Discussing the positives and negatives from lockdown and managing a firm through the pandemic with valued client Campbell Read, partner at Stewart Balfour and Sutherland.
Living in these uncertain times and with the big shift towards working from home. Either full time or even blended working, 2 days in the office and 3 days at home sounds appealing but presents mental barriers and frustrations.
When you are used to the morning commute to work, getting yourself some morning me time, before walking straight into the working day routine. Next, a face to face team meeting with management and work colleagues to receive your fix of inclusion, recognition and work chatter. Then getting on with your working day as normal, something that you have done for years. Going to the same places for lunch or eating the lunch you’ve brought from home. Abiding by the same rules, time restrictions and seeing familiar faces. Finishing off your day at the usual time, with the normal commute home, listening to music, podcasts or reading your kindle or book, before back home to jump on the treadmill of your evening schedule and family life.
We are creatures of habit and routine, but we only see and feel the realisation of this when we are pulled out of our work environment due to a significant change in our lives, for everyone this has been due to Covid. Our times are changing and we need to adapt.
By working from home, problems arise. Many are using the time it would take them to commute to start work earlier and finish later. As work and home life merge, it becomes harder to switch off. Normal routines have gone. Checking emails in an evening, or going back to your desk to do more work in the evening, means that other areas of life that are valuable to you get neglected. You may not be present with the kids or family, you may have stopped doing regular exercise. Work can become exhausting and takes over your life.
Working from home can be distracting. The home comforts and family can pull our attention and make it harder to focus on work.
Online meetings can be more draining than attending meetings face to face. Speaking up during an online meeting can also be anxiety provoking. As the camera turns onto you or your name is highlighted when you speak, the mind can be filled with what if thoughts about what your colleagues are thinking. The lack of facial cues and body language from colleagues to indicate that they are interested and listening are gone. Some people end up staying quiet and contributing less, heir confidence lowering as they are critical of themselves for holding back their opinion.
Some people struggle with the lack of simple social interactions about daily life. The chats with colleagues in the kitchen or while at your desk have stopped. Some struggle with not getting as much regular feedback from colleagues or their boss about the quality of their work. This can trigger self-doubt and self-criticism.
Working from a home office presents two major challenges: Effectively separating business and home life, and the lack of stimulating social interaction that you would normally have working in an office with colleagues. At the same time, working from home brings numerous benefits to one’s lifestyle, and feng shui can help you make the best of it. Learn how to apply the philosophy of feng shui to make your space an inspiring and conducive environment for work.
An important office feng shui guideline is to have your home office as far from your bedroom as possible. If the layout of your house allows, having a separate entrance to your home office is ideal. If this is not feasible, be sure to create as much division as possible between your home office area and your bedroom; this is the basis of good home office energy.
Plan your home office with your success, well-being, and productivity in mind. Think of specific images, inspirational colours, meaningful career memorabilia, and appropriate decor items that make you feel successful, appreciated, and happy. Since you are working from home, feel free to fully express your creativity in decorating your office. Depending on your chosen field, you need to make sure your home office reflects the energy you want to project in the world.
Be mindful of the quality of air and the quality of light (both natural and artificial) in your home office, as these are two of the good must-haves. If your brain is starving for oxygen and your body does not get enough natural light, you will not enjoy being in your home office no matter how much you love your job. Consider investing in full-spectrum lights and bring at least a couple of air-purifying plants into your home office. The energy of plants will refresh not only the energy of your space but also your own energy.
Position your desk in the so-called feng shui commanding position to attract stronger and more successful energies to your work area. A feng shui commanding position means you do not have your back to the door; your desk is positioned further from the door and not in line with it. Be also mindful of not facing a wall while working at your desk.
Having structure to our days is important. Getting up at the normal time you would have got up to start your commute to work, allows you time to then add pleasure and fun into your life. If you know you’ll be doing Zoom meetings for 8 hours getting daily fresh air and exercise is important. You could go for a mindful walk, do exercise, make a healthy breakfast, even prep for your lunch or evening meal. Research shows that if we schedule things into a planner, we are more likely to do it. For good mental health we need a balance of activities that bring us a sense of achievement and pleasure. Activities can be active, relaxing or soothing, on your own or with other people. Connecting with other people is good for our mental health, humans are social creatures. Choose video chatting with friends and working out over binge-watching TV shows.
Living life in accordance with all our values makes for a meaningful life. Switching off from work helps us to do this. Take short breaks during the working day. You could meditate, read, go for a walk, get fresh air or chat to a friend. Once your working day is done, note what you need to do the next working day on a list, clear your head. Prioritise your workload into smaller manageable time slots to prevent procrastination. Think about what has been good about the day, what you are grateful for, and note what has been challenging. Tidy your desk, get changed and turn off your work email notifications. Switch off from work and be present in your personal life. Do 3 x 20-minute recovery blocks before work, at lunchtime and especially straight after you log off from work. Focus on calming activities.
We launched an additional service last year. Preparation of Statutory or Annual Accounts (depending on whether the client is a Ltd company, LLP, Partnership or Sole Trader) and the Corporation and Self-Assessment tax returns flowing from these. These services are offered to our clients that use us for their day to day cashiering, who ultimately need this work done by somebody to remain compliant. We already had chartered accountants in-house. We also have access to our clients’ books and records (that we also knew to be in good order!) It just seemed like an obvious step to offer additional ‘compliance’ services to our clients.
