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Law Firm Accounting and Financial Management (Fifth Edition)

Joseph A. Bailey, David E. Gaulin, Stanley Kolodziejczak, John P. Quinn

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New Fifth Edition!

Last UPDATED in December, 2013.

Accounting experience not required! Whether you are a partner, an executive director, or a law firm CFO, the new Fifth Edition of Law Firm Accounting and Financial Management helps you manage your law firm effectively.

Featuring lucid explanations and illustrative exhibits, the new edition — the most comprehensive and detailed version to date — discusses the latest management, tax planning and accounting strategies for law firms; new information reporting requirements; and special issues affecting multinational firms.

Topics covered include: fundamentals of law firm financial information, with easy-to-understand examples of the data involved; financial management concepts, such as profitability analysis, profit center accounting, budgeting, long range planning, project management and organizing the finance function within the law firm environment; tax planning and reporting, with discussion of compliance, retirement and pension plans; law firm structures, with discussion of the use of umbrella structures by multinational law firms and the issues raised by cross-border practices; and advanced accounting and financial considerations for law firm management.

Advanced topics include: managing risk; pricing strategies, management information reporting; benchmarking; property acquisition; M&A accounting and strategies for successful mergers; capital structures and financing; the uniform task-based management system; and partner compensation.

Book #00602; casebound, one volume, 1,104 pages; Fifth Edition to be published in 2012, updated as needed. ISBN: 978-1-58852-041-8


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  • Availability: Available
  • Brand: Law Journal Press
  • Product Type: Books
  • Edition: 5
  • Page Count: 1104
  • ISBN: 978-1-58852-041-8
  • Pub#/SKU#: 00602
  • Volume(s): 1

Author Image
  • Joseph A. Bailey
Joseph A. Bailey, Jr. is a retired partner of PricewaterhouseCoopers LLP. He coordinated technical tax matters for PricewaterhouseCoopers LLP's clients in New York and throughout the world. Mr. Bailey is a CPA, a member of the American Institute of Certified Public Accountants and the New York State Society of CPA, and has an MS taxation.


Author Image
  • David E. Gaulin
David Gaulin is a CPA and MBA, and the lead Accounting and Business Advisory Services partner of PricewaterhouseCoopers LLPs Law Firm Accounting Service Practice.


Author Image
  • Stanley Kolodziejczak

Stanley Kolodziejczak, CPA, JD, LLM is the leader of PricewaterhouseCoopers LLPs Law Firm Tax Service Practice.



Author Image
  • John P. Quinn

John P. Quinn is a CPA and a retired partner of PricewaterhouseCoopers LLP.


Title
Copyright
Preface to Fifth Edition

Section I
Fundamental Accounting for Law Firms


Chapter 1:
Financial Reporting Concepts

§ 1.01 Objectives of Law Firm Financial Statements
§ 1.02 Basic Financial Statements
§ 1.03 Partnership vs. Professional Corporation
§ 1.04 Accrual Basis vs. Cash Basis
§ 1.05 External vs. Internal Reports
§ 1.06 Net Income vs. Distributable Income

Chapter 2:
Cash Basis Financial Statements

§ 2.01 Modified Cash Basis Accounting for Law Firms
§ 2.02 Partnership Financial Statements (Modified Cash Basis)
[1] Statement of Net Assets
[2] Statement of Revenues and Expenses and Statement of Changes in Partners’ Accounts
[3] Statement of Cash Flows
§ 2.03 Typical Disclosures in Notes to Financial Statements
[1] Brief Description of the Law Firm’s Operations
[2] Significant Accounting Policies
[3] Commitments to Former Partners
[4] Bank and Other Borrowing Arrangements
[5] Lease Commitments
[6] Retirement Plans
[7] Segregated Assets Belonging to Others
§ 2.04 Additional Financial Analysis Schedules
§ 2.05 Professional Corporation Financial Statements (Modified Cash Basis)
[1] Statement of Net Assets
[2] Statement of Revenues and Expenses and Statement of Changes in Shareholders’ Equity
[3] Statement of Cash Flows

