Page 21 - San Antonio Vol 1 No 1

nancial data for law rms. A simple search under “law rm nancial ratios” will provide various useful resources.
THE PROFIT AND LOSS STATEMENT
e pro t and loss statement should clearly spell out the sources of client col- lections, the various types of expenses and
be comparative with the prior period of time. is statement should also have budgeted numbers and benchmark data for the reasons discussed above. In addition, the P/L state- ment should provide the attorney with a clear understanding of the nancial results for the attorney’s hard work. is is done by isolat- ing the compensation to the attorney. is compensation is from salary, other types of compensation or cash withdrawals given and fringe bene ts, such as health insurance, re- tirement plan contributions for the attorney, payroll taxes paid on behalf of the attorney, vehicle allowances, etc. Isolating this com- pensation information allows the attorney to clearly see the “bottom line” of what is truly
... you need to get more out of the financial statements prepared for you. Your accountants need to take a stronger role to make sure you have the financial information you need to manage your law firm.”
earned from the client collections.
THE STATEMENT OF CASH FLOWS
Finally, there is the statement of cash ows that unfortu- nately is rarely pre- pared for the attor- ney. is statement
is designed to clearly show the attorney for a stated period of time (example, the year-end statement of cash ows would report the cash sources and cash uses for the twelve months of that year) where cash is coming from and where cash was used. So o en attorneys nd themselves working harder and making less money. e statement of cash ows can show the attorney where the cash went over a de- ned period. is statement is di cult to un- derstand at rst glance so the accountant must explain the format and accounting terms used.
One of the main points to be made here is that you need to get more out of the nancial statements prepared for you. Your accoun- tants need to take a stronger role to make sure you have the nancial information you need to manage your law rm.
21