PM+M’s Helen Clayton on why it’s important for ambitious lawyers to really understand their firm’s finances, structure and more

Times have changed and, in my opinion, for the better! No longer is career progression based on time served; if it is, I query whether you’re in the right firm for you to progress your career in the way you want to. Further, are you really going to get the chance to progress?

Career progression can be based on any number and combination of factors, including: excellent technical knowledge, superb client relationships, strong business development skills with a credible track record in generating new work along with great team management skills that develop into true leadership. Assessing how and where your career might lead to should include consideration of your skills, abilities and development requirements in all the above.

Understanding your business

Understanding the business of your own firm is a must.  If you’re going to climb the career ladder in that firm, you need to understand how it operates, how it’s managed, its vision and purpose as well as how it’s run financially.

Buying in

At the heady heights of your law firm, you will be likely asked to ‘buy in’ on some level.  This could be in shares or partner capital; understanding which, the implication for borrowing those funds from a bank, the return you receive on the funds injected as well as tax considerations will be important.

I would advise you to understand where this cash goes and how it is used.  If it’s to prop up the working capital of the firm, this could be a warning flag.  If it’s to repay retiring partners or shareholders, are you convinced that the financial management of the business is as robust as it could be? Other questions that you might have around funding are: How is the firm funded? What is the level of external borrowing and is this amortising over time or does lending increase year on year? What is the core working capital requirement of the firm? How do I get paid? What will I get paid and what might I need to leave in the business?

Your status

Depending on the structure of your firm, you may switch to self-employed from employed at some point on that ladder.  Understanding the difference, your change in rights, shifts in benefits that you may have enjoyed when employed, the intricacies of agreements you will be asked to sign – these are all areas I suspect you will need advice on.

Risk

Some of the more significant risks facing the legal profession (and indeed it’s not on its own) are external to the law firm itself.  Consider cyber-crime and the increasingly complex ways in which fraudsters are making millions from businesses around the world.

You should understand and be comfortable with the level of protection in place, which should not be limited to considering cyber security.  Compliance, quality controls, insurance, claims histories and money laundering matters should also be brought under this large umbrella.

People and culture

One of the main reasons for me selecting PM+M for my next (and planned) last career move was to do with its culture and the people.  We have a fantastic culture which is a long way removed from a stuffy, traditional accountancy practice.  Who we are, what we do and the way we do it are all firmly embedded in our values and we are not afraid to deal with behaviours that do not fit. People evolve, they learn and they focus on their strengths. We work a significant portion of our lives and doing that in the right environment is important and you should be considering what strengths you will bring to your leadership team.

The success of a law firm, until we’re all replaced by artificial intelligence, depends on its people.  Retention of the right people saves a lot of hassle, time and cost.  Being a people person and having emotional intelligence will be important in that leadership team.

The future

There are many aspects to be considering on the proverbial career ladder, some of which I have briefly covered above. Thinking beyond the career goal, if indeed there is one, should also be part of your consideration. For example: What will that role look like when you get there?  It may well have changed from what it looks like now – both from a natural development point of view but also from the skills and input that the firm needs.  Life does not stand still. What will the firm look like when you get there?  I doubt it will look and feel the same. What does your own exit look like?  You will need a strong succession behind you; development and retention of your teams being critical to that. Knowing how your exit will be funded will no doubt be important at that stage.

In conclusion, I thoroughly encourage you to take the time to peruse these thoughts and seek advice from mentors and advisors.

www.pmm.co.uk