Chapter 3:
Accrual Basis Financial Statements

§ 3.01 Accrual Basis Accounting for Law Firms
§ 3.02 Partnership Financial Statements (Accrual Basis)
[1] Balance Sheet
[2] Statement of Income and Statement of Changes in Partners’ Accounts
[3] Statement of Cash Flows
[4] Notes to Financial Statements
§ 3.03 Reconciliation of Accrual Basis Statements with Modified Cash Basis Statements
[1] Asset Adjustments
[2] Liability Adjustments
[3] Capital Adjustments
§ 3.04 Professional Corporation Financial Statements (Accrual Basis)
[1] Balance Sheet
[2] Statement of Income and Statement of Changes in Shareholders’ Equity
[3] Statement of Cash Flows
[4] Notes to Financial Statements

Chapter 4:
Revenue and Expenses

§ 4.01 Net Income of a Law Firm
§ 4.02 Fee Revenue
[1] Recording Time Charges
[2] Billing Clients
[3] Collecting Fees
§ 4.03 Compensation Costs
[1] Associates’ Compensation
[2] Administrative Staff Salaries
[3] Fringe Benefits and Other Employee CostsM
§ 4.04 Operating Expenses
[1] Occupancy Costs
[2] Office Operating Expenses
[3] Professional Activities
[4] General Business Expenses
[5] Payments to Former Partners
§ 4.05 Cost Recoveries

Chapter 5:
Assets and Liabilities

§ 5.01 Net Assets of a Law Firm
§ 5.02 Fees Receivable and Unbilled Fees
§ 5.03 Client Disbursements Receivable
§ 5.04 Cash and Short-Term Investments
§ 5.05 Property and Equipmen
t § 5.06 Liabilities

Chapter 6:
Partners’ Accounts

§ 6.01 Law Firm Partnership Agreements
§ 6.02 Composition of Partners’ Accounts
§ 6.03 Allocation of Partners’ Income
§ 6.04 Partners’ Current Accounts
§ 6.05 Partners’ Capital Accounts

Chapter 7:
Internal Controls

§ 7.01 Recent Evolution of Internal Control
§ 7.02 Internal Control for Law Firms
§ 7.03 A Closer Look at the Five COSO Framework Components
§ 7.04 Considerations During the Internal Control Design Phase
§ 7.05 Control Objectives and Financial Statement Assertions
§ 7.06 The Importance of Segregation of Duties
§ 7.07 Significant Internal Control Cycles at Law Firms
[1] Cash Collections Cycle
[2] Cash Disbursement Cycle
[3] Payroll Cycle
[4] Partners’ Capital Cycle
[5] Financial Reporting Cycle
§ 7.08 Other Internal Control Considerations
[1] Information Technology General Controls
[2] Business Performance Reviews
[3] Budgetary Control
[4] Organization Control
[5] Insurance

Section II
Financial Management Concepts for Law Firms


Chapter 8:
Business Concepts

§ 8.01 Law Firm Profitability: An Overview
§ 8.02 Revenue Factors
[1] Chargeable Hours
[2] Billing Rates
[3] Realizations
§ 8.03 Expense Factors
[1] Timekeeper Compensation
[2] Direct Practice Support Expenses
[3] Indirect Expenses
§ 8.04 Leverage of Lawyers
§ 8.05 Components of the Profitability Calculation

Chapter 9:
Employing Project Management in the Law Firm

§ 9.01 Introduction
§ 9.02 Benefits of Project Management
§ 9.03 What is Project Management?
§ 9.04 Who are the Key Players in Project Management?
§ 9.05 Establishing a Project Management Roadmap
[1] Processes
[2] Organizational Structure
[3] People
[4] Strategies, Systems and Tools
§ 9.06 What is Program Management?

Chapter 10:
Management Reporting

§ 10.01 Management Reporting for Law Firms
§ 10.02 Executive Summary
§ 10.03 Operating Performance Analysis
[1] Overview
[2] Modified Cash Basis (or Income Tax Basis) Operating Statement
[3] Key Performance Indicators
§ 10.04 Billed and Unbilled Fee Analysis
[1] Aged Summary of Uncollected Receivables and Unbilled Fees
[2] Speed of Billings and Collections
§ 10.05 Operating Cost Analysis
[1] Compensation Costs
[2] Operating Expenses
§ 10.06 Financial Position Information
§ 10.07 Financial Charts
§ 10.08 Exception Reporting

