David Bott + James Hunt
David Bott (Bott & Co.) and
James Hunt (Allied Irish Bank)
  Bott & Co.
    Set up in 2001
    ABS-type structure from the beginning
    One lawyer + two non-lawyers
    Added a Non Exec Chairman
    ABS application on 4-Jan-2012
    24-Sep-2012 said "yes" i.e. 9 months later
    Are about to go to a Limited Company
(needs a new ABS application)
      5-10 days to fill in the form
      28 days later after submitting, was told
it was the wrong form
    Were given 6 months notice to leave their bank
    Then went to LLoyds
  History
    Lawyers were pillars of the community
    Accountancy
      Enron!!!
      Brought down Arthur Anderson
      RSM Tenon suffered through growth
    Banking
      Financial crisis
      Lehman Brothers
      Co-Op Banking Group struggling with capital reserves
    Law firms
      Cobbetts
      Halliwells
      Blakemores
      Atteys
      Challinors
    Closer scrutiny now by the banks
  Changes to Solicitors Practices
    Stability was starting to errode
    Partnership failure meant
      Loss of face in their local area
      Loss of house/possessions
      Possible sanction from practice
    LLP made some change to this
      Insulated Partners from failure
    More firms go bankrupt on the way
out of recession than the way in
    Legal Week report & comments about how law firms
need to be structured
  Nervous Bankers
    Bankers want to be "better informed" than ever before
    A worked up example based on real data
      EBITDA, Capital, Partners, Bank Debt
      Showed a backup in WIP
    EBITDA is the money available before :-
      Interest costs
      Loan capital repayments
      Changes in working capital
      Capital expenditure
      Tax
      Drawings
    Bankers want to see working capital INCREASE
    How do you get to payout retiring partners with not enough capital?
  Other issues
    With external capital, you cannot "under draw".
    You have to lose people if you are not hitting your targets
    You might have to go backwards to go forwards
    You might try a rent review now with your landlord
    Does a Blue Chip client pay you less than others?
    Turnover is vanity, profit is sanity, cash is reality
  Suggestions
    All departments should have fee income targets
    5 year plans for Partner retirements
    No gearing over 100% of EBITDA
    Minimum capital levels per Partner
    Start sending accounts to the bank once per month
  Courtesy of http://www.conscious.co.uk