On the afternoon of March 14, 2025, the fifth online discussion on “Strategy & Finance – Billing and Revenue Growth,” part of the “2025 Online Law Firm Management Series - Professional Law Firm Management – Real and Fictional Stories,” was successfully held, attracting 189 online registrants. Among them, 32.92% were partners or heads of law offices; 24.22% were associates, senior associates, or counsels; 8.07% were paralegals, trainees, or legal experts; 13.04% were corporate lawyers; and 21.74% were other participants, including solo practitioners. Although some registrations outside the scope of the event content were canceled, the attendance rate remained high, with the Zoom room peaking at 92 participants, almost 50% of the initial registrants.
In the fifth session on Strategy & Finance in law firms, the speakers discussed key financial issues affecting law firm operations, particularly financial management, cash flow, financial reports, and business decisions based on this financial information.
The discussion was organized with the participation of coordinators and speakers:
- Lawyer Nguyễn Mạnh Dũng, Director, ADR Vietnam Chambers (Coordinator)
- Lawyer Trương Nhật Quang, Managing Partner, YKVN Law Firm (Coordinator)
- Lawyer Vũ Lê Bằng, Managing Partner, Nishimura & Asahi Vietnam Law Firm (Speaker)
- Lawyer Nguyễn Gia Huy Chương, Managing Partner, Global Vietnam Lawyers LLC (GV Lawyers) (Speaker)
- Lawyer Vũ Phương Trang, Member, Dzungsrt & Associates LLC (Speaker)
- Lawyer Vũ Thị Quế, Co-Founder/Chairwoman, Rajah & Tann LCT Law Firm (Speaker)
Main Topics:
Basic Financial Reports:
Law firms require three basic types of financial reports: the Income Statement (also called the Profit and Loss Statement), the Balance Sheet, and the Cash Flow Statement. Each of these reports helps the firm assess its financial condition, cash flow, and necessary strategic decisions. The Income Statement determines revenue and expenses, leading to the firm's profit or loss. The Balance Sheet shows assets, liabilities, and equity, while the Cash Flow Statement tracks the inflow and outflow of cash from the firm's operations.
Cash Flow Management:
One of the most important aspects of law firm operations is cash flow management. The speakers emphasized that law firms, particularly small ones, cannot borrow from banks like manufacturing businesses. Therefore, they rely on cash flow from clients to sustain operations. Cash flow may be delayed, especially with large contracts, making cash reserves critical to ensure the firm can cover operational costs.
Business Decisions Based on Financial Information:
The speakers also discussed making business decisions based on financial data. For example, when a firm's financial situation is poor, it may need to reduce staff, change its marketing strategy, or even close an office. All of these decisions must be made based on thorough analysis of financial reports and profitability.
Factors Affecting Law Firm Finances:
Law firms must pay attention to factors such as personnel costs, office rental expenses, marketing costs, and, particularly, tax expenses. In addition, the assets of a law firm primarily consist of cash and accounts receivable from clients. These receivables are amounts the firm has invoiced but not yet collected, which are crucial in determining future cash flow.
Importance of the Cash Flow Statement:
The Cash Flow Statement is critical for evaluating a law firm's financial health. The speakers emphasized that the firm must clearly understand whether cash inflows from clients are sufficient to cover operating expenses. If the Cash Flow Statement shows that cash inflows are insufficient, the firm must adjust by reducing expenses or accelerating the collection of receivables.
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Additionally, the discussion included a mini-survey on financial strategies. The survey results were as follows:
Income Statement: The majority of participants (64%) agreed that the Income Statement should reflect all of the following: revenue, expenses, personnel costs, marketing strategies, and profit as shown in the P&L report. A smaller portion (21%) believed the report should focus only on profit from the P&L.
Balance Sheet: 64% of participants agreed that the Balance Sheet should reflect all of the following: assets, liabilities, cash reserves, and accounts receivable from clients. A smaller group (29%) believed the Balance Sheet should reflect only what the firm owns (assets) and owes (liabilities).
Cash Flow Statement: The majority of participants (86%) agreed that the Cash Flow Statement should cover all of the following: cash from operating activities, cash from financing activities, and whether the firm has enough cash to fund operations. A small number of participants (7%) believed the report should focus solely on cash from operating activities.
Employee Return on Investment (ROI): This metric allows comparison between the total cost of an employee and the total revenue generated by that employee. The most common ratio chosen was 1/4, with 41% of participants, followed by 1/3 at 33%. Other ratios, such as 1/2, received lower votes (11%) along with "Other" at 15%.
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The next discussion, Topic 6, with the theme "Overseas Expansion Strategy & Necessary Legal Framework," will be held at 15:00 on March 21, 2025 (Friday). Registration link: https://bitly.cx/w8mN
For detailed information about other topics in the “Online Law Firm Management Series 2025” with the theme “Professional Law Firm Management – Real and Fictional Stories,” see here: link