Chapter 11:
Profit Center Accounting

11.01 Profit Center Accounting for Law Firms
§ 11.02 Cost Allocation
[1] Imputed Equity Partner Compensation
[2] Other Timekeepers’ Compensation
[3] Support Costs
[4] Non-chargeable Activities Costs
[5] Cost Allocation Calculations
[6] Using the Percentage Method and Cost-perHour Method
§ 11.03 Fee Classification
§ 11.04 Profit Determination
§ 11.05 Analyzing the Results

Chapter 12:
Budgeting

§ 12.01 Budgeting for Law Firms
§ 12.02 Projecting Fees
§ 12.03 Estimating Personnel Costs
[1] Timekeepers’ Compensation
[2] Administrative Staff Salaries
[3] Fringe Benefits and Other Employee Costs
§ 12.04 Estimating Operating Expenses
[1] Occupancy Costs
[2] Technology Costs
[3] Office Operating Expenses
[4] Professional Activities
[5] General Business Expenses
§ 12.05 Responsibility Accounting
[1] Functional Approach
[2] Profit-Center Approach
§ 12.06 Unit Cost Comparison
§ 12.07 Cash Requirements Budgeting
[1] Equity Partner Distributions
[2] Property and Equipment Purchases
[3] Cash Provided by (Used in) Operations
[4] Financing Arrangements
[5] Cash Balances

Chapter 13:
Long-Range Planning

§ 13.01 Long-Range Planning for Law Firms
§ 13.02 The Strategic Plan
[1] Market Identification
[2] Growth Focus
§ 13.03 The Staffing Plan
[1] Lawyer Projections
[2] Support Staff Projections
§ 13.04 The Operating Plan
[1] Revenue Projections
[2] Compensation Cost Projections
[3] Operating Expense Projections
[4] Net Income Projections
§ 13.05 The Capital Financing Plan
[1] Debt vs. Equity Financing
[2] Equity Partners’ Distributions

Chapter 14:
Systems and Data

§ 14.01 Use of Information Technology by Law Firms
§ 14.02 Information Technology Strategy
[1] Defining the Firm’s Requirements
[2] Selecting the Appropriate Computer Software and Hardware
[3] Implementing the System
§ 14.03 Client Accounting System
[1] System Functions
[2] System Features
[3] Report Capabilities
§ 14.04 Payroll Accounting System
[1] System Functions
[2] Outsourcing to Payroll Processor
§ 14.05 Accounts Payable System
[1] System Functions
[2] System Features
[3] Report Capabilities
§ 14.06 General Ledger Accounting and Budget Reporting System
[1] System Functions
[2] Report Capabilities
§ 14.07 Management Information System
[1] System Functions
[2] Report Capabilities
§ 14.08 Partners’ Accounts System
[1] System Functions
[2] System Capabilities
§ 14.09 Auxiliary Systems
[1] Property and Equipment Records
[2] Retirement Plans
[3] Trust, Estate and Other Segregated Assets Held for Others
§ 14.10 Data Security
[1] Access Controls
[2] Policies and Procedures
es [3] Management Controls
§ 14.11 Data Security Appendix
[1] Data Security Policy Background
[2] Data Security Standards

Chapter 15:
Organizing the Finance Function

§ 15.01 Organization Structure of Law Firms
§ 15.02 Organization Charts Law Firm Administrative Functions
[1] Small Law Firms
[2] Medium Law Firms
[3] Large Law Firms
[4] Megasize Law Firms
§ 15.03 Organization Charts Law Firm Finance Function
[1] Small Law Firms
[2] Medium Law Firms
[3] Large Law Firms
[4] Megasize Law Firms
§ 15.04 Branch Office Coordination
[1] Centralized Approach
[2] Decentralized Approach
[3] Comparison of Centralized vs. Decentralized Approach
[4] Combination Approach
§ 15.05 Responsibilities of the Chief Financial Officer
[1] Controller Responsibilities
[2] Treasury Responsibilities
[3] Information Technology Responsibilities
§ 15.06 Key Tasks of Finance Function Supervisors
[1] Billing and Collections Supervisor
[2] Payroll Supervisor
[3] Accounts Payable Supervisor
[4] Treasury/Cash Supervisor
[5] Financial Reporting Supervisor
[6] General Ledger Supervisor
[7] Partners’ Accounts and Tax Matters Supervisor
[8] Financial Analyst
[9] Information Technology Supervisor
[10] Internal Audit

