By Legal Futures Associate ARC Costs
Law firm profitability is necessary for effective business growth and development. Many businesses within the legal services industry are currently facing financial difficulties due to recent law reforms, the pandemic, and the current cost of living crisis. We even have a recession to look forward to which is being forecast to last up to two years. However, such difficult times can also provide opportunities for businesses to evolve and thrive, and it is now more important than ever to take control of your law firm’s financial health to ensure continued profitability and to stimulate growth. ARC Costs have provided advice on key areas you can focus on to help improve your law firm and increase profits for your firm.
Manage your legal costs effectively
Settling legal costs at the end of a case is something that must be dealt with by all legal departments, regardless of their practice area. Managing your legal costs effectively will help you to limit your overheads and maximise the profits generated through legal costs following the settlement of a claim.
However, costs should not only be considered on conclusion of a case, and should always be a consideration from the outset. Failure to manage legal costs from the outset can undo hard work in conducting a case. Firms should pay attention to ensuring the retainer is properly drafted with key areas including: (in the case of Conditional Fee Agreements) success fees calculated compliantly with a bespoke risk assessment; appropriate billable hourly rates set to reflect at the very least the most up to date guideline hourly rates, enhanced where appropriate for complex claims; and appropriate interim billing practices implemented in private instruction matters, or ensuring payments on account are obtained in CFA type cases.
In inter-partes disputes where additional fees can be recouped, negotiating your costs successfully will help to ensure that you are obtaining maximum profit…
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