Course · Interpersonal Skills
The Firm’s Money
Understand how a law firm makes and loses money, forecast cash, get paid, budget, share profit fairly and protect the firm.
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Most lawyers are trained to do legal work and not to read a set of accounts, and many firms find out about a cash problem only when the bank writes. This is the third course of the Legal Management series. It follows a firm’s money from the leaks between work and cash, through pricing policy and billing, cash flow and lock-up, getting paid, budgets and the few measures worth watching, to what happens to the profit (tax, reserves, drawings and how partners share it) and how to protect the firm with controls, insurance and stress tests. It comes with a Cash Forecast that shows, month by month, why a profitable firm can run short of money, and it ends with a capstone in which you diagnose an invented firm that is busy and overdrawn. Accounting and tax rules differ by country, so the course teaches principles and sends you to your accountant for advice.
The Curriculum
How a firm makes and loses money: revenue, costs, profit and the leaks in between→
Revenue from time and fees, fixed and variable costs, profit and margin, leverage, the five leaks and reading a simple income statement. Practice: Where Is the Leak? and Read the Statement.
Pricing policy and billing: rates, discounts, fixed fees, bills and what clients are told→
A rate card and its purpose, discount and write-off rules, governing fixed fees, billing cycles, bill design, what clients must be told and a pricing review. Practice: Discount or Hold? and Fix the Bill.
Cash flow and working capital: why profitable firms run out of money→
The work-to-money cycle, work in progress, debtors and lock-up, the cash forecast, growth and cash, and what to do in a squeeze. Practice: Count the Lock-Up and the Cash Forecast.
Getting paid: terms, money on account, credit control and difficult debts→
Terms that help, money on account, a credit-control routine, disputed bills, the limits on remedies and a culture that talks about money. Practice: Chase or Wait? and Credit Control Order.
Budgets, targets and management accounts: planning the year and watching it→
Budgets built from capacity, the key measures, targets that people can influence, monthly management accounts and variance analysis. Practice: Build the Budget and Read the Variance.
Tax, reserves, drawings and profit-sharing: what happens to the profit→
Tax set-asides, how owners are paid, drawings that follow cash, reserves, partner pay systems and reinvestment. Practice: Split the Profit and Spot the Drawings Mistake.
Controls, risk and resilience: protecting the firm’s money and its future→
Separation of duties, reconciliations, client-money care, fraud, audit, insurance, stress tests, continuity and the choices about borrowing, growth and exit. Practice: Who Should Do What? and Stress-Test the Firm.
Capstone: Capstone: diagnose and fix an invented firm’s cash problem→
Find the leaks, calculate lock-up, forecast cash, fix collection and discounts, set drawings and reserves, check controls and write a one-page financial plan.
What It Covers
“You will learn to see where a firm’s money goes, to forecast cash before it runs out and to decide on numbers rather than hope.”
- Seven modules and a capstone that follow the money: leaks, pricing, cash, collection, budget, profit and protection.
- A working tool you keep using: the Cash Forecast shows free cash month by month, the lowest point, how long the firm is below zero and the effect of faster collection or lower drawings.
- Honest about law and tax: it teaches the questions and the principles, and is explicit about the client-money rules and the limits on remedies against unpaid clients.
- Built to connect: it uses the break-even tool of Starting a Law Firm, the people costs of Hiring and Keeping People and the metric and dashboard ideas of the Law and Data courses.
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Common questions
- Do I need accounting knowledge?
- No. The course explains each term in plain words and uses simple arithmetic. It will make you a better partner in a conversation with your accountant.
- Does it give tax advice?
- No. Tax and accounting rules differ by country and structure and change. The course shows what to ask and why, and urges you to take advice from a qualified accountant.
- Is it for firms or for in-house teams?
- It is written for law firms, but in-house leaders will find the budgets, measures, lock-up and controls relevant, and the profit-sharing material less so.
- How does it differ from Matter Economics and Pricing?
- That course prices and manages a single matter. This course looks at the firm as a whole: its cash, policies, budgets and controls.
- Does the Cash Forecast predict my firm’s cash?
- No. It is a planning aid that uses an invented firm. Replace the figures with your own and test your own assumptions.
- How do I get the Certificate of Completion?
- Sign in, pass each module quiz and keep a course average of at least 75. The certificate is then issued and emailed to you automatically.
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