SECTION III
Tax Planning and Reporting


Chapter 16:
Tax Information Reporting

§ 16.01 Law Firm Partnership or Corporate Tax Returns
[1] IRS Structure
[2] Electronic Filing
[3] Reporting Payments to Attorneys
[4] Filing Tax Returns For Law Firms and Partners
[5] Reportable Transactions
[6] Circular 230
[7] Tax Return Preparer Penalties Under Section 6694
§ 16.02 Reconciliation of Book Net Income with Ordinary Income for Tax Purposes
[1] Nontaxable Income and Nondeductible Expenses
[2] Timing Differences in Reporting
[3] Separately Stated Items
[4] Ordinary Income
[5] Ordinary Deductions
§ 16.03 U.S. Partnership Return of Income (Form 1065)
[1] Income and Deduction Items Comprising Ordinary Income
[2] Partners’ Shares of Income, Credits, Deductions, etc. (Schedule K)
[3] Balance Sheets (Schedule L)
[4] Reconciliation of Income per Books with Income per Return (Schedules M-1 and M-3)
[5] Analysis of Partners’ Capital Accounts (Schedule M-2)
§ 16.04 Individual Partner’s Share of Income, Credits, Deductions, etc. (Schedule K-1)
[1] Partner’s Share of Income and Deductions
[2] Partner’s Share of Items Relevant to Computation of Tax Credits
[3] Partner’s Share of Items Relevant to Other Tax Computations
[4] Schedule K-1 Reporting for a Deceased Partner
[5] Bar Coding for Schedules K-1
[6] Foreign Bank and Financial Account Reporting
[7] Operations in an International Boycott Country
§ 16.05 State and Local Income Taxes
[1] Type of Tax Return
[2] Taxable Income Determination for State Income Tax Purposes
[3] Income Tax Credits
§ 16.06 Foreign Income Tax Returns for Partnership and Partners
[1] Partnership Returns
[2] Partner Returns
[3] Tax Withholding
[4] VAT
§ 16.07 Changes in Income Tax Rules
[1] International Tax Rules
[2] Tax Shelter Disclosure
[3] Executive Compensation
[4] Disallowance of Certain Partnership Loss Transfers
[5] Recognition of Cancellation of Indebtedness Income
[6] Individual Partner Taxation
[7] Tax Administration
[8] Miscellaneous Provisions
§ 16.08 Determining U.S. Income Tax Residency for an Alien Individual

Chapter 17: Retirement and Pension Plans
§ 17.01 Law Firm Retirement Arrangements
[1] Objectives of Retirement Arrangements
[2] Types of Retirement Arrangements
[3] Limitations on Tax Deductions
§ 17.02 Unfunded Partner Retirement Programs
[1] In General
[2] Plan Features
[3] Methods of Calculation
§ 17.03 Defined Contribution Plans
[1] Profit-Sharing Plans
[2] Money Purchase Pension Plans
[3] Cash or Deferred Plans (401(k) Plans)
§ 17.04 Defined Benefit Plans
§ 17.05 Cross-Testing for Nondiscrimination
§ 17.06 Other Retirement Programs
[1] Partner Life Insurance Arrangements
[2] Individual Retirement Savings Arrangements (IRAs)
[3] Post-Retirement Benefits Other Than Pensions
[4] Roth IRAs
[5] Education IRAs
[6] Annuities
§ 17.07 Financial Disclosures by Law Firms About Their Retirement Programs
[1] Unfunded Retirement Programs
[2] Funded Retirement Programs
§ 17.08 Financial Reporting by Retirement and Pension Plans
[1] Standards of Financial Reporting
[2] Examples of Financial Information
§ 17.09 Government Compliance Reporting (Form 5500)
[1] Annual Report
[2] Plan Financial Statements and Schedules
[3] Examples of Financial Information
§ 17.10 Professional Tax Advice

