Los Angeles Trust and Probate Litigation Attorney, SirkinLaw

Some attorneys have greater business risks

What happens to legal files if an attorney become incapacitated or dies? What can you do to ready your solo law practice for sale? What could happen to the attorney-client trust funds? Who would take possession of the clients' files? What happens to the attorney-client privilege? Who will sell the practice? Who is allowed to look at a client's file? For sole practitioners, these questions pose significant risks as well as great planning opportunities, as long as planning is done before incapacity.

Fortunately, California enacted laws which allow solo attorneys to plan for their businesses in the event of incapacity and death. Mina N. Sirkin, a Family Wealth Lawyer in Los Angeles, California has created PracticeAssure(TM), a business system which guides attorneys to plan for 1) retiring; 2) selling a practice; and 3) succession in specific areas of their law practice and business while they are healthy. Practice administration is a very challenging area, but it is usually the attorney who knows who would be best suited to administer the practice.

Many times the surviving spouse gets overwhelmed with the great task of returning client files, selling the practice, and managing the other parts of the estate. This task can be reduced to some basic steps to preserve the value of the practice. Lack of planning greatly reduces the value of a practice upon sale.

PracticeAssure(TM) engages solo attorneys to take the necessary steps in protecting their clients' files and money, protecting the value of the law practice, making the practice a marketable practice, and protecting the attorney's estate by implementing simple steps in succession planning over a one year period.

Ms. Sirkin will be speaking at an introductory seminar regarding the above risks and how attorneys can minimize them:

Seminar Date: April 17, 2007 Time: 12:00 p.m.-12:30 p.m. Pacific

Place: Internet. This is a virtual seminar. If you are unable to attend at the date or time above, please email us with a request for virtual files at Info @ SirkinLaw.com .

Price: $150.00

To Register for the introductory seminar and for more information about the PracticeAssure(TM), email [email protected].

Mina N. Sirkin is a Board Certified Specialist Attorney in Estate Planning, Probate and Trust Law by the Board of Legal Specialization of the State Bar of California. Ms. Sirkin practices in Los Angeles County, California. She was the legal expert to PrimeTime News, CBS 2 / KCAL 9 on the death of Anna Nicole Smith. [email protected]. http://www.SirkinLaw.com. Tel: 818-340-4479

Law Office Cash Flow Management 101

By: Mina N. Sirkin, Esq.

Time is money, and cash flow is king when it comes to the financial management of a growing law office. There are two aspects of cash flow: 1) How much time does it take for you to get paid on each invoice; and 2) How fast do you have to pay your employees and vendors. The time lag between when you have to pay your vendors and employees and the time you collect from your clients is the key problem, and the solution is cash flow management. Simply put, cash flow management translates into delaying outlays of cash as long as possible while encouraging those who owe you money to pay it NOW.

How do you measure cash flow

Prepare cash flow projections in smaller increments, such as monthly increments. If you maintain an accurate cash flow projection, it can alert you potential problems, long before an emergency emerges.

Cash flow plans should not be looked at as accurate views of the future. They're simply a best guess as to the following variables: 1) your clients' payment histories, 2) your ability to identify key upcoming expenditures, and 3) your suppliers' and vendors' ability to wait for a delay in payment. A small law firm must check to see if receivables will continue coming in at the same rate they have recently, that payables can be extended as far as they have in the past, that you have included expenses such as capital improvements, loan interest and principal payments, and that you have accounted for seasonal sales fluctuations. Checking the number of new clients on a monthly basis is also an element of cash flow management.

You must start your cash flow projection by adding cash on hand at the beginning of the period with other cash to be received from various sources. Ultimately, you will discover the information you need from your financial reports. By looking at your cash flow reports, you must be able to answer this question: How much cash in the form of client payments, interest earnings, service fees, partial collections of bad debts, and other sources are we going to get in, and when?

