Human resources

This Practice Note explains how to interpret and make sense of a law firm’s financial accounts... Why are financial accounts important? Firms must monitor and assess their accounts to gauge performance and determine what actions are needed to improve results... What is available in a set of year-end accounts will depend upon the: legal structure or constitution of the firm rules that dictate the form and content of the accounts In addition to year-end accounts, you may choose to produce monthly or quarterly management accounts, which should be reviewed regularly. For further information on management accounts, see Practice Note: The importance of good management information... What financial statements make up a set of financial accounts? Every firm needs to prepare annual financial statements that together comprise the firm’s financial accounts. There are six statements potentially required: profit and loss account balance sheet cash flow...

This Practice Note is intended for law firms. It explains why capturing time is so vital. It also explores best practice around time recording and considers the impact on write-offs if more time is captured. Why do law firms need to record time? Time should be recorded primarily to understand the true cost of work undertaken, to ensure accurate and reliable client billing, and to maintain compliance with SRA client costs information requirements (see further subtopic: Information on costs). It is therefore necessary to record all time spent on a client’s matter—whether this time can be billed is a separate issue and must only be considered at the point of billing. Law firms often confuse time recording with billing. As a consequence, many lawyers discount their time twice: at the point of entry and initial capture again when preparing and issuing the client’s...

Its importance has grown notably in practice. Many clients face tight budgets for instructing solicitors and seek steadily lower fees and even greater overall value. Consequently, firms must compete harder and be readier to give more to secure fresh clients and fresh work. The rise of procurement managers has allowed commercial, institutional and public sector buyers to run robust and demanding processes that deliver improved value for money. As more clients go to tender and rivalry increases, pitches must be sharper than ever. This Practice Note clearly outlines a framework for pitching for work and points to best practices needed to thrive in a competitive market. Requests for proposal and invitations to tender Chances to pitch for work appear mainly in two principal forms. Requests for proposal ( RFPs) are typically broad in scope and not highly prescriptive. An RFP is commonly used,...

This Practice Note sets out guidance on why a law firm may require finance and the ways in which such funding might sensibly be obtained. It also looks at what level of debt is sound and when it becomes too high. Why do law firms need finance? All businesses need finance, and law firms are no exception. Funding enables the practice to secure the assets it relies on to conduct its trade. A review of law firm balance sheets shows the principal assets that must be financed are: fixed assets current assets Fixed assets The main fixed assets are: property—many smaller practices purchase their premises, whereas this is less typical for larger firms, which are more likely to rent their office space IT equipment—almost all law firms recognise the need to improve and refresh their IT systems; although such equipment is...

This Practice Note explains approaches for handling relentless client demands for fee reductions. It outlines inventive fee structures and considers how solicitors can develop greater confidence when negotiating charges. Providing creative fee arrangements instead of greater discounts Crucially, a creative fee arrangement is not simply a steeper discount. A creative price should advantage the client and also benefit the solicitor. If it favours only one side, it is unlikely to endure in the longer term. Balance is critical; where one side bears all the compromise, the model will falter. Much legal commentary suggests clients dislike time-based billing, as it can reward inefficiency. Nonetheless, some matters may still suit time-based fees as the fairest option for both parties, for example where the amount of work required is uncertain. When the likely workload is unclear, paying for time can appear the most even-handed solution for both client and...

Producing a proposal document demands more than good writing skills. Several distinct tasks must be completed to the right timetable and in the proper order. Co-ordinating the team’s input calls for care, planning and resolve. If key steps are missed or mistimed, the process can rapidly slip out of control. This Practice Note offers guidance for law firms on important points to address when preparing a proposal document. It assumes the firm has chosen to pitch. For further guidance on pitching for business, see Practice Note: Pitching for business and Precedent: To bid or not to bid questions. The importance of good management Effective management and clear leadership are essential to deliver a compelling proposal. This can rest with one person or be shared, for example by the pitch lead and a senior BD person. In a joint arrangement, the pitch lead...

How does an in-house lawyer measure the performance of their external law firms? Paul Gilbert sets out some objectives, metrics and examples of incentives. Paul Gilbert outlines objectives, metrics, plus illustrative examples of incentives also......

