More Financial Scrutiny for Law Firms?

An interesting article from the Birmingham Post, quoting Johnathan Dudley of Crowe Clark Whitehill. This follows their annual Solicitors Benchmarking Survey. He rightly points out that when substantial and apparently successful firms, such as Challinors, crash, funders will be much more wary in advancing money. That does not just apply to banks, but also other creditors, many of which will be off the balance sheet.

Those of us who have been through a bank tightening its grip on the partners of a firm, or of suspending drawings, or indeed of the ructions of a mooted cash call, (Hill Dickinson seem to have managed it) know the pressures that this creates.

So this is a very good time to review cash management, funding requirements and income. And, yes, keep in contact with the bank, even if it is not comfortable. Think about your reaction to bad news from your staff – most partners want bad news early so that they can do something to rescue the situation. Why would a bank manager be different? Do not, above all, sail too close to the wind financially – we have seen the possible consequences.

 

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