How financially fit is your law firm, asks Brent Wilkinson
Recent research from insolvency trade body R3 showed that just over 30% of UK law firms are at risk of failing within the next 12 months. How can these firms avoid failure, and how can they ensure that their law firm is “financially fit”?
In order to keep a legal firm healthy and open for business, it is important that, for example in an LLP, the members are fully aware of the internal workings. In many cases the mentality of the members can be the first downfall of any LLP; however, by thinking of the business’ needs first, there are a number of common mistakes which can be avoided.
Don’t milk the cash cow
As most partners within a law firm will be aware, remuneration within an LLP structure is dictated by both the profits generated by the business and the available cash to distribute. However many firms enter into financial difficulty by taking too much cash out of the business for partner remuneration,
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