Cash Flow Interruptions Hinder Law Firm Growth: Are you Prepared?
Founding Partner of Price Benowitz LLP
Partner at Koshers & Company
EVP & Head of Corporate Development at Esquire Bank
For contingency fee law firms, cash flow interruptions present a daunting challenge and a continual balancing act — one that is especially challenging for managing partners that self-finance case costs and resources.
The unprecedented events of 2020 separated the leaders with long-term growth visions from short-sighted, unprepared managers. With high inflation and a recession imminent, businesses are once again preparing to face economic volatility and uncertainty. For contingency fee law firm owners who live in a revolving cycle of feast and famine, this can be unnerving.
High inflation, higher costs of expert services, and increased overhead costs cut into a law firm’s profit margin, contracting the well of cash it can draw on to invest in growth initiatives.
There are three simple strategies to mitigate cash flow interruptions and ease the variability of the contingency fee law firm’s cash flow cycle:
- Having a varied case inventory consisting of a mix of high-volume cases and single event, catastrophic injury can flatten the cycle by injecting more cash more consistently back into the business.
- Keeping a tight control on overhead and expenses to stay lean and mean, while being careful to not cut costs so drastically it hampers growth.
- Borrowing to invest in case expenses, marketing, technology, hiring, etc., is a cost-effective way to quickly increase cash flow.
Watch the 2-minute video below as Bryan Koshers, a contingency fee law firm accounting specialist from Koshers & Company, explains these strategies further.
Prepare for Cash Flow Interruptions – Meet With Esquire Bank Today
Learn how you to prepare your law firm for cash flow interruptions.
Whether your goal is investing in growth, expanding your practice, or improving your cash flow, understanding your case inventory is an important valuation for your firm. Leveraging your firm’s case inventory to finance case disbursements can allow you the flexibility and liquidity to pivot your focus to investing in digital marketing, technology, and staff, and ultimately build case value for your clients.
Schedule a no-obligation consultation today to understand how Esquire Bank’s solution-based credit facilities can help you recession-proof your law firm business.
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