For Law Firm Clients:

1. Review realization rates and compare to prior years.
2. Review client profitability to assist with determining billing rate adjustments noted in #3.
3. Review attorney and legal assistant billing rates. Will the firm adjust rates in 2023? If so, establish a communication protocol with your clients.
4. Set timekeeper budgets including billable hours, collections and originations.

For All Clients:

5. Review your general ledger and correct coding adjustments as necessary.
6. Look at your Profit & Loss report. Where do you stand? If you have a larger than expected profit, are there any major purchases you should make now that can be depreciated? Make sure you have the cash. Talk to your CPA tax advisor.
7. Verify loan accounts and cleanup them up if necessary.
8. Work on reducing your receivables (follow-up with clients to get paid!)
9. Write off bad debt if necessary but work on getting paid first.
10. Make SEP IRA or 401K contributions and donations to charity to reduce taxable income. (Talk to your CPA tax advisor)
11. Verify your 1099 information is setup properly in your accounting system. Ensure you have W9’s and Tax ID numbers for issuing correct tax forms.
12. Begin to think about year-end bonuses or special gifts. Will you give these this year or in January?
13. Look for fringe benefits you should report on W-2’s. Some of these could include health & life insurance, transportation subsidies, moving expense reimbursements, educational reimbursement programs, and employee loans you’ve forgiven.
14. Take a physical inventory of your products and FFE and make adjustments in your accounting system as necessary.
15. Write a list of all the company’s major accomplishments for the year. Be prepared to share this with your staff, they will appreciate it.
16. Write out your goals and plans for the next year.
17. Create budgets for the next year if you work on a calendar year fiscal basis.
18. Check all the links on your website to make sure they are active.
19. Check with your CPA on COVID related tax breaks.
20. Scrub your Balance Sheet – verify all your account balances.

B2 Management & Consulting would like to thank you again for allowing us to handle your accounting and bookkeeping functions. If you would like to discuss any of the items listed above in more detail, please don’t hesitate to contact us at 512-381-1500. This list is not intended to be inclusive of all items needed for your year-end planning. Please consult with your CPA tax advisor also.

“Where do I begin?” … “There’s no way to predict what is going to happen, so why bother?” … “There’s not enough time to do this.” … “I can build it, but no one will ever use it.”

Regardless of your thoughts on budgets, they are a workplace reality that is here to stay.

Your budget maps out your firm’s plan for financial success.

Here are some budgeting basics:

• Budgeting is the future plan of the business, and where the strategic plans are translated into financial numbers.
• Budgeting ensures that the firm’s plans are financially viable.

The advantages of good budgeting:

• Enables you to better plan for the future
• Allows you to determine if the firm’s strategic goals are attainable
• Provides an opportunity to identify areas of potential cost savings
• Revenue and cost variances can be more easily identified, providing an opportunity for quicker action.
• Budget time is a good opportunity to evaluate the rate that you are charging clients. Are you profit driven or client driven?
• It is important to understand the effective rate that will be needed to bill in order to achieve the desired level of profit. (This is so critical!!!)
• Review the firm’s strategic plan and note activities for the budget. Separate activities into existing and new. Document your assumptions.
• Know your general ledger – it is your friend!
• Identify areas of potential cost savings—are there other vendors who may be able to provide better value and/or service? Are certain services no longer being used?
• Some costs simply can’t be controlled—recognize them and budget accurately.

Remember….

If you don’t know where you’re going, you’ll probably end up somewhere else. —Yogi Berra

If you haven’t started your budgeting process, you probably are already behind. With our team of CFOs, we can help you with the budgeting process and get your roadmap to financial success established. Call us!

For more information on HR, accounting & bookkeeping services, please contact Brenda Barnes at bbarnes@b2-mgmt.com.

Employee handbooks set forth expectations between the employer and the employee. A handbook is important in providing clear boundaries for the employees and establishing what to expect regarding benefits and workplace rules. Employers can clearly communicate to employees how they should behave, what constitutes appropriate workplace attire, and how the employer will compensate discipline, and reward employees. Employees will understand their responsibilities and have a reference point for how to do their jobs, maintain their status, and possibly advance.