The service has proved extremely popular since launch, with both existing firms and new start firms alike. To them, it just makes sense to have their financial compliance taken care of in the most efficient way. So, instead of us doing the day to day and month to month record keeping, and then somebody coming along once a year to turn that information into a set of accounts, we can do it ‘under one roof’. It saves the client dealing with multiple suppliers, saves them being asked for information by external Accountants which we already have, and saves us time dealing with a third party who are coming at it from a standing start, given that they may only interact with their client once a year.
There may come a time when we have others working in this team, but for the time being, the work from start to finish is done at the most senior and experienced level. This reduces risk. With full understanding of the specifics of the solicitors’ accounts rules, and the complexities of client accounting that ‘normal’ businesses do not have to deal with, we reduce the risk of mistakes or omissions. We will also, generally, turn a set of Accounts around more promptly. As with most things in life, the quicker you deal with something, the fresher it is in your mind, and the less likely you are to forget some of the details.
Importantly, we are also very clear on where our service offering starts and finishes. If the client requires more specialist advice on something such as Tax or Pensions, we are very happy and proactive in referring them on to a specialist in that area through our network of strategic partners. Again, sticking to what you know is fundamental to reducing risk.
If this service sounds like it might benefit your firm, I’d be delighted to have an informal chat about how we can help.
Gregor Angus, Cashroom
The problem with history is that it takes a long time.
Often it takes a long time to happen, but more importantly, it takes a long time to work out what happened, how important it was, and what caused it. And more importantly – it takes even longer (if at all) to learn the lesson it teaches.
COVID 19, and the resulting lockdowns blighted last year, and continue to blight 2021. According to the John Hopkins COVID Resource Centre as of mid-January 2021 97m people have had COVID worldwide and 2.1m people have died (https://coronavirus.jhu.edu/map.html). World economic output has dropped by 7%, the biggest drop since World War 2.
No doubt, the immediate impact of COVID is significant, but what of the long-term trends. And what of the “unintended” consequences?
In his extraordinary 1998 book, “Guns Germs and Steel”, Jared Diamond explained the impact on civilisation of transgenic diseases jumping from farmed animals to humans. Specifically, the part smallpox played in decimating the native populations of North and South America, making the European conquest of these continents so much easier.
It appears that COVID 19 was also a transgenic disease, jumping species somewhere in China. That deadly “chance” highlights the appalling damage (not to mention suffering) caused by rearing and slaughtering 80 billion animals a year, so we can eat meat. Might COVID-19 encourage a move to Veganism?
COVID 19 shows how a long term, high impact, yet relatively unlikely, risk can devastate … if it happens. It illustrates how ignoring those risks, to deal with more likely, but less impactful issues, comes back to haunt you. Might it provided us with a terrible “wake up call”, (hopefully) forcing us to deal with climate change?
COVID 19 has highlighted inequality. Inequality between those children who can keep up with their remote lessons because they have a laptop, and those who don’t, and can’t. Inequality between higher skilled workers who can mostly work from home, and those who can’t. Inequality between races, where the pandemic seems to hit the BAME community harder than the white community. And finally, inequality between the rich world, racing to vaccinate their population, and the rest of the world …. where vaccines are too expensive, too difficult to manufacture or too difficult to distribute. Will COVID-19 force democratic governments to do more to address growing inequality?
And finally, in those western democracies the state has stepped into citizen’s lives in ways that would have been unimaginable even 2 years ago – and mostly for the good (or at least with good intentions – let’s not talk about the outcomes!). One lesson history teaches is that, when sates take more control of their citizen’s lives, they give it up reluctantly.
To return to my first paragraph, history will take time to work out where all this ends. Dramatic events can have huge, unintended consequences. That’s particularly true of diseases.
You can draw a line between smallpox and the colonization of the Americas, between the Black Death and the end of serfdom in England, between African’s relative immunity to malarial mosquitoes and the Atlantic slave trade, and between the Spanish Flu, the great depression, the rise of Fascism and World War 2.
History has a funny way of things working out!
David Calder, Cashroom
2,000,000,000,000!! There were over 2 trillion Google searches per day in 2020. If we’re not looking for it online we’re not looking for it at all.
Once upon a time it was claimed that people buy from people; and whilst this to a small extent remains the case, the truth is that we now buy convenience. If we do not get it fast these days then we move on, and quickly.
You’ll be a lawyer who gets this; your ‘shopfront’ these days is your website. You will have appointed a fantastic Digital Marketing agency to design your website in such a way that it makes your phone ring or your email ping! You’ll have designed a sales process which makes sure that any enquiry is dealt with very quickly! You’ll not lose any ‘shopper’ to any one of the many hundreds of other lawyers who are just waiting online for your system/process to slip up.
As a lawyer I know that you are rare! For the majority, sales systems and processes are for shiny sales people selling Double Glazing and Second Hand Cars, right??
My firm relies on the web to supply 80% of its new clients every day, month and year. I know that answering enquiries and quickly is critical. I’ve learned the hard way though. I had a receptionist who became my ‘Sales Prevention Officer’.
Onwards Answering is my answer to my law firm, I know it’s the answer to yours! I know that getting that email/phone/message answered and quickly just needs to happen, or I lose. I know that telling a ‘shopper’ that we can help them before anyone else does is key. My law firm’s progress is founded on this.
