Posted by Karen Garthwaite, head of professional development at Legal Futures Associate ILFM
Garthwaite: Collaborative approach brings multiple benefits
Many law firms grapple with a divide between fee-earners and finance teams, which can create friction that risks undermining regulatory requirements, profitability and client service.
While common, this separation isn’t just a sector quirk; it represents a fundamental risk to firms’ regulatory and financial health as well as operational efficiency.
When these two critical functions work in isolation, the consequences may affect every aspect of the firm.
What are the risks?
The risks of maintaining barriers between fee-earners and finance teams are substantial and multifaceted.
Poor communication can lead to unintended compliance breaches, delayed billing and poor cash collection. Fee-earners may pursue matters without fully understanding their regulatory or financial implications, while finance teams struggle to provide meaningful compliance and operational support without understanding the individual client/matter circumstances which may drive certain decisions.
The result is a firm that operates reactively rather than proactively, constantly firefighting and fixing issues and breaches that proper collaboration could have prevented.
Working together
Building genuine collaboration requires a shift from viewing these functions as separate entities to recognising them as interdependent parts of a unified firm.
The foundation of this lies in creating regular, structured touchpoints, relevant to the specific legal teams.
We recommend monthly matter reviews involving both fee-earners and finance team members, which can identify potential issues before they become problems, while quarterly strategic sessions allow both sides to align on priorities, policy/procedure reviews and resource allocation.
Successful collaboration also depends on mutual understanding of each other’s challenges and constraints.
Finance teams benefit from understanding the unpredictable nature of legal work and the pressures fee-earners face on many fronts. Conversely, fee-earners need to appreciate the importance of timely billing, the impact of delayed payment of invoices on cash flow, and the regulatory requirements that drive many financial and compliance processes.
Using tech to your advantage
Technology can serve as a powerful enabler of collaboration when implemented carefully.
Integrated practice management systems that provide real-time visibility into, for example, residual client account balances, matter profitability, unbilled work in progress and outstanding debt, create a shared source that both teams can rely on.
However, technology alone cannot solve cultural issues and firms must invest in training that helps both sides understand how to use these tools effectively as well ensuring compliance with current regulations.
An ongoing collaboration
Building and strengthening relationships takes time. The most successful firms recognise that effective collaboration requires ongoing investment in relationship building and process improvement.
Regular cross-functional training sessions, joint problem-solving workshops and shared responsibility for client financial relationships all contribute to a culture where collaboration becomes the norm.
The benefits of this collaborative approach include improved internal relationships and a better flow of information, but also improved cash flow, reduced write-offs and even better client satisfaction. It can also lead to more sophisticated approaches to pricing, risk assessment and business development that give firms broader competitive advantages in an increasingly challenging market.
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