Our HR team at B2 Management and Consulting knows the importance of employee handbooks and making sure they are properly tailored for your company.

For more information on HR, accounting & bookkeeping services, please contact Brenda Barnes at bbarnes@b2-mgmt.com.

Unfortunately, and far too often, accounting is also connected with scandal or fraud. The preparation of fraudulent financial documents, inflated earnings, concealed bad debt or other expenses, manipulated payroll, misreported tax liabilities and false insurance claims or banking applications. The wrongdoers were able to commit fraud because the victim organization lacked strong internal accounting controls. Without strong internal control measures in place, the wrongdoers can manipulate documents and data, misrepresent the company’s performance, and commit outright fraud.

According to the International Federation of Accountants (IFAC), the COVID-19 pandemic has heightened the risk of fraud and illicit financial reporting because of the shift to remote working; when employees are separated from the main office, internal controls can be easier to bypass.
No organization is immune to such scandals. What controls can you put in place to minimize the potential loss and embarrassment?

Detective internal accounting controls include: inventory counts and checks; internal and external audits, surprise cash counts, and reconciliations.

Preventative internal accounting controls include: segregation of duties; controlled access to the accounting and financial reporting system; double-entry accounting; limiting management involvement in financial statement preparation, expense verification; and limiting physical access to cash, equipment, inventory, and other assets.

Corrective internal accounting controls include: physical audits of assets and inventory; adjustments or rectification entries in the accounting system; and ledger verification.

All organizations need solid internal controls to assure the reliability of the financial reporting, processes, and compliance with various laws and regulations. Outsourcing your accounting functions to an organization such as B2 Management & Consulting (B2) can strengthen the segregation of duties, whether it be through our handling of the day-to-day transactions or we can act as an overlay to your internal accounting department. B2 can review underlying financial data, payroll registers, bank reconciliations and other key areas that are susceptible to error -intentional or unintentional. B2 can also provide consulting services to help you establish sound internal control procedures in your organization.

Call us; we are happy to help!

For more information on accounting & bookkeeping services, please contact Brenda Barnes at bbarnes@b2-mgmt.com.

Since many attorneys and paralegals are compensated by an end-of-year bonus based on productivity, this is an excellent time to review productivity reports. Is the firm meeting its overall goals? Are there underperforming individuals? There are many reasons as to why a timekeeper may be underperforming when compared to budget. The client workloads may have lessened this year; the timekeeper may have had some personal issues that impacted their ability to perform at 100%, or they simply may not be focused on their client production. This may be a time for a kick in the pants or, better yet, some encouragement to finish the year strong.

You will also want to review the financial health of the firm. Some of the key metrics to review are:
Fees per partner/shareholder. The metric can be run using billed dollars or collected dollars. For billed dollars, the firm’s billings are divided by the number of partners/shareholders. The more billings each partner can manage, the higher the firm’s profit margin.

Fees per all timekeepers. Similar metric but including the associates and paralegals.

Staff to partner ratio. The number of professional staff is divided by the number of equity partners/shareholders.

Effective billing rates. Each timekeeper has a standard default billing rate. There may be other rates that are higher or lower depending on the industry and the client. The effective billing rate is the rate after discounts and write-offs/write-downs.

Accounts Receivable per partner/shareholder. The review of accounts receivable (and unbilled time) should be reviewed now. Collection efforts should be underway for dollars to be collected before end of year.

If a client’s debt has been on your books more than six (6) months, consider offering the client a discount if paid before the end of the year. The longer a receivable is on the books, the less likely you will collect it.

The key metrics can be compared to other firms by utilizing some of the surveys that are issued every year. Many can be expensive, but if you have not checked your firm against others in a while, it may be worth spending the money. Also, compare to prior years and see how the firm measures. The effective billing rate metric is extremely critical, especially if the firm bases its budget on default billing rates. For example, if a $500 per hour partner has an effective rate of $325 per hour, it will be an indicator of either efficiency issues or clients being offered discounted rates. Finally, the push to collect receivables will happen, so you might as well get as much runway as possible by starting now!

