Law firm cash flow: Improve your firm's financial health

As the end of the financial year approaches, many solicitors are likely to be reviewing their cash flow and considering ways to improve their financial health. Positive cash flow is essential for your firm to be successful in such a competitive market.

For those facing cash flow problems, there are a number of things firms should consider for improving cash flow and achieving long term success.

Tips For Improving Law Firm Cash Flow

1. Get your finances in order

Understanding your finances is essential for cash flow management. Use cash flow forecasting and figure out which types of cases are bringing in the most money and which are not. Review your outgoings and make decisions on which expenses can be cut to improve cash flow and reduce costs for your firm. Get advice as early as possible to ensure you make the best decisions for your firm.

2. Remote working

The pandemic forced us to adapt in our ways of working and has shown us that working remotely as a law firm is possible, and in some circumstances, a more viable option. Allowing your staff to work from home, either part time or full time could allow you to reduce the size of your offices and reduce your outgoings on real estate, heating, and electricity, cutting costs and improving flow of cash.

3. Exit an unprofitable market

The legal services industry has faced many challenges over the past decade. It is unsurprising that some law firms have made the strategic decision to exit specific practice areas to allow them to focus on more profitable markets. With the help of R&R Solutions, you can ensure a smooth, compliant exit from any market, placing files with the most suitable firms from our panel of solicitors, allowing you to preserve the value of your locked-up WIP

4. Free up value locked in your WIP

If you decide to exit an unprofitable or less profitable market, you could choose to transfer your existing files to an alternative firm of solicitors. Using the R&R Solutions method will ensure you recover the maximum value locked in your work in progress, thus helping to improve cash flow when you need it most.

5. Consider a merger or acquisition

It has become clear in recent years that larger firms have more power to compete in such a competitive legal market. Due to this, the number of mergers and acquisitions in recent years has increased substantially. In some circumstances, the merging or acquiring firm may not wish to continue in a specific legal market. If this is the case, R&R Solutions can assist firms in leaving an unsuitable market and placing files with a suitable firm on our panel.

How can R&R Solutions assist?

R&R Solutions understand the importance of having positive law firm cash flow. We can work alongside your firm to help you leave a less profitable market, improve your cash flow by releasing value from your work in progress, and assist if you choose to take the merger or acquisition route for your firm.

In the worst-case scenario, you may be required to close your firm due to cash flow issues. R&R Solutions can assist you in this situation to ensure a compliant closure of your firm.

Our process involves discreetly selling a firm’s cases to multiple purchasers on our panel of solicitors. This mitigates the risks to the buying firms and results in a higher value for the work in progress being recovered and provides you with a share of any success fee, whilst ensuring SRA compliance.

Our team manage the whole process from transfer of files to appropriately qualified panel firms suited to deal with your unique client matters through, to collection and management of costs at conclusion. Our fees are only payable as a proportion of what you recover, so there is no risk to you.

If you would like to find out more about R&R Solution’s process, feel free to get in touch with our Managing Directors on a confidential basis: David Johnstone at david.johnstone@rrsolutions.co.uk, or 07887 796 989, or Sally Dunscombe at sally.dunscombe@r-rsolutions. co.uk or 07774 205 870