be in good financial health before the new year arrives? Now is the time to make sure your firm is shipshape. By asking these questions, lawyers can take necessary measures to address any discrepancies, make informed business decisions, and maintain compliance with accounting regulations. 

Is all my time entered? 

Ensuring that all billable hours are accurately logged is crucial for the financial health of your firm. Time-tracking tools can help automate this process, making it easier to capture all billable activities. Missing even a small amount of billable time can add up, affecting your bottom line and potentially skewing your understanding of your firm’s productivity. 

What am I still owed? 

Keeping a close eye on your accounts receivable (AR) ensures that you’re getting paid for your services in a timely manner. Financial reporting tools can provide real-time insights into your AR status. A high AR could indicate issues with your billing process or client relationships that need to be addressed to maintain cash flow. 

What are my liabilities? 

In addition to accounts receivable, assess your accounts payable to ensure that you settle all bills by the end of the year. This includes office bills, direct disbursements, matter costs, and third-party bills. 

Am I up to date on client ledger reconciliation? 

Regular reconciliation of client ledgers is essential for compliance and financial accuracy. Trust accounting tools can streamline this often complex task, but this software still requires human oversight. Falling behind on reconciliation can lead to compliance issues and make it more difficult to assess the financial health of your firm accurately. 

How profitable have I been? 

Understanding your profitability is key to making informed business decisions. Business accounting tools can help you track expenses and revenue, giving you a clear picture of your firm’s profitability. Knowing your profitability metrics can guide your strategy, helping you decide where to invest resources for growth. 

Are my financial records audit-ready? 

Ensuring that your financial records are audit-ready is essential for compliance and peace of mind. Using a comprehensive accounting system that tracks both business and trust accounts can help you maintain meticulous records, making an audit a less daunting prospect.  

You can also provide more transparent and timely financial reporting to stakeholders, which is helpful for fostering relationships of trust. 

Phase two: client relations and growth 

After assessing your firm’s financial health and organization, it’s time to shift your focus to client relations and growth opportunities. Here are some questions to consider to help you strengthen your relationships with clients and plan for growth in the upcoming year. 

Have I shown my appreciation to clients? 

Client retention is generally more cost-effective than acquiring new clients. A simple thank-you note or a small token of appreciation can go a long way.  

CRM (client relationship management) software can enhance these efforts by allowing you to keep track of personalized information like special dates, client preferences, or past interactions, making your appreciation efforts even more impactful. This enhances client relationships and can drive referrals and positive reviews, boosting your firm’s reputation. 

Have I reviewed my vendor contracts? 

Reviewing vendor contracts is crucial for optimizing expenses and ensuring you’re getting the best value for your firm. Secure document storage and sharing can assist in this process by providing a centralized location for all your contracts, making them easily accessible for review. 

This way, sensitive information remains confidential, and you can keep track of terms, renewal dates, and compliance requirements. The information can help you negotiate better terms and avoid unexpected costs or service interruptions. 

What’s my plan for growth next year? 

Strategic planning is crucial for any business, including law firms. Outline your goals for the coming year, whether expanding your client base, entering a new practice area, or implementing new technologies.  

Robust reporting tools can help you analyze your firm’s performance and identify areas for growth. A well-thought-out plan can serve as a roadmap, helping you allocate resources more effectively. 

Do I need a new website? 

Your online presence is often the first impression potential clients have of your firm. An outdated or poorly designed website can deter potential clients, so this is an area worth investing in. 

Evaluate the effectiveness of your current website (or have an outside assessment) and consider updating it to reflect your services and expertise better. Specialized website services for law firms ensure that your online presence is professional and delivers an excellent user experience.  

Is my team aligned with firm goals? 

Team alignment is vital for achieving your firm’s objectives. Regular team meetings and performance reviews help keep everyone on the same page. Another source of support here is a comprehensive practice management system with tools for task management, performance metrics, and communication, ensuring everyone knows their role in achieving the firm’s goals.  

Start 2024 off right with CosmoLex 

Now that you’ve asked all the right questions, you’re on track for success in the new year.  

Start things off right with a comprehensive, legal-specific software solution: CosmoLex streamlines your law firm’s operations, making it easier to focus on what you do best—practicing law. Here’s how CosmoLex can support each phase of your year-end close: 

• Time-tracking to ensure that all billable hours are accurately logged 
• Financial reporting for real-time insights into your accounts receivable 
• Compliant trust accounting to make it easy to reconcile client ledgers 
• Built-in business accounting so you perform bookkeeping without QuickBooks 
• Audit-ready records thanks to a comprehensive accounting system 
• Secure document storage and sharing 
• …And more 

These features contribute to a smooth and efficient year-end close, setting the stage for a successful new year. If you’re ready to make 2024 the best year yet, sign up for a free trial of CosmoLex today.