Onwards Answering supplies law firms with a telephone reception and diary management service which will simply improve your firm’s turnover, guaranteed! A bold statement I know, but it’s true! Allow them to become your front-line sales team. They’ll answer all your calls but most of Onwards Answering is designed and is primed to listen for your next new business opportunity. Our call handlers act fast in dealing with getting your shoppers talking to you, and on your terms. But even that’s just not enough. We’ll become an integral part of your business sales process and we’ll work with you – and even teach you – how to convert leads into new business and increase your turnover, all guaranteed!
85% of all missed calls do not call back! Let us begin to help you today.
We have quarterly training sessions with Rebecca at Tricres and I can honestly say she is great. In a pandemic when training might not be at the top of your priority list I highly recommend firms take the time to go through an exercise like this. Beforehand I always think I could really be doing without this today, I need to be getting on with X, Y and Z, but I ALWAYS come away up beat and feeling better about work and also about homelife – it’s basically one and the same now isn’t it!?!
We had our quarterly session last week and Rebecca sprung emotions on us. Believe me when I say we are not a touchy feely bunch at all. This did not come naturally to any one of us but we completely let it all out and you know what…it felt amazing! In-fact most of the company has had it now but I will only speak about the session I attended. You might think that sounds horrific and is not for you and your firm and I would have agreed in your position but after doing it I am a convert.
It is important we help people feel better and we all do a better job when we aren’t under stress. While we will be encouraging team members at all levels to tell us how they feel we felt it was important to go through the exercise ourselves.
Rebecca introduced the session and that we were going to be talking about emotions; I recoiled and potentially muttered something rude to myself. As a Scot it’s not naturally in me to talk about such things never mind with my colleagues (I even quite like that people can’t hug me anymore).
Now I won’t give away her secrets, but Rebecca had some tools and ways to get 12 remote individuals opening up to each other from within their own homes through a video call.
Not only did I feel so much better divulging how the stresses of home school, having a toddler at home and doing a good job at work were getting to me but I immediately felt closer to my team again, not an easy feat with remote working. I felt empathy towards everyone’s struggles and I also didn’t feel as alone in mine. Now when I type it here it doesn’t look a lot, but I really went into how these things are making me feel. I don’t suggest we do this as a team every week but ongoing being more mindful of your colleagues’ emotions can only be positive for the business.
We are a diverse management team. We have people living alone, those home-schooling young kids, older kids, those who have spouses working in hospitals or the care sector, one is based in America and those who have full houses again with children that had left for university. It is easy at the moment to get caught up in just how awful your own situation is and to hear how your colleagues personal life is really actually going at the moment, nobody was allowed to use the word fine, was such a beneficial insight for everyone.
Obviously, we threw in the odd joke when it got too serious or awkward, we are human after all, but we all came away and agreed one thing – we will openly talk about our emotions in our business more.
I now understand the importance of this for my children too. I am currently home schooling a 5 and a 6-year-old and each morning when they log-in they each have their own way to let the teacher know how they feel. My five-year-old has a display of coloured monsters. Green monster is jealous, red monster angry, yellow happy – you get the idea. My five year old is getting used to telling us how he feels at the start of the day and in turn his teacher knows what language to use to help him learn better, what tools to give him to improve how he feels, perhaps when to challenge him more because he is in the right mood – how amazing is that as a child and yet as adults when we are told to talk about emotions we physically recoil!
We might not be spilling our hearts out everyday and although post-pandemic the emotional challenges might not be as tough; we will continue to talk about how we feel at Cashroom.
Emma O’Day, Head of Marketing at Cashroom
I almost called this post “Mama Mia” – as in the Abba song “Mama Mia – here we go again” … but thought better of it!
With infection rates soaring, and the death toll mounting at an alarming rate, we’re all back in Lockdown, pretty much where we were in April last year. At the Cashroom we have re-initiated our business continuity plan and are back to regular business continuity meetings every other day.
Our biggest worry is complacency – the thinking that “we’ve been there, done that” and it will be fine. But it’s different this time.
It’s different because, last April the legal sector slowed down dramatically. That allowed us all to furlough staff that had child care commitments and found working from home challenging. This time, like many of our clients, we’re busier than we were in February last year, and furloughing staff is not an option.
It’s different this time because while no more deadly, the new strain of COVID is far more infectious. So, we can all expect more of our staff to be incapacitated by illness.
It’s different because we’re all tired, run down, and sick fed up with lockdown. The mental health of our employees is more “challenged” than ever.
So we are taking nothing for granted, preparing for the worst, while hoping for the best.
And you should too!
We’re here to help the profession through lockdown and beyond. If we can help you or your legal finance team, please get in touch.
And there is light at the end of the tunnel…..my wife (who’s a Doctor) will receive 3,000 doses of the Asta Zeneca vaccine next week for her older patients … we’re getting there!
David Calder, Managing Director at Cashroom
To stimulate immediate momentum in the property market and to support the jobs of people whose employment relied on custom from the property industry, the government decided to introduce a temporary Stamp Duty Land Tax (SDLT) holiday as relief. This relief increased the starting threshold of residential SDLT from £125,000 to £500,000 from the 8 July 2020 until 31 March 2021. A similar holiday is in place in Scotland although with a £250,000 threshold set until 31 March too.
A petition calling for the government to extend the SDLT holiday until September 2021 has now attracted more than 86,000 signatures, up from just over 54,000 earlier this week. At 100,000 signatures, the petition to extend the stamp duty holiday will be considered for debate in Parliament.
