Mission critical: Unlocking cashflow
Managing a firm’s revenue / working capital lifecycle is a significant responsibility in a legal profession that has a huge amount of cash locked-up in work in progress (WIP) and the billing and collection process. PwC’s Law Firms Survey 2019, for example, showed that while year-end lock-up performance improved across the top-100 law firms in 2019, average lock-up rates worsened for top-10 and 11-25 firms by nine days, outweighing the improvements.
The result, according to PwC, is a significant lost cash opportunity, amounting up to an average of £32.5m in a top-10 firm.
Not surprisingly then, we have recently found ourselves working more frequently on senior revenue management roles, as firms have realised the importance of recruiting revenue experts who have the leadership ability to radically improve the working capital lifecycle.
What are firms looking for?
Senior roles of this type take a new spin on familiar revenue titles in the legal profession – moving from overseeing the process of revenue collection (undertaken largely by people with considerable prior experience in law), to broader and more strategic roles that bring in commercial expertise, often from outside of the legal sector. The aim is to take these roles to the next level where they can favourably impact WIP and lock-up performance.
Titles for these roles may vary along the lines of Head of Working Capital or Senior Manager – Working Capital, but they all reflect the more senior remit, with salary and benefits to match. Typical responsibilities include:
- Setting the strategy for the working capital function
- Designing and implementing new revenue management processes
- Devising innovative solutions to improve the revenue lifecycle
- Working closely with the Head of Finance and developing strong relationships with other senior managers and stakeholders
- Leading the working capital team
Those particularly in demand for these jobs come with consultancy/advisory experience, have some background in a management role and have worked with clients on finance issues. Experience of a partnership environment, a strong commercial outlook, and the ability to influence at the highest level, also reflect many of the features we are seeing on job descriptions for these roles.
Talent beyond law
For this reason, firms have been increasingly willing to look for talent from beyond the legal sector – the Big Four accountancy firms proving fertile hunting ground. Such candidates can offer new ways of thinking and the commercial plus strategic experience to transform billing and collection management.
By way of example, we recently placed a candidate from one of the Big 4 accounting firms as Head of Working Capital at a magic circle firm. The role required the right candidate to be an active member of the Senior Finance Management Team, helping to set strategy for the function, and engaging in operational decision-making. Day to day, it meant managing a team of Working Capital Controllers / Managers focusing on the working capital lifecycle – including reducing lock-up days.
The right candidate needed to be able to build strong relationships with senior finance contacts at top clients as well as internally with senior stakeholders across the business, including the COOs/CFO, and the Global Finance Team. They had to have strong leadership ability to develop and improve the performance of the working capital team.
It was interesting that while the firm considered experience of a partnership environment to be advantageous, this forward-thinking firm didn’t limit itself to the legal sector in its search. The right commercial outlook and experience were seen as more critical factors.
This reflects our findings in many roles such as this. Previously, firms may have hired external consultants to advise on areas like WIP management, but more are seeing this as a sufficiently critical issue as to want to recruit full-time in-house expertise at this more senior level. We think this is a trend that is likely to continue as firms realise that improvements across areas like operational efficiency, technology investment and business development are of limited use if ultimately the money doesn’t come through the door.
For those with strategic expertise in working capital, this is a fantastic opportunity to make a tangible difference in a senior role, joining a law firm’s top table of leadership decision-makers.
If you would like to know more about revenue management teams in the legal profession, or specific opportunities we are currently working on, please contact [email protected]