For more information on accounting & bookkeeping services, please contact Brenda Barnes at bbarnes@b2-mgmt.com.

Outsourcing is an undeniable way to help your law firm become more efficient. There are several primary drivers for outsourcing: 59% of firms used outsourcing to cut costs; 57% did so for employees to focus on deep work and 31% outsourced to enhance the quality of service.* It’s time that you become more efficient by outsourcing your billing department to a highly experienced U.S.-based firm that can take your firm to the next level.

LEDES COMPLEXITY: Most, if not all of your billing staff, hate LEDES billing and the complexity of the budgeting, uploads, reporting, and follow-up. Unfortunately, when the firm celebrates a new large institutional client, your billing department shudders to think of the laborious process of adding the new client with a LEDES billing platform! Or worse, the new client is not a priority, so it sits on the “back-burner” until pressed, which delays the billing and collection process for your new client.

EXPERTISE: Outsourcing to a third-party such as B2 Management & Consulting provides you with a billing staff that has expertise in law firm billing. In its 12 years of business, B2 has employed team members with experience ranging from 5 to 35 years working with attorneys. Legal Billing expertise is our niche.

IMPROVE COLLECTIONS: Outsourcing can speed up the billing and collection cycle for your law firm since B2 makes your client invoices a priority. Your B2 team will work with your firm to establish a billing workflow. We have established processes and procedures that will improve your efficiencies. As your billing department, we monitor Work-In-Process and assist with collection of aging accounts receivables.

BEST PRACTICES: Outsourcing to a company that specializes in law firm billing will provide your firm with industry best practices. B2 team members stay current on billing trends and other best practices to keep your firm competitive. Your B2 team will provide a billing workflow template and assist you in administering the process.

CASH FLOW: Outsourcing your billing department will improve cash flow because you have a dedicated team that will ensure your billing process is efficient: timekeeper entries are posted to your practice management system, prebills distributed, bills finalized, WIP reviewed, and Aged Accounts Receivables monitored. Increased efficiencies equal improved cash flow!

B2 Management & Consulting handles approximately 2,000 client invoices per month. We have experience in handling LEDES billing on the following platforms: TyMetrix 360, Legal eXchange, CounselLink, Collaborati, LSS, Datalytics, Legal Tracker, CSC and CounselGo. Our practice management software experience include: ActionStep, Centerbase, Clio, Cosmolex, Coyote Analytics, Firm Central, Harvest, MyCase, PC Law, Practice Panther, TABS3, Timeslips, TimeSolv, and Zola Suite. If you are currently using a software not listed, we can master it quickly.

*Deloitte Global Outsourcing Survey 2020

For more information on accounting & bookkeeping services, please contact Brenda Barnes at bbarnes@b2-mgmt.com.

Here are five (5) challenges that are keeping business owners awake at night and our recommendations to help you get some sleep:
1. Finding and retaining top talent.
It seems the great resignation isn’t over; however, we see employees repurposing their priorities. As a compassionate and caring employer, you need to find out what employees want and what will make them stay. If they want to work from home, see if you can accommodate them. If they want more flexible hours, that should be easily adapted. Bottom line, get in touch with your employees and ask them about their job satisfaction. If you can accommodate them, do it; it will be much less expensive in the long run.

2. Managing cash flow.
First and foremost, always have a safety net that you can call upon should cash get tight. A bank line of credit is typically easy to get because the banks will require personal guarantees. You do not have to use it, but it will give you peace of mind. Also, monitor your cash closely. It is important that your back-office staff is providing you with regular (daily, weekly, and monthly) cash projections and comparisons to prior years. Manage your accounts receivable.

3. Competition from other businesses.
Increase your branding and visibility on social media. It does work. Pay attention to your competitors. Are they doing something that you are not? Make sure that your responses to requests for proposals are on point and address what the client has asked for, not what you think they need; however, you should make appropriate recommendations based on your expertise that will benefit clients in the long run.

4. Attracting new clients and keeping existing clients.
Talk to your clients and find out what keeps them up at night. If your business can help, then step up and help. Timely respond to a client’s emails, telephone calls, and issues. The care that you provide will go a long way in keeping the clients you have and increasing referral opportunities.