Secondly, in making accurate cash flow projections, you must obtain detailed knowledge of amounts and dates of upcoming cash outlays. That means not only knowing when each penny will be spent, but on what. Have a line item on your projection for every significant outlay, including rent, inventory (when purchased for cash), salaries and wages, sales and other taxes withheld or payable, benefits paid, equipment purchased for cash, professional fees, utilities, office supplies, debt payments, advertising, vehicle and equipment maintenance and fuel, and cash dividends.

Cash flow projections also relate to marketing efforts. You must track your advertising and marketing efforts and view it in conjunction with your cash flow to determine if you are wasting money on particular types of advertising.

How to improve your receivables

If you got paid for legal work the instant you are engaged you would never have a cash flow problem. Unfortunately, that doesn't happen for most practices. You can still improve your cash flow by managing your receivables. Improving the speed of payment by clients improves cash flow. Here are some of the techniques for doing this:

Offer discounts to clients who pay their bills rapidly.

Ask clients to make retainer payments at the time of engagement.

Require credit card back ups on all new non-cash clients.

Have someone in your office call if the payment is late.

Issue invoices promptly.

Track accounts receivable to identify and avoid slow-paying clients. If your engagement is conditioned on timely payments, communicate your need to exit the case, if the client is not forthcoming with payments.

Managing Payables

When you are managing a growing law office, you have to watch expenses carefully. Don't be lulled into complacency by simply expanding collections.; Any time and any place you see expenses growing faster than revenue, examine costs carefully to find places to cut or control them. Here are some more tips for using cash wisely: Take full advantage of creditor payment terms. If a payment is due in 30 days, don't pay it earlier, unless substantially discounted.

Use electronic funds transfer to make payments on the last day they are due.

Communicate with your vendors. If you ever need to delay a payment, you'll need their trust and understanding.

Carefully read and consider vendors' offers of discounts for earlier payments. These can amount to expensive loans to your suppliers, or they may provide you with a change to reduce overall costs.

Don't always focus on the lowest price when choosing vendors. Sometimes more flexible payment terms can improve your cash flow more than the lowest price.

Surviving low cash flow

Every entrepreneur may find himself in a short cycle where he simply lacks the cash to pay his bills. This doesn't mean you're a failure as a lawyer or as a business person. Everyday business practices that can help you manage the shortfall.

The key to managing cash shortfalls is to become aware of the problem as early and as accurately as possible. Banks much prefer lending to you before you need it, preferably months before. When cash flow is good, you should consider obtaining a line of credit from your bank and keeping it for future needs. When the reason you are caught short is that you failed to plan, a banker is not going to be very interested in giving your a line f credit.

If your bank won't help, turn next to your vendors. Vendors are generally more interested in keeping you going than a banker, because they are more likely to know more about your business. With most vendors, you can get limited extended terms just by asking. This is especially correct if you've been a good client in the past and have regular communication with the vendor.

Consider using law factors. These are financial service companies specifically dealing with law firms which can pay you today for receivables you may not otherwise be able to collect on for weeks or months. Factors generally work with personal injury firms whose settlements are unpredictable. You'll receive as much as 15 percent less than you would otherwise, since factors demand a discount, but you'll eliminate the hassle of collecting and be able to fund current operations without borrowing.

Ask your clients to accelerate payments. Offer a discount of a percentage point or two off the bill. You should also go after your worst clients-those whose invoices are more than 90 days past due. Offer them a steeper discount if they pay today.

Select the bills you'll pay immediately carefully. Don't just pay the smallest ones and let the rest slide. Make payroll first-unpaid employees will soon be ex-employees. Pay crucial vendors next. Ask the rest if you can skip a payment or make a partial payment.

Mina N. Sirkin is a Board Certified Specialist attorney in Estate Planning, Probate and Trust Law by the Board of Legal Specialization of the State Bar of California. Ms. Sirkin practices in Los Angeles County, California.  [email protected]. http://www.SirkinLaw.com.