This Practice Note sets out a range of approaches for gauging a law firm’s financial performance. It further offers guidance on analysing and benchmarking financial data so that results can be compared with prior years and with competitors. It explains how to interpret trends and set benchmarks for meaningful comparison. What key aspects of performance need to be measured? Firms must look at income, expenditure and cash flow together to avoid running out of funds. Income Expenditure Cash flow This information should be reviewed routinely, at least once a month, and budget holders should monitor the figures for which they are accountable. Regular, at least monthly, reviews are essential. Fee income Fee income fluctuates and directly impacts profit. For that reason, fee generation warrants close oversight, ideally month by month. A downward trend in fees can indicate looming difficulties, especially where overheads are static or rising...

The interview is your chance to showcase your proposal to the potential client. Poor preparation is the biggest cause of defeat at this stage. Even with a strong line-up, delivering without adequate rehearsal invites failure. This Practice Note sets out the core actions and factors to consider when preparing for a tender presentation. Get organised Hold a team meeting with the full pitch group at the earliest opportunity—see Precedent: Preparing for a tender presentation—meeting agenda. Aim to run this first session at least four to five working days before the interview. Check the administrative arrangements in the request for proposal ( RFP) or invitation to tender ( ITT). If the papers do not cover this, confirm directly with the client: how much time is available the preferred team size and make-up the location the room type the facilities and technology at the presentation location who will attend from the client side and what...

Most law firms have rainmakers who stand out for their ability to win work, yet many lawyers view selling as distasteful—a frequent remark is that they did not become a lawyer to engage in sales. This is hardly unexpected, as common stereotypes portray lawyers and salespeople as drawing on very different capabilities. Typically: lawyers are regarded as highly analytical, understated, risk-averse, considered, reserved, and accustomed to operating in a regulated environment sales personnel are, by contrast, seen as more opportunistic, extrovert, and readier to take risks It does not have to remain so—a few modest wins can turn a wary lawyer into a self-assured business developer. For many, it simply takes clarity on how the sales process works, a readiness to give it a try, and a handful of good experiences. This Practice Note offers guidance on selling to new...

At the very start of the engagement process, there will be numerous criteria, including the initial selection criteria, that matter to you when evaluating a law firm’s performance. Whether there are 3 points or 103, we recommend capturing every one within a 'value matrix' accordingly......

Businesses are continually seeking ways to raise performance, and effective pricing can play a pivotal role in boosting the bottom line over time and with deliberate attention. This Practice Note introduces pricing in law firms and sets out guidance on key considerations for any firm aiming to adopt a more sophisticated pricing model. Pricing warrants attention in every business—the connection between price and profitability surfaces both in anecdotes and in deeper analysis. Although the outcomes from refining pricing strategies and tactics will differ greatly, one study indicated that pricing has two to four times the potential to influence profitability when compared with other business levers. Firms that recognise and actively pursue pricing as a central strand of their strategy typically outperform industry peers without a pricing focus across several important financial metrics, eg return on equity and net profit. Firms that are moving towards...

This Practice Note is aimed at law firms. It explains why management information ( MI) is necessary and how it ought to be presented and circulated to secure: a shift in managers’ behaviour better financial outcomes Why do you need management information? Every business needs MI to: monitor performance against budget spot variances from budget as early as possible By its nature, MI concerns matters the recipient can influence. Do not circulate data merely because it is interesting; share it because it can drive improved performance. Many law firms have issued MI for years, yet there is often little proof that this has lifted efficiency or results. It may therefore be prudent to reassess what is being shared and pinpoint enhancements. Before computers, most practices produced minimal MI and partners were simply expected to maximise their billings each year. As most costs were fixed, a...

This Practice Note sets out guidance on managing financial risk. It aligns with the SRA Standards and Regulations 2019 and outlines commonly used financial risk tools. The duty to monitor financial stability and business viability You must: proactively monitor your financial stability and business viability—and, once you become aware that you will cease to operate, carry out an orderly wind-down of your activities identify, track and manage all material risks to your business, including those that may arise from connected practices The SRA does not prescribe how this should be achieved. In practice, the level of resource devoted to financial risk management will differ between firms and depend on factors such as firm size and current financial resilience. For example, a practice that relies heavily on bank borrowings may allocate substantial resources to establish financial risk systems and review them at regular...

