The Gazette 1974

general willingness to co-operate with such a Sur-

rey. This is most encouraging.

Apart altogether from the survey side of affairs, the

^ l a b i l i t y of such information is, of course, also basic

tile

s u c c e s s

' financial management of a legal prac-

fe is not proposed to review in any depth the time

stln

g and financial accounting document which was

culated to you yesterday but I would stress that, what

°ks like a formidable document is, in fact, a very

,'reple system when in operation. One of the main

'rnculties, and perhaps the only problem area, is the

'scipline which each principal and chargeable member

'Ire staff must accept of recording time each day.

"re this hurdle has been passed the actual work in-

?'ved thereafter is minimal. Our own experience at

°°pers & Lybrand was that one girl in the time office

cater for approximately 100 fee earners and pro-

re the management information which is available

n such records. The type of management informa-

,0n

required would b e :

1 A constant record of fees furnished showing profits

and losses on those fees compared to time costing

rates.

> A constant record of the various classifications of

^ork showing profitability or non-profitability in

those classifications; Conveyancing,

Litigation,

Company work, Probate.

> A constant record of work in progress.

' A constant record of work in progress on the books

°f the practice for more than a year, 18 months or

two years—whatever information is required in this

(5)

area>

. ' A record of debtors.

> A record of chargeable and non-chargeable time

by principals and members of the staff. In these

days of high rates of remuneration for staff—both

professional and administration—time control is

basic to the profitability of any professional prac-

tice.

a B

^ a n y of you may by now have decided that the

information is fine so far as a large practice with

tnerous principals and many chargeable staff is con-

ned but I would refute this, in so far as the whole

pt of running a professional practice has changed

o f

^ o u s l y in recent years, due to inflation, the cost

ing staff—both professional and clerical—the cost

(j ,

C a r r

y i ng higher work in progress and the cost of

tiali

^ one-man practice would benefit substan-

^ by having costing information, if for no other

^ ^

than to have information available as to what

. .

profitable and what work is unprofitable so that

isions can be made as to whether certain types of

B°

ld be taken on or whether it might be worth-

th l

e m

P l ° y

clerk to assist in taking on some of

Pri •

rou

tine

work which is not profitable for

Pal involvement.

* have no doubt that the information which would

anate from the introduction of time records and

tro] of chargeable and non-chargeable time would

' b u te considerably to making any office a more

oilt

able concern. This view will be substantiated by

ew of your colleagues who have introduced the

ystem.

J ^ f i en one considers that the going rate for senior

£5 f i t "

1 s

° f i

c i t o r s

^ now in the region of £4,000/

" >000 in the cities and it is probably not very far

behind in the provinces and one looks at one's invest-

ment in premises, work in progress and debtors, I sug-

gest that no solicitor is effectively working his practice

unless he has annual earnings in excess of £8,000.

You must all have experienced in recent years, as in-

deed have the owners of all professional practices, the

constantly increasing demand for more capital invest-

ment in one's firm emanating out of the necessity to

carry higher debtors, work in progress, salary costs and

overheads. The professional man, unlike his brother in

industry, has got to provide this capital out of his

annual earnings and, as capital is provided from the top

rung of annual earnings, it may well be that he is

providing it out of income which is taxed at 80p in the

£ . Accordingly, it could be that, in order to provide

an additional £1,000 worth of capital, a professional

man would have to earn £5000 income before tax.

Again, unlike our colleagues or people of equal quali-

fications and experience in industry, we must provide

from our taxed income pensions for retirement years,

sickness insurance in the event of ill health and finan-

cial security for wives in the tragic event of death.

We can not, therefore, as professional people, finan-

cially survive in this inflationary and fast moving world

in which we find ourselves

unless

we acknowledge the

utter necessity to financially manage our practices in so

far a s:

1. time control is concerned—especially the control of

one's own time and that of chargeable staff;

2. W.I.P. control is concerned—frequent competing

competing furnishing of W.I.P., which information

is readily available from time costing system;

3. profitability control is concerned—the having of in-

formation as to whether jobs are profitable or non-

profitable to enable decisions to be taken regarding

fees and categories of work which should be pursued

or abandoned;

4. debtor control is concerned—a system of regular

follow up of outstanding debts.

Mr. John Ross, in proposing the vote of thanks to

Mrs. Downes, doubted whether it was essential to get

in the costs quickly. He did not think that the profit-

ability motive was essential in one man practices, who

had to accept whatever legal work was offered. It

might be necessary to hold a seminar to determine this.

(Mr. Ross then presented Mrs. Downes with a walking

stick on behalf of the Society.)

Mrs. Downes stated that most solicitors were in fact

up to date with their accounts. As there is a limit to

what any one man practice can take on, he should

know what work is profitable.

Mrs. Grace Blake deplored the fact that Mrs. Downes

had not expressed nearly enough generosity in her re-

marks, but had concentrated far too much on money

and profitability.

The Director-General stated that it was intended to

organise a one day seminar on Solicitors Time-Costing

in the autumn and he was asking for volunteer lec-

turers.

Mr. Pierse (Listowel) suggested that book-keepers

could be allowed to attend the forthcoming Seminar. It

seemed to him that the ratio between gross profit and

net profit was the correct one to apply.

Mr. Carroll (Fermoy) asked, if time-costing were

adopted, would scale charges be abolished entirely?

Mrs. Downes emphasised that solicitors were bound

by the statutory scale fees unless they contracted out of

155