Asked and Answered

By John W. Olmstead, MBA, Ph.D, CMC

Q. I am the firm administrator of a 16-attorney firm in San Diego. We have six equity members, four non-equity members, and six associates. We also have four paralegals and six staff members. We are managed by a three member executive committee. Each month I provide the equity members and the executive committee with the same reports from our software system. They are quite numerous. The equity members and the executive committee complain that they get too many reports and they don't look at them while the non-equity members and the associate complain that they don't get access to any financial information. Do you have any suggestions?

A. Less is often more. I would rather see partners receive less reports and read and use the reports they do receive. They can always request additional detail reports if they desire them. Think of a pyramid - at the top are equity members, then non-equity members, associates and then the executive committee and the firm administrator. At the top of the pyramid the information is more summarized and more detail is provided as you work you way down the pyramid. For example, do the equity members need to see journal registers, cash receipts registers, etc.?

I suggest you develop a report distribution guide that outlines who gets what and when and have it approved by the executive committee. Here is an example:

The objective of these guidelines are to provide timely, meaningful reports to firm management, equity and non-equity members, associates, and other timekeepers. Therefore, as few reports as possible should be distributed to reduce bulk and information overload. All other reports not listed for equity member distribution should be available to them on a per request basis.

Daily Reports

• Bank balance report should be provided to the Managing Member or Executive Committee member responsible for financial management on daily basis. 
• Cash Requirements report from accounts payable system should be provided to the Managing Member or Executive Committee member responsible for financial management and Director of Administration on a daily basis or before approving bills for payment.

 Weekly Reports

 A detailed time report will be generated weekly (by Wednesday of each week for the conclusion of the preceding week) and will be distributed as follows:

• Director of Administration – copy of the entire report listing hours of all timekeepers.
• Individual Timekeepers – report listing their hours only.

Monthly Reports

        Monthly reports should be distributed no later than the 5^th of each month according to the following schedule:

Equity Members             

• Timekeeper Analysis Report for the entire month and YTD for entire firm.
• Income Statement
• Balance Sheet
• Aged AR Report – their AR only – originating
• Summary Unbilled WIP Report, their WIP only – billing attorney/originating
• Collection Analysis Report run by working timekeeper for all timekeepers. After this run the report should be run again by originating timekeeper.
• Realization Master Report

        Non-Equity Members

• Timekeeper Analysis Report for the entire month and YTD for their individual stats only
• Aged AR Report – their AR only – originating
• Summary Unbilled WIP Report, their WIP only – billing attorney/originating
• Collection Analysis Report run by working timekeeper for their individual stats only. After this run the report should be run again by originating timekeeper.
• Realization Master Report

        Executive Committee

• Timekeeper Analysis Report for the entire month and YTD for entire firm.
• Income Statement
• Balance Sheet
• Detail General Ledger
• Cash Requirement Report (Vendors)
• Aged AR Report – entire firm
• Summary Unbilled WIP Report, entire firm
• Collection Analysis Report run by working timekeeper for all timekeepers. After this run the report should be run again by originating timekeeper.
• Realization Master Report

Director of Administration

• Timekeeper Analysis Report for the entire month and YTD for entire firm.
• Income Statement
• Balance Sheet
• Detail General Ledger
• Cash Requirement Report (Vendors)
• Aged AR Report – entire firm
• Summary Unbilled WIP Report, entire firm
• Collection Analysis Report run by working timekeeper for all timekeepers. After this run the report should be run again by originating timekeeper.
• Realization Master Report
• Journal Register
• Cash Receipts Register
• Check Registers
• Trust Account Register.

        Associates

• Timekeeper Analysis Report for the entire month and YTD for their stats only.
• Collection Analysis Report run by working timekeeper for their individual stats only. After this run the report should be run again by originating timekeeper.

        Paralegals

• Timekeeper Analysis Report for the entire month and YTD for their stats only.
• Collection Analysis Report run by working timekeeper for their individual stats only. After this run the report should be run again by originating timekeeper.

        Staff (Timekeepers Only)

• Timekeeper Analysis Report for the entire month and YTD for their stats only.

Quarterly Reports

•  Each attorney should receive the same reports as they receive monthly.
• Each attorney should review a Summary Work in Process Report and a AR Report (billing/originating attorney) and cleanup old unbilled WIP and AR.

Annual Reports

Annual reports are generated at the end of the year and maintained in a end of year section of the reports binder for the year (or computer system)

        Equity Members

        Same reports as received monthly.

        Managing Member/Executive Committee

         Same reports as received monthly

        Director of Administration

        Same reports as received monthly

        Note: At year end each of the above reports should be printed and saved to a file to the         reports folder that has been setup on the computer network. This should be done prior to         running the year end close.

        Associates

        Same report as received monthly.

        Paralegals

        Same reports as received monthly.

        Staff (Timekeepers Only)

        Same reports as received monthly.

Click here for our financial management topic blog

Click here for articles on other topics

John W. Olmstead, MBA, Ph.D, CMC, (www.olmsteadassoc.com) is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics and author of The Lawyers Guide to Succession Planning published by the ABA. For more information on law office management please direct questions to the ISBA listserver, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at jolmstead@olmsteadassoc.com.