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Should Your First Law Firm CFO Be Fractional?

Lawyers/Law Firms

Should Your First Law Firm CFO Be Fractional?

Are you so busy handling client cases that you’re finding it difficult to keep up with the financial and accounting obligations required to run your firm? While hiring a full-time CFO might be prohibitively expensive for some smaller businesses, there are ways to access this experienced professional resource without having to spend exorbitant amounts of money on salary and benefits. Consider outsourcing your first Law Firm CFO.

A Fractional CFO is an external financial expert hired on a part-time, contract, or retainer basis to address specific business needs. They help small and medium-sized businesses manage high-level financial responsibilities without the significant overhead of a salaried C-level executive. Your first Law Firm CFO can help you manage a wide range of tasks to help you meet compliance requirements and financial milestones. They can offer a deep rolodex of industry contacts and extensive knowledge that can lead to strategic partnerships.

Here are some ways a virtual Law Firm CFO can help lead your business to success:

  • They can develop financial forecasts and reports
  • Navigate compliance and regulatory issues
  • Create long-term financial strategy
  • Complete accounting books
  • Analyze industry trends

Studies show that CFOs help law firms improve their bottom lines and expand margins, driving gains for partners. More than 85% of the Am Law 100 and 70% of the Am Law 200 firms employ a chief financial officer, according to a study by Colliers International. These larger firms saw substantial revenue increases with the help of a Law Firm CFO. In 2020, the Am Law 100 reported a 6.6% gross revenue increase to $11 billion, with revenue per lawyer jumping by nearly 5% to $1.05 million. As revenues increase, so do the profits per equity partner. In 2020, the biggest law firms saw profits per equity partner increase by 13.4% to $2.23 million.

Smaller law firms might feel priced out of a full-time CFO that can provide similar benefits. Luckily, a Fractional CFO can plug your firm into some of the same resources at a sliver of the cost.

Why is it smart to consider a Fractional Law Firm CFO?

As a law firm, it’s in your best interest to hire a CFO. However, most Law Firm CFOs command six-figure or more salaries and robust benefit packages. As a smaller law firm just starting out, it might not be possible to spend so many hard-earned dollars on someone managing a component of the business that’s outside of your core legal purview. A factional Law Firm CFO offers an attractive solution because it unlocks affordable access to a legal financial expert that can help you increase revenue and profits.

Here are some other reasons why you might want to hire a factional Law Firm CFO:

  • Your business is growing rapidly and you’re so busy practicing law that you no longer have the bandwidth to manage balance sheets, income statements, and financial reports, let alone think about maximizing profitability.
  • Your firm is bringing on new investment and restructuring, requiring a financial expert with specific experience managing capital allocation. You want to make sure the cash is being deployed according to the law and in the best interest of your firm and investors.
  • You are bringing in a lot of new clients but aren’t seeing an increase in profitability. A Law Firm CFO can conduct a deep dive into your finances and determine where you’re leaving money on the table; how to cut redundancies and improve margins.
  • The business has reached a plateau and could use an expert who can bring industry connections and high-level strategy.
  • Your firm’s financial reports are in disarray. A Law Firm CFO can help you fix your books and establish a system of protocols for the future.

How to Hire an Outsourced CFO Service

Outsourced CFO services, such as those provided by The A Team Consulting, can offload this entire process for founding partners so that law firms can focus on what they do best – manage legal matters for clients.

With over 20 years of experience, the A Team’s Fractional CFO services will match you with the best Law Firm CFO, a person who meets both your needs and your budget. The A Team will get you where you need to be. Call 646-849-4267 or contact us online to get started.Fr

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