We all know how different accounting considerations are important for different modes of businesses, right? However, when you talk about a law firm, the considerations needed to be made might be a bit “too” different from the rest, owing to the nature of the business. Here are some of the important accounting considerations that law firms need to make:
One of the most important things that a law firm needs to consider is the time each individual is spending for generating revenue for the business. However, it’s a bit trickier than what you might initially think. The fact of the matter is that the working hours of an attorney are not as easily determined. If you tend to classify the time an attorney spends in their office as “working hours” then you might be mistaken. Why? Well, it’s because an attorney will not bring in revenue simply by sitting inside their office. Rather, the revenue that they bring in will depend, typically, upon the time the attorney spends with their clients. To put it simply: when making decisions factoring attorney hours, a law firm will need to bring other considerations into play as well.
Most law firms offer reimbursements to their clients in case a case doesn’t go their way. I mean…that’s what makes the law firm seem trustable and competitive, right? However, the fact of the matter is that law firms don’t like reimbursing clients, for obvious reasons. When it comes to reimbursements, the management of law firms needs to keep a close watch on not only the reimbursements made but also the attorney who handles that case. Why is this important? Well, having an attorney who consistently creates a need for reimbursements needs to be held accountable. Such considerations will not only make the law firm more profitable but boost the competitiveness of the attorneys as well.
Ultimately, a law firm will need to consider the profitability that each attorney is bringing in for the law firm. In case the profitability generated by an attorney doesn’t justify the expenses made by the company, over a period of time, then it points towards the fact that there’s a need to consider the future of the attorney with the law firm. The law firm is a business after all, and the purpose of every business is to generate profits, at the end of the day, right? If you think about it, factoring the profitability of an attorney will aid the business in making important business decisions. For example, the growth of attorneys who are extremely profitable will, obviously, be much greater than attorneys who’re not doing as well,. Such a consideration also aids the law firm in deciphering the right set of attorneys that will be catering to the most important clients.
There are countless other accounting considerations that are important for a law firm, if it wishes to maximize its profitability. For expert advice on the matter, you can schedule an appointment with the experts at SKB Accounting.