Delays are holding up homebuyers as the current lockdown places extra pressure on conveyancing solicitors, mortgage lenders and surveyors, struggling to push through purchases.
Todays Conveyancer published an article this week detailing law firm Dutton Gregorys promise to clients. They have unveiled their latest campaign promising if they don’t complete a client’s property purchase before the deadline, client’s won’t have to pay their conveyancing fees.
In a press release on their website, it says:
“Dutton Gregory want to do everything in their power to ensure all their clients affected by the Stamp Duty Holiday complete before the deadline – alleviating stresses where possible and saving thousands of pounds in the process.”
Would you follow Dutton Gregory in a similar campaign your own firm?
Is extending the SDLT holiday scheme for those already committed to the process the right thing to do or is it going to reach a chaotic end? We have seen a dramatic change to the furlough policy and could we see the same again here?
The latest lock down is only further adding to the pressure on current property transactions, with many working from home, many having children with home schooling obligations and many unfortunately falling ill. Many firms are beginning to fear the potential for negligence claims rising if they don’t get deals completed before the deadline.
While the transaction of buying and selling a property differs quite substantially between Scotland and England with most notably the completion date being agreed at different stages of the process, will the UK be united in its approach? Could the Scottish Government make a marked distinction between Scotland and the rest of the UK by extending the LBTT holiday beyond the current March 31st deadline? The Treasury has already said that it has no plans to extend the deadline so Nicola Sturgeon could make a competitive difference for Scotland by extending the tax holiday north of the Border.
The amount of legal cashiering work approaching this deadline may be impractical for many firms to meet. During this time it is more important than ever to be accurate, efficient and compliant. We help over 200 law firms in the UK so they can concentrate on their legal work. This is the ideal time to outsource your legal accounting to our experts. Contact us today.
Emma O’Day, Head of Marketing and Communications at Cashroom
We regularly get enquiries about our services from start-up law firms. They are generally solicitors who have realised that they want to work for themselves, that they don’t really like the management style of their boss or Partners, or that they want flexibility that their current role doesn’t allow them. They are sometimes niche practitioners who know with some confidence that clients will follow them, but are just as often practising in areas such as conveyancing, family law, or personal injury.
Lately we can add to that list people who have been made redundant by their firm due to Covid-19 related uncertainty, and those who have realised by working remotely for the best part of a year that they don’t actually gain very much from all the back-office infrastructure and cost their current firm has, and could very easily and seamlessly set up on their own. For example, one recent new enquiry told me that she has realised they don’t really need a receptionist to answer the phone – calls can be easily diverted to the relevant Partner, and they definitely don’t need multiple typists – it turns out that typing emails, or short letters, themselves isn’t that difficult or time consuming.
Just as importantly, and often above everything else, the people starting these firms realise that working for themselves can mean earning more – they receive all the fees they earn, minus a few overheads (that they are in control of) – rather than a far lesser sum, often as little as the traditional professional services business model (roughly 33.3% to the Fee Earner by way of salary, 33.3% to the Equity Partner, and 33.3% towards overheads/costs).
So, if you have started the new year with a resolution to set up your own firm, please do get in touch for an informal chat about it. We have been through this many, many times before with all different types and sizes of firms. We are very well placed to recommend some things you may want to think about, some networks you may want to join, some systems or processes you may want to put in place, some people you may want to consult with on, for example, which bank may be best suited for your needs, and of course we can chat through our service offering to ensure accounts rules compliance, payroll and accounting are taken care of, all without the burden of employing somebody.
We have a vast amount of legal industry knowledge and experience, and a wide network of contacts. We would be very pleased to share these with you, if it helps you along your journey.
Gregor Angus. Senior Business Development Manager
Most lawyers have been asked that questions multiple times. We all have our own answers, and if you’re like me, the answer may change to fit the circumstances of the question.
However, last night, watching the (ultimately) failed coup taking place in Washington DC, I was reminded of why I became a lawyer.
The legal system creates a set of rules and norms that regulates all of us. At its core, it stops society falling into chaos, where the strong prey on the weak, and anarchy rules. Ironically, the reason for the attempted coup last night, was because the system worked and judges across the US threw out every attempt by the Trump administration to prove voter fraud and the legislature were doing their job – the only avenue left for those “protesters” was the chaos and violence that was on display last night.
But it did not work.
American democracy, and the American legal system was strong enough to defeat those who wanted to subvert it. It was messy, and noisy, and took longer than it should have (and tragically took 4 lives), but it worked.
I was incredibly proud to be a lawyer last night. To be a (very small) part of a system that has defeated tyranny and anarchy across the world and did so again in the US yesterday.
And I know it might not seem like that when you’re 14 hours into a mediation and nobody wants to settle, or it’s midnight on completion day and you still haven’t agreed the draft, but we are all part of that system, and we should ALL be proud.
David Calder, Managing Director at Cashroom
The last article I wrote for the blog sounded an upbeat note for 2021, comparing the 2020s to the “roaring” 1920s. Since then we’ve a new strain of the virus, chaos at Dover, and the continuing Brexit drama, with no deal in sight.
All looking a bit bleak again.
However, some more thoughts to try and keep us smiling over the festive period.
Part of the reason for my optimism was clients reporting that there was a “lot of cash looking for a home”. Well, I’ve been looking at that a little bit more.