Chapter 18:
Tax Planning

§ 18.01 Tax Planning for Law Firms
§ 18.02 Accounting Methods
[1] Alternative Tax Accounting Methods
[2] Financial Statements vs. Tax Reporting
[3] Changing Tax Methods of Accounting
§ 18.03 Income Recognition
[1] Billing and Collection Accounting
[2] Client Deposits/Deferred Income
[3] Alternative Fee Arrangements
[4] Tenant Improvement Allowances
[5] Valuing Property Received in Exchange for Services Rendered
§ 18.04 Year Expenses Are Deductible
[1] General Rule
[2] Client Disbursements vs. Firm Expenses
ent Disbursements [3] Depreciation Accounting
[4] Repairs and Maintenance Expenses
[5] Purchase vs. Lease Accounting
[6] Interest Capitalization on Leasehold Improvements
[7] Charitable Contributions as Business Expenses
[8] Purchasing vs. Developing Computer Software
[9] Prepaid Rent
[10] Establishing and Maintaining a Web Site
[11] Real Estate Operations
[12] Amortization of Start-Up Costs
[13] Interest Relating to Tax-Exempt Income
[14] Incentives
[15] Methods of Financing Capital Contributions
[16] Capitalization of Internal Projects
§ 18.05 Accounting Periods
[1] Fiscal Year vs. Calendar Year
[2] Timing of Qualified Pension Plan Contribution Deduction
§ 18.06 Partner Profit/Loss Sharing Arrangements
[1] Sharing Firm Income
[2] Active Partners
[3] Retired Partners
[4] Former Partners
[5] Reasonable Compensation for PC Shareholders
[6] Transfers of Partnership Interests for Services
[7] Personal Service Corporations
§ 18.07 Operations in Multiple States and Cities
[1] Income Allocation Methods
[2] Determining Presence and Nexus
[3] Sales Taxes on Library and Equipment Purchases
[4] Sales Taxes on Professional Services
[5] Personal Property Tax
[6] Other Taxes
[7] State Credits

Chapter 19:
Business Expenses and Fringe Benefits

§ 19.01 Partner and Employee Business Expense Deductions
[1] Travel, Meal and Entertainment Deductions
[2] Reimbursement “Accounting” Substantiation Requirements
[3] Expense Reimbursement Policy Statement
[4] Expense Reports
§ 19.02 Employee Relocation Costs
[1] Expenses for a Temporary Transfer
[2] Moving Expenses for a Permanent Transfer
[3] Purchase of Transferee’s Home
§ 19.03 Employee Fringe Benefits
[1] In General
[2] Parking, Transit Passes and Vanpooling
[3] Working Condition Fringe Benefits
[4] De Minimis Fringe Benefits
[5] Employee Cafeterias
[6] Dependent Life Insurance
[7] Educational Assistance Program
[8] Annual Physical Examination
[9] Employer-Provided Retirement Planning Services
[10] Frequent Flyer Program
[11] Health Savings Account (HSA)
[12] Partnership’s Contributions to a Partner’s Health Savings Account (HSA)
[13] Taxability of Disability Benefits
[14] Summary Tax Effects of Fringe Benefits
§ 19.04 Self-Employed Accident and Health Insurance Deduction
§ 19.05 Home Office Deduction

Chapter 20:
Law Firm Structures

§ 20.01 Expanding Sphere of Operations
§ 20.02 Forms of Doing Business
[1] Partnership Structure
[2] Corporate Structure
[3] LLC or LLP Structure
[4] Conversion to LLP
[5] Electing S Corporation Status
[6] Incorporating a Partnership
[7] Choosing Between a Corporate Structure and a Partnership or LLP Structure
[8] Check-the-Box Regulations
§ 20.03 Structures of U.S. Firms Operating Outside the United States
[1] Branch Structure
[2] Hybrid Global Partnership
[3] Parallel Structure
[4] Umbrella Structure
§ 20.04 Non-U.S. Firms Operating in the United States
§ 20.05 Merger Considerations
[1] Partnership Merges into Partnership
[2] Partnership Merges into a Corporation or PC
[3] PC Merges into PC
[4] PC Merges into Partnership
[5] Tax Accounting for Merger-Related Costs
§ 20.06 Law Firm Affiliation
§ 20.07 Multidisciplinary Practice