5. Succession and retirement of key persons.
Succession and retirement planning are different for all businesses. In law firms, the clients need to be transitioned smoothly, so they do not change firms. In other businesses, it may be a prospective buyer who can take over your business when it is time to retire. All in all, the planning for the retirement of key persons should start 5-10 years before the retirement date. The timeline, of course, depends on how essential the person is to your organization.

B2 Management & Consulting would be happy to discuss any of the uncertainties that are keeping you up at night. If you would like to learn more, please contact Brenda Barnes at bbarnes@b2-mgmt.com.

There are many things the pandemic did positively for the legal industry. The big spotlight on technology infrastructure (or the lack thereof) provided work-life balance to many (not really to working mothers), necessitating the ability to perform many administrative duties remotely.

Now that many law firms have returned to their offices, it is time for the managing partner and firm administrators to sharpen their pencils. Do you need an accounting department that looks the same post-pandemic when compared to pre-pandemic? Many functions can be outsourced and save your firm time and money. Where outsourcing used to make sense for only smaller firms, many large law firms are moving toward outsourcing certain portions of their accounting and billing department, if not all. A firm’s ebilling/LEDES clients can be your first step in using a company that specializes in law firm accounting and billing. Accounts Payable can be a second function to consider when outsourcing.

B2 Management & Consulting has been serving the legal community for 13 years. We have a team of professionals that can handle your back office needs.

Sharpen your pencils, and then give B2 a call.

For more information on accounting & bookkeeping services, please contact Brenda Barnes at bbarnes@b2-mgmt.com.

Rule 1.15 specifically requires the lawyer to preserve “complete records” with a law firm’s trust accounts which include promptly rendering a full accounting for all receipts and distributions from the trust account. Any violation of Rule 1.15 may subject a lawyer to professional discipline.

Each state bar association will also have model rules of conduct concerning the lawyer’s trust accounting.

Consult your state bar association and familiarize yourself with the standards of conduct and record maintenance. (IOLTA, IOLA)

Here are a few general best practices to follow:

1. Always segregate trust accounts from operating accounts. A client fee can only be deposited in a firm’s operating account if it has been “earned” or there is a specific non-refundable retainer agreement in place with the client. Best practice is to deposit in the trust account first and then transfer to the operating account once the fee has been earned.
2. Lawyers should never receive, nor are they entitled to receive, any interest from client trust accounts. Typically, a separate trust bank account is set up and can be interest-bearing, but the accrued interest is for the benefit of legal aids or pro bono programs. If a single client trust deposit is significant, the attorney has a due diligence to separate the funds in an interest-bearing account for benefit of the single client. If the deposit is short-term (which is typical), a separate account for benefit of the single client is not necessary but should be disclosed to the single client that the deposit will be in the general trust account. Please consult your state bar rules.
3. Full accounting should be provided to any client upon request, which may include copies of vendor invoices for any disbursements made from the client trust account. The client trust accounting should include a running balance of the account. Trust accounts should never have a negative balance. If you have a separate practice management system from the accounting software, ensure that the client ledgers balance to the bank account balance for that particular client.
4. ALWAYS ensure that a client trust check has cleared the bank before disbursing funds. If you disburse before the funds are collected, you are in essence borrowing funds from another client account and this is unacceptable.
5. The lawyer is accountable for supervising the trust account and only lawyers are authorized to sign trust checks.

Trust accounting is not complex if you know the rules and comply accordingly. If your firm handles trust accounting internally, it is in your best interest to have an outside firm such as B2 Management & Consulting to review your trust accounting. Let us help! For more information on accounting & bookkeeping services, please contact Brenda Barnes at b2-mgmt.com.

Looking for help with your legal billing or need specialists to help you recover accounts, contact B2 today.

As a full-service management consulting firm, B2 partners with our clients to deliver solutions that help solve their most complicated needs. Utilizing decades of industry experience and functional expertise, we can assist you in growing your business in a strategic way and help prepare you for the future.

“Outsourcing our back office was one of the best decisions I made. The team at B2 is experienced, efficient and responsive to our needs.” – Michael R. Perkins, Perkins Law Group PLLC