Way back when I practiced law, few one- and two- lawyer offices prepared a budget in advance for the year. Their budget, and in many cases their “partnership” distribution formula, was the tried-and-true formula “you eat what you kill.” Had we questioned the lawyers about that omission, many would have responded that budgets weren’t important because that wasn’t real money. Revenue received was real money and they generally understood their monthly overhead requirements. Yet these same lawyers would have advised their business clients that running their business without a budget was a terrible idea.
Why should a solo or small firm prepare a budget? appears in the annual finance issue of Law Practice Magazine. It is written by OBA Practice Management Advisor Julie Bays and me. This is such an important subject, especially for lawyers starting a new small law firm. The article covers the basics and is targeted toward lawyers with little background in accounting.
A budget is a plan. Sometimes things don’t go according to your plan as we all learned in 2020. But attempting to reach one of your primary business goals, financial security, deserves advance planning and this feature should help small firm lawyers who have never prepared a law firm budget head in the right direction.