Chapter 21:
Global Operations

§ 21.01 Globalization of Law Firms
§ 21.02 U.S.-Based Law Firms Practicing Outside the United States
[1] Location of Permanent Establishment
[2] Registering for Business
[3] Bar Restrictions
[4] Structure
[5] Accounting Periods
[6] Accounting Methods
[7] Sourcing and Allocation of Partnership Income
[8] Allocation/Apportionment of Expenses Transfer Pricing
[9] Value Added Taxes
[10] Foreign Tax Credit
[11] Guaranteed Payments
[12] Foreign Currency Gain or Loss
[13] Filing Requirements Partnership and Partners
[14] Withholding on Distributions
[15] Certification of U.S. Residency (Form 6166)
[16] Social Security Totalization Agreements
[17] Tax Equalization/Protection
[18] Operating an International Law Firm
§ 21.03 Non-U.S.-Based Law Firms Practicing in the United States
[1] Structure
[2] Accounting Methods
[3] Accounting Periods
[4] Allocation of Income
[5] Allocation and Apportionment of Expenses
[6] Treaty Considerations
[7] Employee Considerations
[8] Withholding on Effectively Connected Income
[9] U.S. Tax Obligations of Foreign Entities and Their Owners
[10] Filing Requirements Partnership and Partners
§ 21.04 United States Partners and Associates Assigned to Foreign Countries
[1] Tax Planning for Lawyers Assigned Abroad
[2] Tax Policy for Lawyers Assigned Abroad
[3] Protection vs. Equalization
[4] United States Taxation of U.S. Citizens Residing Abroad
[5] Foreign Income Exclusions
§ 21.05 Foreign Tax Credit
[1] Overview
[2] Foreign Tax Credits vs. Foreign-Income Exclusions
[3] Allocation of Foreign Taxes in Accordance with Partner Income Allocations
[4] Credit for Taxes Paid to Foreign Countries and Possessions of the United States
[5] Foreign Tax Redetermination
§ 21.06 Moving Expenses
§ 21.07 United States Principal Residence
§ 21.08 Withholding Tax
§ 21.09 Social Security Liability
§ 21.10 Totalization Agreements
[1] Prevent Double Taxation/Preserve Benefits
[2] Territoriality Rule/Detached-Worker Rule
[3] U.S. Employer
[4] Foreign Affiliate
[5] Rules for Partners

SECTION IV
Advanced Accounting for Law Firms


Chapter 22:
Risk Management

§ 22.01 Overview
§ 22.02 Risk Management Team
§ 22.03 Policies and Procedures Manual
§ 22.04 Risks to be Managed
[1] Performance Risks
[2] Operational Risks
[3] Financial and Accounting Risks
[4] Trust Account Risks
[5] Employee Risks
§ 22.05 Strategies to Manage Risks
[1] Policy Manual
[2] Quality Control
[3] Operational Safeguards
[4] Internal Auditor
[5] Independent Audit or Review
[6] Peer Review
[7] Malpractice Insurance

Chapter 23:
Financial Modeling

§ 23.01 Financial Modeling for Law Firms
§ 23.02 Types of Financial Models
[1] Long-Range Profit-Planning Models
[2] Merger and Acquisition Accounting Models
[3] Office Occupancy-Cost Models
[4] Other Financial Models
§ 23.03 Creating an Office-Occupancy Cost Model
[1] Analyzing the Decision-Making Process
[2] Developing Input Data, Assumptions and Statistics
[3] Processing Calculations
§ 23.04 Using an Office-Occupancy Cost Model
[1] Base Case
[2] Alternative Scenarios
[3] Comparison of Base Case vs. Alternative Scenarios
§ 23.05 Interpreting the Results

Chapter 24:
Merger and Acquisition Accounting

§ 24.01 Articulate a Strategy for Growth
§ 24.02 Merger Action Plans
§ 24.03 Form a Merger Team
§ 24.04 Strategic Considerations
[1] Financial Measurements
[2] Firm Name and Governance
[3] Partner/Shareholder Considerations
[4] Practice Areas and Client Strategies
[5] Personnel Considerations
[6] Geographic Strategies
[7] Accounting Considerations
[8] Tax Considerations
[9] Operational Considerations
§ 24.05 Target Identification
§ 24.06 Evaluate the Deal
[1] Strategic Considerations
[2] Financial Due Diligence
[3] Financial Projections
[4] Communication and Focus
§ 24.07 Negotiate and Close the Deal
[1] Structure of the New Firm
[2] Governance of the New Firm
[3] Transition Period for Full Implementation
[4] Documents and Protecting the Name
§ 24.08 Implement the Deal
[1] Communication
[2] Timetables
[3] Co-location
[4] Choose the Best Practices
[5] Accounting Policies
[6] Accounting and Reporting Systems
[7] Monitor Results
§ 24.09 Roadblocks and Deal Breakers
[1] Independent Consultant
[2] Firm Name
[3] Governance
[4] Compensation and Benefits
[5] Capitalization
[6] Conflicts and Risk Management
[7] Identification of Surviving Firm
[8] Unfunded Deferred Compensation Plans
§ 24.10 Assessing the Benefits and Risks of a Merger

