Management Assistance Program
Reviewing Your Law Firm’s Financial Picture (April 20, 2020)
At this point between clients who are laid-off, clients whose businesses have closed and courthouses closed except for emergencies and other limited services, most Oklahoma lawyers and law firms are looking at significantly reduced revenues for the near future.
This is an appropriate week to do some budgeting and short-term financial forecasting to determine what adjustments can be made. Some scary hypothetical situations need to be examined even while you hope that they do not occur. What would a 50% drop in revenue for the next three months look like? Or 25%? Are there changes you can make on the expense side? The challenge for law firms is many expense items do not decrease even when the firm is closed or in a work-from-home scenario. Payroll and physical “plant” expenses are likely the major overhead items.
If you were one of the lucky ones to receive a Paycheck Protection Program loan, then loan forgiveness is contingent on your business continuing its full payroll, which for many may remove payroll expense reduction from the options for expense reduction, not that most law firms wanted to cut staff or staff hours anyway.
In order to assist with your financial review this week, we have a video interview with Pete Roberts, a Seattle-based law firm consultant and certified public accountant. Pete has spent his career advising law firms and discusses what he has seen in Seattle recently and how law firms can react to the changes caused by our current crisis.