The Importance of a CFO for Running the Business of Law
In this blog, we discuss the importance of hiring a Chief Financial Officer (CFO) for running the business of law for your firm.
The Increasing Demands of Managing a Growing Law Firm
Most contingency fee law firms begin as a small office with one or two partners. Usually, the partners split responsibilities between them or work in tandem to address all the firm’s needs. As the firm grows, each partner will need to take on specialized tasks: marketing, hiring, accounting and many more. One of the most important tasks that is essential to a growing law firm is funding.
The Importance of a CFO for Establishing Law Firm Growth Funding Strategies
Funding typically comes from case fees as most law firms are self-funded, but this limits the firm’s ability to grow only to the cash flow it can maintain. In the feast and famine cash flow cycle of a contingency fee law firm, this naturally limits big visions and costly projects. With a designated partner as CFO, with the time and skills necessary for more in-depth research, law firms can begin to look at alternative forms of funding and plan for bigger growth projects.
As CFO, this partner can delve deep into the firm’s finances, cutting costs where applicable and reallocating funds to growth projects. While it is always a worthwhile endeavour to ensure that costs are efficient and waste is curbed, this alone will not be enough to find the cash necessary for exponential growth. To achieve significant growth, law firms must look at ways to fund growth that are not directly tied to the firm’s current earnings at any given moment.
Under the guidance of a CFO, contingency fee law firms can explore alternative funding strategies such as taking on financing. Many of the nation’s top law firms have engaged partners for Case Cost Financing, an effective way for law firms to free up cash flow for growth. However, not all banking institutions offer Case Cost Financing as the contingency fee business model is unique and poorly understood.
The Value of a Strategic Banking Partner
Esquire Bank, a financial institution created by trial lawyers to address the funding issues many contingency fee law firm owners face, is a bank that intimately understands the contingency business. Not only does Esquire Bank have the expertise to value a firm’s contingent case inventory, but it will lend against it. Additionally, with law firm clients large and small across the nation, Esquire Bank has helped countless firms achieve and surpass their growth goals over the last 15 years.
Funding growth through financing can be a daunting idea for law firm owners who typically self-finance their business. It can also seem counterintuitive to borrow in order to grow. However, as Esquire Bank’s clients will attest, once they took on a Case Cost Line of Credit and saw its immediate impact on their business and growth, they regret not doing it sooner.
Meet with Esquire Bank
Interested in adding a CFO for running the business of law at your firm? Learn how your law firm can finance its case costs and free up capital to invest in talent, marketing, technology, operations, case acquisition, and growth. Schedule a no-obligation consultation with an Esquire Bank Business Development Officer today at a time convenient to your schedule.
Looking to Learn More About Law Firm Growth and Law Firm Financing Strategies?
Download the eBook now, “5 Best Practices from Law Firms That Are Growing and Succeeding Boldly,” to get your hands on our top strategies for achieving exponential growth.
* The information provided on (or accessed through) this blog is provided for general informational purposes only and is not intended as, and should not be relied on for, law firm operations, tax, legal or accounting advice. Some of the information may not be applicable or appropriate for all law firms. Please consult your own tax, legal and accounting advisors as appropriate. Results may vary by law firm.
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