According to Refinitiv, 2020 has been a bumper year for raising finance. Initially, much of the money raised was “defensive” in nature (in April Carnival Cruise Lines raised $6.25b in debt, and Boeing sold $25b in bonds around the same time), however by the summer more business were raising finance presumably because they saw opportunity. The cash now held by non-financial firms is around $7.6t, up from $5.7t last year.
That’s an awful lot of “cash looking for a home”! Where will it find that home?
Bluntly, I have no idea, but there is one thing that’s clear – the pandemic, and the various lockdowns have driven innovation. Business have been forced to change dramatically, and people are beginning to realise that the things they thought would be “too hard” or would take too long are actually a lot easier than they thought. Change and innovation isn’t as difficult as we all thought.
So, we have a situation where businesses have lots of cash and are less fearful of new ideas and change….! I suspect some of that cash may “find a home” in technology and innovation investments!
And there’s something else.
Productivity is the engine of growth and prosperity. Doing more with less drives increases in income and living standards. However, since the financial crisis productivity in the western world has remained pretty static.
Economists debate why that is. However, one theory is that it takes time to work out how best to deploy new technologies effectively. Think about the “dot com boom” – everybody knew that the internet would revolutionise the world … but it took a while to work out how that would happen – hence the dot com bust. It takes time for businesses to work out how best to use technology and make the organisational changes that let them do it.
Well, the pandemic has forced our hand. There has been more organisational change, and technological innovation in the last year than many people expected in the next 5 years.
Now combine that, with all the “cash looking for a home’ and it makes you wonder if we are looking at a productivity boom in the 2020’s…..!
The more I think about it, the more I can see reason to be optimistic … and the more I want to learn the Charleston!
David Calder, Managing Director
As we look to welcome in a new year, the UK economy waits with anticipation over the prospect of an effective COVID-19 vaccination and the delivery of a BREXIT deal that will support UK businesses.
The challenge for many law firms, outwith the concerns over future fee income levels, will be the reality of increased costs caused by the ending of the furlough scheme, the start of CBILS loan repayments and the settlement of any deferred tax/VAT. Adding to this, the increases to Professional Indemnity Insurance (PII) premiums leads all firms to consider how best to recoup cash and build sustainable financial reserves.
Lexcel encourages law firms to adopts strict controls (Lexcel 2.2 ) which should help to maintain a watchful eye on business finances, and the SRA has also mandated that firms must be able evidence their approach to financial stability (SRA Code of Conduct for Firms 2.4).
SRA recently published their Risk Outlook 2020/2021 which offers further insight on several future developments and it is clear that firms must proceed with renewed energy in order to encourage an effective flow of cash within the business.
In the spirit of Christmas, these ‘three wise kings of finance’ may not offer gold, frankincense or myrrh but they will provide an immediate positive result for your firm heading into 2021.
The threat of negative interest rates has been widely discussed over the last couple of months and the big 4 high street banks offer a historic low rate of 0.01% on client monies. Do not despair – it is still perfectly possible to achieve higher rates on ‘top slice’ client monies. You just need to know where to look. That is an extra £4,900 per £1m deposited.
The Law Management Section offers an opportunity for firms to benchmark their financial performance. Participants receive a bespoke report which they can use to effect positive change in the approach to cash management. For example: A £5m turnover practice that can reduce lockup (Debtors and WIP) by 10 days can expect to reduce their cashflow by £136k. This reduces the reliance on an overdraft and provides headroom for future periods of cash shortages. This practice should be an essential annual event for Lexcel firms and offer a great exercise for the COFA to really understand the financial position of the firm.
Many firms now realise that allowing fee earners to earn fees whilst the finance team owns billing/cash collection, creates a perfect balance. Evidence is of course anecdotal and success levels will vary amongst firms but It is encouraging to learn that firms that have made this step report a positive impact on cashflow and more importantly, the positive development of their teams understanding of the importance of effective cash control.
There are many ways to improve the financial performance of a legal practice, and what is important is to first have a clear understanding a firm’s cultural approach to financial management. Only then can an improvement plan be mapped out.
The Financial Stability Scorecard is a free resource available to firms associated with The Cashroom. The scorecard takes less than 5 minutes to complete and does not require any financial information. With 100% of respondents confirming the scorecard helps to evidence their approach to financial management, you can be sure this resource offers added value.
Paul McCuskey is Managing Director of Gemstone Legal which helps law firms to maximise income whilst reducing risk. Former UK Head of Professional Practices at Bank of Scotland and Lloyds Bank, Paul has worked with law firms of various sizes and complexity across the UK and Northern Ireland. Having seen banks shift away legal sector specialism, Paul set up Gemstone Legal to offer firms a trusted, independent approach to finance and risk management. Paul is a Lexcel assessor and speaks and writes regularly on financial factors impacting the UK legal sector.
Your firm’s finance function sits at the centre of your firm’s risk profile.
There are many different elements of risk, which means that it is an area ripe for improvement if you can identify those problems. Improvements in your risk profile can lead to efficiency savings, cost savings, lower PII premiums and better nights’ sleep.
See how many issues you can recognise in the following fictional account.
Bloggs & Co is an average firm in an average town. They have a mixed client base of private individuals and businesses. They operate across three small offices. Some clients are local, and some are from other parts of the UK. [Risks around AML processes- whose responsibility is it within the firm to make sure there is compliance?]
