The Gazette 1974

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

a 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 ^ u ' financial management of a legal prac- ° stln g and financial accounting document which was Ir culated to you yesterday but I would stress that, what ,0 °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 Q 'Ire staff must accept of recording time each day. v "re this hurdle has been passed the actual work in- ?'ved thereafter is minimal. Our own experience at c °°pers & Lybrand was that one girl in the time office cater for approximately 100 fee earners and pro- j U re the management information which is available 0r 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 n ° Ve information is fine so far as a large practice with tnerous principals and many chargeable staff is con- c ^ r ned but I would refute this, in so far as the whole Ce pt of running a professional practice has changed o f ^ o u s l y in recent years, due to inflation, the cost 0 f r 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- re ^ by having costing information, if for no other ^ ^ than to have information available as to what 000 in the cities and it is probably not very far fe is not proposed to review in any depth the time c