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Law firms struggling with cashflow problems
Cashflow problems are getting worse for law firms as Britain’s economy struggles in the recession, new research has found.
According to a survey of firms, carried out by the Law Society’s Law Management Section (LMS), 40% experienced more cashflow pressures in the three months to August (2012) than in the previous quarter.
Of the 51 firms surveyed as many as a third said they had considered merging with another practice to ease their cashflow worries.
One in eight said they had injected extra money into the business, while a similar percentage admitted reducing partner salaries.
A third of practices said they were operating within 25% of their overdraft limit, while one in six admitted operating within 10% of their limit on a regular basis.
Fareeda Jaleel, founder of FRJ Business and Marketing Solutions, said: ‘In these tough economic times it is vital that firms have a clear strategy and plan in place to ensure future growth.
‘It may be stating the obvious to say that firms need to understand their business model inside out in order to succeed, but so many don’t. It is not enough to simply muddle through because in a recession only those that have proper plans and goals for the future will survive.’
August 5, 2016
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