The firm’s finance function is based in their main office. There is a senior cashier, Maureen, who has no formal qualifications, but has been with the firm ‘forever’. She has done the cashiering for thirty years and was the only one who knew the passwords for the old practice management system. [Many firms have this situation with passwords, and with one person being the only one who can make the finance processes work]
Last year the firm changed system and Maureen has struggled. [System change can prove stressful for the finance team, as the system is often chosen for reasons related to case management and we hear of cashiers receiving little training, or in some cases simply being resistant to change].
She now keeps password details on yellow stickers next to her screen. [Clear security risk, but surprisingly common] The new system is cloud based and many data reports are available, however Maureen tends to provide info to the partners using Excel spreadsheets. It can take several weeks to pull the data into her old spreadsheets but she prefers to do it that way. [Inefficient process and providing the Management Information to the partners so slowly makes the information far less useful]
The changes to the Solicitors’ Accounts Rules recently caused some stress for Maureen and for the COLP but she assured the COLP that since they had been compliant before the regulation changes, they would be compliant now. [Wrong! And from what we have seen of Maureen, are we sure she is right that they were compliant beforehand? It’s not necessarily her fault- she may have little or no knowledgeable support within the firm]
The firm hired a junior cashier six months ago to support Maureen. They advertised in the local press and the managing partner interviewed the candidates. [How did the MP assess competence as a cashier? How did the firm assess integrity?]
The new cashier is called Joe, and Maureen finds it very time consuming to train him, especially when it comes to the accounts system. She has shown him how to access the bank and make payments, as that is one area in which she can get completely swamped. [Having someone new and junior able to make payments puts the firm at huge risk of either mistakes or even internal fraud. Also, Maureen will find it difficult to train on the system as she doesn’t understand it herself.].
The fee earners email the client and office slips to Maureen and Joe, and occasionally partners come into the room with paper slips when they want to jump the queue. On a Friday they often have to field emails, visits and even telephone calls from clients chasing completions and providing information. [Huge inefficiencies here which can affect cost effectiveness and indeed service for the firm’s clients with eg delayed completions. Also, using email to communicate with the accounts department is fraught with cyber risk, especially when the team is swamped and more prone to errors]
This year the firm has of course coped with Covid restrictions. Initially their work dropped off, but there has been a huge surge of conveyancing work since July. When the first lockdown occurred, Maureen was sent to work from home, however the firm’s technology and processes didn’t work for her. Her home wifi kept crashing as she tried to set up payments. The partners who were used to giving her tasks face to face struggled to implement remote working. Supervision and ongoing training of Joe was almost impossible. When things eased the firm decided to move the finance function back into the office, seating Joe and Maureen at either end of their room. [Many firms had the same problem- working securely and efficiently away from the office is not as easy as simply sending people home with a laptop]
Today Maureen feels really tired and her coronation chicken sandwich for lunch was strangely lacking in taste. Joe seems to have an irritating cough too. [The risk of the resource within any function of a law firm becoming unwell is always there, but of course even more so at present- what if the team or key individuals need to isolate rather suddenly?]
Hopefully this article will have raised some interesting topics for discussion. Next month I will run through the ways in which these risks and problems can be mitigated and avoided.
Alex Holt, Director of Business Development
Over the last few weeks, I’ve spoken to a number of client firms about their experiences of 2020, and where they see the market going over the next few months. I won’t pretend this is a scientific study, or that it has a huge sample size (about 20 individuals in 20 firms) but I found it interesting, and I hope you do too.
My first take away, was how resilient our client firms are. While a few found the first lock down, challenging, all of them managed, with a mixture of home working, and minimising visits to the office.
The 2 big issues were, access to technology, and access to their “files”. Firms who had invested in cloud computing (most of them) and had digitised their paper files (far fewer) had a huge advantage. Experience ranged from simply going home and “logging on”, to panicked calls to IT support, and loading paper files into their car.
Of course, not worrying about their finance function helped!
Next, most took advantage of the furlough scheme. It was a challenge for some. For a number 80% of their furloughed employees’ salary was less (in some cases, significantly less) than the maximum grant. Some topped up the government scheme, to pay 100% of the furloughed staff members salary, but most didn’t.
Some firms took out a COVID Business Interruption Loan. Interestingly, most of those who did, found they didn’t need it, and are treating it as “low cost working capital”.
This was more varied. Generally speaking, there was a short sharp shock in the second quarter. Revenue fell, in some cases dramatically, but mostly far less than people expected. Broadly the message was “it wasn’t as bad as I thought it would be”.
Different sectors held up more than others. Matrimonial and private client work (excluding conveyancing) held up best. Firms with strong matrimonial practices have remained busy throughout the year (a cynical person might correlate that with lockdown!), but general private client work was also strong. One person commented “there’s nothing like being faced with a global pandemic to make one face one’s own mortality” when reporting an increase in enduring powers of attorney, and estate planning. Sadly, a few have noted a marked increase in executory and probate work.
Commercial work was more mixed. Most deals froze at the start of lockdown. Some never came back, and very few deals were initiated in the 2nd quarter. However, in the third quarter many of the deferred deals came back, and some of our commercial firms have been very busy through the summer.
Interestingly, some commercial firms report their clients seeing the impact of the lockdown as a buying opportunity. One in particular is extremely busy with Commercial Property clients “recycling their cash” (the client’s words), into other investments. From a few firms the message I received was that there is a lot of money “out there” looking for a home!
Residential Conveyancing has had the greatest roller coaster ride, from “falling off a cliff” in Q2, to “I could be working 24hrs a day 7 days a week if I wanted to” in Q3. However, it’s fair to say that the residential property lawyers I spoke to are the least confident about the next few months.