Chapter 25:
Partners’ Compensation

§ 25.01 An Overview
[1] General Goals of Partner Compensation Plans
[2] Specific Objectives of Partner Compensation Plans
[3] Components of Partner Compensation Plans
§ 25.02 Measuring Partners’ Performance
[1] Performance Measurement Criteria
[2] Performance Measurement Programs
[3] Performance Measurement Reports
§ 25.03 Evaluating Partners’ Performance
[1] The Autocratic Approach
[2] The Democratic Approach
[3] The Formula Approach
[4] The Lockstep Approach
[5] The Modified Lockstep Approach
[6] The Committee Approach
§ 25.04 Ranking Partners’ Performance
[1] Assigning Rating Factors
[2] Creating a Ratings Matrix
[3] Preparing a Point Schedule
§ 25.05 Choosing a Partnership Definition of “Profits”
[1] Types of Accounting Methods
[2] Comparison of Allocable Partnership Profits Under Alternative Accounting Methods
§ 25.06 Developing a Partnership Profit-Sharing Formula
[1] Allocation Base
[2] Allocation Concepts
ions [3] Allocation Programs
§ 25.07 Comparing Partners’ Compensation Under Alternative Scenarios
[1] Developing Input Data
[2] Calculating Partners’ Compensation
[3] Considering Alternative Allocations
§ 25.08 Assessing and Addressing Partner Compensation Trends
[1] Compensation Goals
[2] Present Trends
[3] Plans for Improvement

Chapter 26:
Capital Structure and Financing

§ 26.01 Capital Structure of Law Firms: An Overview
[1] Economic Considerations
[2] Competitive Considerations
[3] Cultural Considerations
§ 26.02 Alternative Financing Methods
[1] Equity Financing
[2] Borrowing
[3] Leasing
§ 26.03 Developing a Suitable Capital Structure and Financing Plan
[1] Understanding Financing Requirements
[2] Identifying Appropriate Financing Methods
[3] Matching Financing Requirements with Financing Methods

Chapter 27:
The Law Firm and Business Development

§ 27.01 Overview
§ 27.02 The Law Firm Marketing Process
§ 27.03 Creating a Brand
§ 27.04 Law Firm Websites
§ 27.05 Measuring and Demonstrating Marketing Effectiveness
§ 27.06 Marketing Budgets
§ 27.07 Conclusion

Chapter 28:
Pricing Strategies

§ 28.01 Law Firm Pricing Strategies: An Overview
§ 28.02 Cost-Based Pricing Using Hourly Rates
[1] Pricing Factors
[2] Pricing Methodology for Staff Services
[3] Pricing Methodology for Ancillary Services
[4] Pricing Model
§ 28.03 Value-Based Pricing Using Hourly Rates
§ 28.04 Alternative Pricing
[1] Concerns with the Hourly Rate System
[2] Reasons for Adopting Alternative Pricing
[3] Relationship to Corporate Planning and Budgeting
[4] Types of Alternative Pricing
[5] Advantages and Disadvantages
[6] Considerations in Adopting Alternative Pricing
§ 28.05 Pricing Goals: Adapting to Competitive and Client Challenges

