Originally posted on Cameron's Profits for Partners Blog:

Many firms spend a lot of time trying to collect bad debts instead of preventing them in the first place.  You can change that with a good file opening system, with your Managing Partner approving all new clients and files over a certain size.

Why do this?  Because many law firms’ compensation systems reward partners for volume of billings or hours generated, not quality of billings or hours.  Even firms that reward partners for cash received instead of billings still have to deal with long delays in receiving cash for work billed.  The best way to avoid this is to deal with the problem right at file opening.

You need to give the Managing Partner the authority to say no when a new client presents a high credit risk.  The Managing Partner is not infallible so you also need to build a simple methodology up front to allow partners to…

View original 314 more words

About Colin Cameron

Founder of Profits for Partners, Management Consulting Inc. We provide strategic profit-focused advice to professional service firms based on 25 years of executive management and consulting experience. I am a management consultant, chartered accountant and former COO of a major Vancouver, BC law firm. My specialties are profitability improvement, strategic planning, firm governance, partner compensation, financial management and operations management. View all posts by Colin Cameron

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