June 2015 Bar Bulletin
Keeping the Scorecard of Your Practice
By Peter Roberts
The word "control" resonates with every attorney I have ever met. For this issue of the Bar Bulletin "keeping score" is my synonym for control. You have the responsibility to know what the numbers are in your firm and I will venture to say I want you to have some fun keeping score.
Before you say, "I am not a numbers person," think about the numbers. The numbers of course mean those day-to-day items that have dollar signs attached to them. "Keeping score" means knowing and controlling the money generated and used by your law practice. You want know where the money comes from and where the money goes. No green eyeshades necessary.
Predicting the Future
A budget is the "predicting" portion of keeping score. A budget is the plan for the acquisition and use of money for a specific period of time. The budget is the basis for the scorecard that enables you to know the success of your predictions for the year.
Here are several methods for preparing a budget:
Simple Method #1: Look over last year's tax return and use the fees and expenses that you reported last year as this year's budgeted amounts. While simplistic, this method gets you going with numbers that reflect a measure of reality.
Less Simple Method #2: Determine how much money your law practice must generate to support you personally as well as to pay practice expenses (overhead). This is called "break even."
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