Other more “random” observations. Agricultural work is booming – apparently “farmers have buckets of cash” at the moment. Insolvency work is very quiet …… but “watch this space”.
As I mentioned above, residential conveyancing lawyers are nervous. There is normally a dip over the holiday period, but the expectation is that with increasingly sever lockdowns, and the expectation of increased redundancies, that will be exacerbated (one person referred to the Furlough Scheme as the “Redundancy Deferral Scheme”!). A number of people reported mortgage lenders dramatically tightening their lending criteria, making getting a mortgage much harder.
Firms with a broader private client offering (matrimonial, wills and executory/probate) feel they are in a better position to weather the downturn. The few Commercial Property lawyers I spoke with, were “cautiously optimistic”. One pointed to “turmoil” in the letting market creating a lot of work.
Commercial Litigators and Insolvency Lawyers are “biding their time”!
The consensus is still that Q1 of next year will be hard, possibly very hard. I’ve written about his before. The expression I’ve heard more than once is that it’s when the “chickens will come home to roost”.
I’m not going to disagree with that assessment. The economy is in a bad spot, and the public finances are in a worse one …. but …!
There are 2 things beginning to make me think optimistically about Q2/3 next year.
First are the increasingly hysterical reports about a Vaccine. This morning Matt Hancock opined that most folks should be vaccinated “sometime after Easter”. For once the hype might be real. I hear from friends in the NHS that planning for distribution is underway, and my wife (a Doctor, and possibly the most cynical person I know) is surprisingly optimistic! A 95% effectiveness rate is extremely high (vaccines in common use, e.g. Cholera, are far less effective), and with the “Oxford” vaccine reporting a 70-90% effectiveness, we have one that is much easier to manufacture and store than the others.
Second – as with all down turns, there will be winners and losers. No doubt some sectors, and many businesses will be badly affected. However, a recurring theme in the conversations I’ve been having is that “there is a lot of cash out there”. Which makes absolute sense – look at the hole in the public finances? Very broadly speaking, the government has borrowed billions of pounds and given it (by way of grants and loans) to people. Also (and I’m sorry, but this is a little “dark”), the 50,000+ excess deaths will dramatically accelerate the passing of “inactive” wealth, to a younger generation where that wealth will be much more active.
The biggest problem for individuals and business over the last few months has been uncertainty and a collapse in confidence. Everybody has put off significant purchases and investments because of uncertainty, and a lack of confidence. The result – a lot of people are sitting on cash – remember the firms who have their CBILS still sitting in the bank, and all that cash “looking for a home”?
But with an effective vaccine in reach, and “the end in sight”, that confidence will return … and that cash will be looking even harder for a home.
I hesitate to predict a 2021 summer boom – I’m not an economist (!), and public debt is eye watering, but ….. there will be a lot of people, with a lot of cash, looking to “get back to normal”.
Remember the “roaring 20s” (well, at least, do you remember hearing about them – even I’m not that old!). Well, that boom happened right after the First World War …. and the Spanish Flu pandemic!
David Calder, Managing Director
I promise I didn’t spend my honeymoon in Cornwall thinking about the legal sector and business generally. That would be tragic, and may well be the sort of thing that would lead to a very brief marriage.
However, when I got back to my desk and the joys of my working life a few things did occur to me.
We can fall into a trap- looking in very insular ways at the sector we serve, at the methods and processes which are specific to our market. I believe that in doing so we are missing out. I think this may be particularly the case for winning and servicing new business.
Think about client service and parallels with the hospitality industry who must surely have had things tougher than most other sectors.
Booking a table – almost every restaurant we wanted to visit had very slick online booking systems. They were easy to use, and provided a very quick and certain confirmation that we had a table. There was no need for ‘human’ interaction and it made me wonder whether customers might value the ability to book an appointment slot online, when googling legal services in an evening.
Surely firms could use a version of this method to engage with existing clients and potential new customers. The firm would specify slots of available time, and the load could be shared across a number of fee earners. I know that when booking a table, we were far more likely to book at our convenience, rather than having to call during specific hours to speak with someone. I suspect there is a large portion of a firm’s potential market who would think similarly when shopping around law firms to acquire services.
Which brings me onto customer reviews. It’s not so long ago that price transparency on websites was the big new thing for lawyers. But surely more than ever, the ideas from online shopping have relevance for the sector. The parallel with a service industry like hospitality is that service and customer experience play a key part in reputation. Every firm can perform its core legal business. They can write a Will. Or sell a house. Or litigate. However the differentiator is often not about price. What makes a firm stand out is how well they perform those services, what the customer experience is, and what the firm does to capture reviews and publicise them to win work.
When we were looking where to eat we would want to view a clear website, with the detail we needed (menus usually, and lists of cocktails!), and we would always consider some of the recent reviews and star ratings.
Finally, let’s think about that customer experience in more detail.
So we’ve gone online, searched for our restaurant (or lawyer), looked at their website, read their reviews, made a booking. In we go.
The variety of experience from that point on is huge. Someone who has booked a table (or decided to meet a lawyer to discuss a will for example) has only just started their journey. How are they greeted on arrival? The parallel here is the difference between being left standing with a mask on in the foyer for twenty minutes or being shown by a friendly and helpful person straight to your table.
