Dewey & LeBoeuf LLP halted profit payments to partners in August, according to an article today in Law360. The move was a proactive step to protect cash balances in the face of financial uncertainty.
Eversheds LLP took a similar step recently, according to Law360, by suspending profit payments due in November and February.
Collections, realization and cash flow management are certainly issues facing many law firms in today's economic slowdown. Financial hardships serve as a tough reminder that finding the ideal client from a business development perspective includes the need to assess their ability to pay. A vigilant approach to accounts receivable is an important corollary.
When good clients slow down the payment cycle, law firms can view it as an opportunity to tighten the client relations team around innovative billing and/or collections practices that meet the needs of both parties.
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