August 2019 – Amata

Do You Need a CFO for Your Law Firm?

June 18, 2025August 28, 2019 by Amata Law Offices

Your law firm provides necessary services to your community. And while your focus should be on providing the best legal advice to your clients, sometimes you might feel like you also need to be a tax and human resources expert as well. It is easy to get frustrated when all you want to do is concentrate on your law work.

How can you focus on what you do best and still run a viable firm?

One option includes expanding your workdays into 24/7 marathons as you to try to handle everything by yourself. Or, you can hire individuals with other business specializations to handle all of these different tasks for you, which can get expensive if you’re a small firm.

Consider hiring a virtual CFO.

Administrative help is an important cornerstone of any business, but these administrative tasks take up lots of valuable time that you could spend doing plenty of other important work. If you decide to tackle all of these tasks yourself, you quickly will realize that financial statements, tax planning, forecasting, cash flow, and payroll create far more work than one person can reasonably do. The typical solution for lawyers is to hire both an accountant and an administrative assistant, but adding these salaries to your payroll can place a burden on your growing firm, even if the results are beneficial in the long run.

For a more economical solution, outsource these tasks to a virtual CFO. This is a service that specializes in all the professional knowledge required to handle the business aspect of your law firm. Often, these services charge a reasonable flat annual rate for their high levels of accuracy and professionalism. If you believe this safe and affordable way of obtaining administrative and financial help can enable you to better run your law firm, check out the options for working with a virtual CFO.

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How to “Right-Size” Your Law Firm

June 18, 2025August 12, 2019 by Amata Law Offices

Some firms euphemistically call downsizing right-sizing because it enables them to alter their workforce according to the amount of business they’re currently generating. The staff-to-work ratio is deemed “right” and the workforce is the “right size” for the firm, hence the more upbeat lingo.

An even more optimistic interpretation of right-sizing is called “flexible” right-sizing.

Flexible right-sizing means providing alternative work arrangements to associates or support staff rather than laying them off or downsizing during slow periods. This method helps firms scale down or up, depending on the demand for services, without losing valuable employees.

If you’re looking to right-size, but not let anyone go, consider offering support staff the following:

Sabbaticals or furloughs are unpaid time off. They may be offered to staff who would be difficult to replace or they may be suitable for seasonal employees when the firm anticipates that the slowdown in work may be temporary.
Telework allows associates to work from home. Some firms find that by allowing more of their staff to make work-from-home arrangements, they can shift to smaller offices and save on leases and related expenses without sacrificing productivity. In fact, some firms find that productivity goes up. And with specialized Virtual Office phone programs, your workers can still maintain their business lines with their mobile!
Reducing the number of days worked per week may shift some full-time associates and support staff to part-time hours, or it may further decrease part-time hours.
Job sharing arrangements involve two employees who share one available position. Job sharing may coincide with flextime, in which your staff can work flexible hours according to their availability and job needs. This is ideal for people such as paralegals who may work with other lawyers and firms, and are not always available.

Flexible right-sizing isn’t always an option though. If you’re downsizing as you move to your own solo practice, then consider virtual assistants, who can work on-demand and allow you to maintain the right amount of support staff for incoming casework.

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Will Your Law Practice Be Affected by New Leasing Standards?

June 18, 2025August 1, 2019 by Amata Law Offices

Who is Effected?

In 2016, the Financial Accounting Standards Board (FASB) effectively turned the lease accounting rules upside down. The new rules, which became effective on January 1, 2019, for public companies using a calendar year, are scheduled to be effective for private companies using a calendar year on January 1, 2020.

The changes will significantly affect the financial statements of every company that leases property or equipment, especially those that rely on operating leases (i.e., leases 12 months or less that do not include an option to purchase the underlying asset that is reasonably certain to be exercised).

Important Changes

All leases longer than 12 months in duration must be recorded on the company’s balance sheet. That’s a big change from the current rules, under which operating leases were recorded as a rent expense that didn’t appear on the company’s balance sheet. Under the new rules, with limited exceptions, all leased property or equipment is considered a right-of-use asset and must be recorded as such on the company’s balance sheet.

Similarly, all lease payments are recorded as liabilities rather than operating expenses. This change affects other things as well. For example, interest expenses must be calculated as a cost of the lease and allocated over the term of the lease on a straight-line basis. This affects financial reporting across the board, including calculations for earnings before interest, taxes, depreciation and amortization as well as depreciation and certain tax calculations. The new rules also require additional quantitative and qualitative disclosures designed to enhance the transparency of a company’s financial statements and to allow greater comparability between similar companies.

Note that lease arrangements are contracts that can be structured as part of a larger contract rather than as a separate lease agreement. For example, a master lease can contain different terms for each type of property or equipment in the lease.

In addition, month-to-month leases come under special scrutiny, particularly if the lease is between related parties.

The tests include whether the lessee is

Depreciating significant improvements to the property for more than 12 months
The sole user of assets and is paying the lessor to service the debt
Guaranteeing the lessor’s debt
Able to relocate without incurring a great expense

Other Considerations

Other important considerations under the new rules include the following:

The definition of a reasonable useful life for the asset
Whether the asset has any useful life at the end of the lease
Who has title to the asset at the end of the lease
The cost of the asset to the lessor is at the end of the lease
The lease renewal options (e.g., what if the lease renews annually?)
What happens if there is no formal lease agreement?

The bottom line is that all businesses must take the time to review all their lease agreements, whether they are separate agreements, contained in a master lease or are part of another contract, and rework how their leased assets are accounted for and reported so they can be in compliance by January 1. The change involves the company’s processes and procedures for recording leased assets.

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