Chapter 29:
Uniform Task-Based Management System and Legal Electronic Invoicing

§ 29.01 Overview
§ 29.02 The Internet and Uniform Task-Based Management System (UTBMS)
[1] The Process of Developing Industry Standard Codes
[2] Coding Structure
[3] Glossary of Terms
[4] Sample Time Record
§ 29.03 Legal Electronic Invoicing
[1] The Problems
[2] The Challenges
[3] Electronic Invoicing: A Business Solution to a Business Problem
[4] The Core Components of E-Invoicing
[5] Electronic Invoicing Enablers
[6] Electronic Invoicing as One Component of a Legal E-Business Architecture
[7] Analog Impedes Electronic Invoicing
[8] Decreasing Friction is the Key Consideration in Electronic Invoicing Design
[9] The Internet: Low Friction Invoice Transportation
[10] Non-Standard Development Tools
[11] Proprietary Business Models
[12] Non-Scaleable Technologies
[13] Conclusion
§ 29.04 Corporate Client Perspective
[1] Matter Budgeting
[2] Cost Analysis
[3] Streamlined Administrative Processes
§ 29.05 Law Firm Perspective
[1] Addressing Specific Concerns of Law Firm Attorneys
[2] Adopting a Strategy to Meet Client Needs
§ 29.06 Guiding Principles in Forming UTBMS
[1] Support of Business Objectives and Processes
[2] Simplicity and Ease-of-Use
[3] Chronology
[4] Suitability for All Size Offices
[5] Avoidance of Multiple Interpretations
[6] Flexibility to Track Both Tasks and Activities
[7] Use of Narrative Time Entries Retained
[8] Use of Matter Type Codes to Distinguish and Track Matters
[9] Meeting the Requirements of Most Matters
§ 29.07 Litigation Code Set
[1] Phase and Task Codes
[2] Activity Codes
[3] Expense Codes
[4] Sample Budget/Bill Format Litigation
[5] Definitions
§ 29.08 Bankruptcy Code Set
§ 29.09 Project Code Set
§ 29.10 Counseling Code Set

Chapter 30:
Management Information

§ 30.01 Management Information for Law Firms
§ 30.02 Internal Management Information
[1] Firm Management
[2] Practice/Office Leaders
[3] Partners
§ 30.03 Management Information Requested by Third Parties
[1] Information Requested by Clients
[2] Information Requested by Banks and Lessors
§ 30.04 Management Inquiry Tools
[1] What are Management Information Systems?
[2] How Management Information Systems and Tools are Used
[3] Advantages of a Management Information System
[4] Facilitating Project Management
[5] System Security
[6] Distributing Management Information: Law Firm Intranet or Portal
[7] Defining the Portal
§ 30.05 Benchmarking
[1] Benchmarking: An Overview
[2] Approach to Benchmarking
[3] Sources of Benchmarking Information
[4] Guidelines for Success

Chapter 31:
Property and Equipment Acquisition: The Lease or Buy Decision

§ 31.01 Overview
§ 31.02 Anticipated Useful Life of Asset
§ 31.03 Sources of Capital
[1] Purchase Transactions
[2] Lease Transactions
§ 31.04 Term of Lease or Financing
§ 31.05 Maintenance and Related Issues
[1] Maintenance Costs
[2] Asset Tracking
[3] Insurance and Appraisals [4] Prepayment, Assignment and
/or Cancellation
§ 31.06 Example Modeling
[1] Model Assumptions
[2] Lease/Buy Model
[3] Analysis of Model

Chapter 32:
Law Firm Governance

§ 32.01 The Importance of Governance
§ 32.02 Definition of Corporate Governance
§ 32.03 The Executive Committee
[1] Role
[2] Composition
[3] Size
[4] Key Governance Responsibilities
[5] Meetings
§ 32.04 Other Committees
§ 32.05 International Presence
§ 32.06 Conclusion

Chapter 33:
Outsourcing

§ 33.01 What is Outsourcing?
[1] Definition
[2] Where is Outsourcing Used?
[3] Outsourcing Terms
[4] Outsourcing Agreements
[5] Business Process Outsourcing (BPO)
[6] Benefits of Outsourcing
[7] Risks of Outsourcing
§ 33.02 Determining Value
[1] Top Down Business Case
[2] Bottom’s-up Business Case
[3] Benchmark Your Performance Against Industry Leaders
[4] Determine Sourcing Alternatives Lift and Shift, Automate and Eliminate, Fix and Shift
[5] Create a Business Case That Includes Potential Benefits, Costs and Risks
§ 33.03 Implementation
[1] The Vendor Selection Process
[2] The Internal Process
[3] Why Deals Don’t Work

Index