One difficulty lawyers encounter when meeting a potential client is not knowing enough about the individual and the company they speak for. Getting ready for those early meetings is, therefore, crucial to maximise the chances of building the relationship from the outset as effectively as possible. This Practice Note offers pointers to support a lawyer in preparing for a meeting with a corporate prospect. Ten steps to a successful meeting The steps below will assist you in preparing for a business development ( BD) meeting and should improve your prospects of securing a positive result. Conduct initial research Identify principal stakeholders and decision makers in your target organisation. Collect as much detail as you can on the person you will meet and the organisation they represent, eg: on the person—what their present role is, their place in the hierarchy, and what their previous role was on the...

Whether you’re a fan or a critic, social media isn’t going anywhere. Handled with care, it can strengthen your personal brand on the web and help you build a robust online identity. Yet, as the press has repeatedly shown, charging in without thinking can see things go wrong with alarming speed. This Practice Note helps you shape a social media presence that works for you and your organisation, and offers guidance on: what others can view defining clear social media objectives your voice and tone ways to spark original content ideas developing resilient online networks insights from Chris Hadfield—‘ How to be a zero’ getting to grips with hashtags knowing when not to post What can everyone else see you doing? A simple rule still stands in this fast‑moving space: if you wouldn’t voice it to a room full of...

This Practice Note is aimed at law firms. It looks at how you can raise your people’s financial awareness so they are both more willing and better able to help you meet your financial targets. Financial awareness—why it should matter to fee earners? It is unsustainable to have capable fee earners who deliver excellent client service yet generate no profit from their work. To produce healthy margins, your fee earners must know the law and be attentive to every client’s needs, but these abilities on their own do not secure profit. Lawyers who grasp how a firm’s finances operate can satisfy clients’ expectations while simultaneously producing strong profits for the practice. In turn, the firm can reinvest in its people and its clients, fuelling even greater profitability. Fee earners with a commercial mindset are also more likely to give clients sound commercial guidance, not just advice that is...

For law firms, business development works best when it is guided by a clear, systematic and transparent approach. All too frequently, practices rush into tasks—like networking, authoring articles or rolling out campaigns—before properly grasping where they stand, settling on intended outcomes, or mapping the route to reach them. This document brings together three critical core phases of business development planning as follows: grasping your present position via both internal and external analysis establishing clear, meaningful firm goals and objectives creating a targeted, coherent business development and marketing strategy Taken together, these steps provide a practical, reliable foundation for sustainable growth. They ensure business development activity is purposeful, aligned with firm strategy, and capable of delivering measurable results. See also Precedents: Business development—internal analysis—law firms Business development—external market analysis—law firms Business development aims, goals and...

When evaluating a general damages claim, the practitioner ought initially to refer to the Judicial College Guidelines (JCG)...

This Practice Note This Practice Note reviews mechanisms used in settling litigation. A Tomlin order consists of a consent order paired with a schedule. It operates to stay proceedings on terms that have been agreed. The provisions contained in the schedule may remain confidential. This Practice Note describes the scope of confidentiality attaching to the schedule and sets out how it differs from a standard consent order. Sample wording for a Tomlin order is included, alongside links to precedents, as well as guidance on court approval. It also addresses varying, setting aside and enforcing a Tomlin order, including the considerations the court will take into account when handling applications for each. Further guidance is provided on interpreting and applying the relevant provisions of the CPR; however, some courts and divisions impose very specific requirements for both drafting and approval, and for approaching the schedule and confidentiality issues. Accordingly, you must consider the particular rules and court guide provisions in the forum where your claim is proceeding when drawing up the Tomlin order...

Date [ date ] Parties [ name of Landlord ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Landlord) [ name of Tenant ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Tenant) [ [ name of Guarantor ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Guarantor) ] [ [ name of Mortgagee ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Mortgagee) ] Definitions Within this Deed, the terms below shall be interpreted as follows: [ Annual Rent • the annual sum reserved under the Lease; ] [ Insurance Rent • the Tenant’s share of the Landlord’s costs of insuring the Property (as set out in the Lease); ] Lease • the lease of the Property dated [ date ], entered into between (1) [ the Landlord OR [ name ...

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