Like all businesses, law firms are required by law to pay taxes. There are many ways for law firms to reduce their tax liability. Understanding how tax rules apply to law firms can help save money. Choice of entity considerations. A law firm can be a sole-proprietorship, partnership, LLC, LLP, or a Corporation. Firms should consider the number of employees, … Read More
What financial KPIs should my law firm be tracking and evaluating?
Key Performance Indicators, or KPIs, are critical metrics for evaluating company performance. They inform decision making and draw attention to areas that need improvement. For law firms, KPIs: Monitor firm health Simplify decision making Record successes Highlight problems Law firms can monitor KPIs to evaluate firm operations, business development and intake, performance and efficiency, and client satisfaction.[1] Of course, one … Read More
What client costs can my law firm be reimbursed for?
Law firms incur many different types of expenses on behalf of clients, and many costs can be reimbursed in the course of client billing. It is important to understand what these costs are, distinguish between hard and soft costs, and make sure that fee agreements between you and your clients delineate these costs upfront so that clients aren’t faced with … Read More
Should my law firm use retainers or just bill as work is done?
Law firms either bill as work is done (e.g., monthly, quarterly, or at predetermined milestones) or by using a retainer model. The three retainer models most frequently used by law firms are: General retainers Flat fees or advance payment retainers Security retainers General retainers secure a lawyer’s services for a particular period of time, and flat-fee retainers function as complete … Read More
When will law firms go back to what it was like before COVID?
There is no clear answer, as the coronavirus pandemic has yet to subside in the United States. For unrestricted public and professional activity, many different but interconnected pieces must be in place. Because each state has taken its own path in responding to the coronavirus, state authorities will have to determine if cases are low enough to allow continued reopening. … Read More
How should my law firm handle our billing?
Legal billing is a distinct practice with nuances and complexities that distinguish it from billing in other industries. Legal billing can be complex for clients to understand because of rate structures, retainers, and invoicing practices[1]. When determining your billing practices, you should look at rates, time tracking, and payment methods to find your best options[2]. Hourly Rate The most common … Read More
What is the safest way to prepare my law firm for the future or another natural disaster?
2020 has been a year of crisis management. Between the coronavirus pandemic, wildfires, police brutality riots, and numerous large-scale natural disasters across the United States, law firms have had to contend with a lot of uncertainty. These events have raised the question of how to safely prepare for future disasters. The first thing that a firm must have in place … Read More
What should my law firm do to plan for the next year?
Planning for the upcoming year often starts in the final quarter of the year. Annual plans vary widely depending on the structure and scope of the firm, but there are some topics that appear in most effective strategic plans for law firms. Finances & Operations Every firm should evaluate their finances. This may include reviewing their current budget situation and … Read More
What type of bank accounts should our law firm have?
Whether a firm is a new solo practice or an established AmLaw 100 firm, a law firm needs to have at least three bank accounts. These bank accounts should include: A business operating account. This account(s) are designated for practice income and expenses. If you’re audited, you would provide records for this bank account. A business savings account. Set aside … Read More