Does your firm have processes to deal with people both remotely and face to face which make the client feel valued, not just on their first encounter, but then onward throughout their dealings? And at the conclusion do they look at the bill and say “the main course was expensive for what we got” or do they wax lyrical online about what incredible service and value for money they experienced?
One thing that law firms don’t need to worry about is the upset caused by eating at loads of these establishments and realising that the major efforts to get fit and lose weight before the wedding were decimated by the wonderful meals and drinks we enjoyed. I guess that’s another story entirely!
Alex Holt, Director of Business Development
Alex Holt has been chatting with Karen Bexley of Bexley Beaumont gaining important insights into how Bexley Beaumont have dealt with this year. Bexley Beaumont are one of our valued clients who only started trading in January 2020. They are a boutique law firm who specialise in many areas of law from Commercial, to Family and even Employment law.
Last week we set out the first 5 benefits of Management Accounts. Continuing with that, here are another 5 to round out our Top 10!
It is easy to see how much cash you have in the bank from month to month, but much more difficult to monitor how much your clients owe you, how much you owe creditors, and of the monthly movements in those figures. An increase in debtors, without an increase in turnover can be an early warning sign that clients are taking longer to pay, and that you need to invest some time in chasing payment of your outstanding fees, or using an outsourced Credit Control service.
It can sometimes be helpful to share management accounts with key members of staff, so that they can easily see the reason why they need to control costs, increase collection of fees etc. Accounts can be a nice visual aid to focus performance, and can also be split into specific areas if you only want to show staff particular areas of the business relevant to them. However, you should note that not everyone will be interested in numbers!
Usually business owners will have a reasonably good idea of turnover, and a grasp of regular costs, however it can be difficult to monitor varying margins, exceptional costs, one-off projects and anything else out of the norm. It can also be difficult to factor in accounting concepts such as accruals and depreciation. This can mean that the year-end results are far from what’s expected. If a business has made an unexpected loss it can come as a nasty shock. If the business has performed much better than expected, it could result in an un-planned corporation tax bill.
Traditionally, some types of firm will be busier at certain times of the year, and quieter at others, so need to plan ahead for that. Usually (albeit not in 2020!) conveyancing firms are busier in spring and autumn, and monthly accounts allow you to track and analyse every individual month, so that you can clearly see the impact of this and plan for future years accordingly.
Some business owners will choose to take their earnings in dividends or drawings rather than salary. However, for less established or less profitable companies this will need careful monitoring, to ensure too many dividends or drawings are not taken through the year. For other businesses, it may be that through monthly monitoring, it is perfectly possible to take more drawings each month.
There are of course many different benefits, and these will vary firm to firm, but hopefully this has provided some food for thought in terms of running your business with the benefit of information allowing you to do so with more confidence.
Gregor Angus, Senior Business Development Manager
Every limited company must file a set of accounts with Companies House following the end of each financial year. That is a statutory requirement, and is seen by some as a necessary evil in exchange for some of the benefits of being a limited company entity. However, far from just being a box ticking exercise, a set of accounts can provide you with valuable information about your business and its performance, allowing you to make better decisions and strategically plan for the future.
The benefits of Accounts can however be limited, if you only see them once a year. Many businesses therefore produce monthly management accounts. For smaller firms looking to control spending, this may seem like adding an unnecessary cost, but we would contend that the benefits nearly always outweigh the expense. Here (in no particular order) are our top ten reasons why:
Usually business leaders will have an idea of where they want their business to go, and how it should perform. Often the reality is very different from expectations though, and the difficult part is spotting where those differences stem from. Budgets and forecasts can easily be integrated into management accounts, providing a visual aid to easily see the causes of any variances. Our management accounts packs are specifically designed to be very visual, with graphs and charts to easily see where you are against budgets and forecasts.
A monthly set of accounts makes it very easy to compare costs month to month, and to expectations or budgets for the month or year to date. Often savings can be found by analysing costs in more detail, and promptly. It allows you to pick up on small variations against budget, which over the course of a year would add up to a significant difference. It also helps to set out all your various outgoings/costs in a list that is easy to review, rather than trying to do that in your head. This situation has been even more apparent in 2020 where all businesses’ are trying to review their costs, and those with management accounts have a very easy place to start.
If you are looking to raise finance from a bank or investor, continue or increase an overdraft, usually a good business plan, backed up by forecasts and accounts, can dramatically improve your chances of success. However, this can be difficult to do if you are using a set of accounts that were produced 6 months or more ago. This is especially true if the business performance has changed significantly since the last financial year end, or in the present situation, where the whole world has changed significantly since the previous year!
It’s a bit of a cliché, but it is true! Relying on annual accounts or data is not very useful in measuring realtime, or within a useful timeframe, what is going on in your business. You can use management accounts to help set measures or targets that would be beneficial to your particular business, and then use the monthly reports to measure where you are against those. That way, you are using the data to refine what you are doing, change tact completely, choose what you should be doing more of, less of, or even not doing at all!
Remember cash is not the same as profit. For example, some firms may collect a payment to account from their clients up front, but obtain credit from suppliers, or have chosen to defer payment of VAT. In the gap between receiving cash up front from clients, and paying suppliers or deferred VAT, the company may have other costs to pay out, such as wages and monthly bills. Cash in the bank can sometimes give a false sense of security, whereas monthly accounts will make it easy to identify problems or gaps in funding quickly, so that you can look for external funding or reduce costs before the problem becomes critical
Gregor Angus, Senior Business Development Manager
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.