How We Helped A Queensland Construction Law Firm Become Cash Flow Positive

Problem

• Construction Law firm struggling with Cash Flow Management
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• Cash Deficit of $100K

‍• All credit lines exhausted

‍• Firm struggling to make payroll

Diagnosis

‍• Firms’ lawyers were not adhering to Cash in Trust Guidelines and were continuing to do work even when there was not enough money in trust as they were being incentivized on hours billed and not cash collected
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‍• Revenue from Retainer work was masking the actual profitability of the firm
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‍• Individual lawyers' productivity and Cost to Company were not being measured
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‍• Overdue receivables higher than the industry standard.

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Solution Implemented

• Modified Trust Request procedure where trust requests were automatically generated when WIP reached 90% of $-amount in Trust for each individual matter

‍• “Stop-Work” was strictly implemented when there was not enough funds in trust for a particular matter

‍• Modified Incentive for lawyers on Cash received instead of hours billed

‍• Separated Retainer Billing from Hourly Billing

‍• Weekly monitoring of hours billed for each lawyer | Weekly review of Overdue receivables and follow-up

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Result

• 7 Months Time to Eliminate Overdraft

• 2 Months Operating Cash Buffer

• >90% Ontime Trust Requests

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