Strengthen Your Law Firm’s Financial Stability. Four Expert Tools, One Hour Well Spent…Now may be the time to act!

Profitability alone does not guarantee long-term success. The legal sector has long reported that many law firm failures are not due to a lack of work, but rather poor cash flow management and internal practices that weaken financial resilience. Adopting the right behaviours is critical for success. This article outlines four practical tools that can help achieve just that.

Due to the failure rate, the regulatory expectations are becoming more stringent. The SRA Code of Conduct for Firms (section 2.4) requires all law firms to maintain financial stability and viability. The Law Society, through the upcoming Lexcel Version 7, is expected to place greater emphasis on financial governance. This will include a requirement for documented procedures showing how law firms monitor and manage their financial viability. 

Despite these pressures, many law firms struggle to dedicate the necessary time or resources to fully address these evolving regulatory requirements. Day-to-day operational demands often take priority, leaving little capacity to review financial controls, or invest in tools that provide clear insight into financial health. As a result, firms may find themselves reacting to issues rather than taking a proactive approach to financial stability and compliance.

"Financial management accounts provide a historical view of a firm's performance but offer limited insight into its future financial health. While cash flow forecasts are important for planning, they are often inconsistent and based on assumptions that can reduce confidence in their accuracy. A more reliable indicator of long-term financial stability lies in understanding the firm’s culture, particularly the behaviours, financial policies, and operational procedures that influence performance and support effective risk management."

Gemstone Legal provides a practical response: four complimentary tools developed specifically for law firms. Used alongside a firm’s existing financial reports, these tools help assess financial health, highlight areas for improvement, and translate entrenched behaviours into measurable, actionable steps.

1. Financial Stability Scorecard

This diagnostic tool helps evaluate your firm’s cultural approach to finance. By assessing the gaps in your financial controls the results can offer a set of essential insights that could change how your law firm manages its finances.

Access the Financial Stability Scorecard:

https://www.gemstonelegal.co.uk/financialstabilityscorecard

Estimated time commitment: 5 minutes

2. Client Money Interest Scorecard

As the high street banks continue to offer historically low pay rates on client funds, firms have an opportunity to generate additional income from utilising secondary banking providers. This short assessment reviews your current processes and suggests compliant ways to improve returns.

Access the Client Money Interest Scorecard:

https://www.gemstonelegal.co.uk/cminterestscorecard

Estimated time commitment: 3 minutes

3. Deposit Marketplace

Many firms hold significant office funds in low-interest accounts. Our platform, delivered in partnership with Akoni Hub, allows firms to manage surplus funds across multiple institutions, enabling improved returns with minimal administrative effort.

Access the Deposit Marketplace:

https://www.gemstonelegal.co.uk/deposit-marketplace

Estimated time commitment: 12 minutes

4. Financial Benchmarking Scorecard

Benchmark your law firm’s performance against sector standards. This comprehensive tool provides insights into key financial metrics, helping identify both strengths and areas requiring attention. A follow-up consultation is included to help you interpret results and plan next steps.

Access the Financial Benchmarking Scorecard:

https://www.gemstonelegal.co.uk/financialbenchmarking

Estimated time commitment: 40 minutes

Arrange a 1:1 Discussion

In today’s economic environment, structured financial planning is essential. These tools are designed to save time, clarify your law firm’s position, and provide a practical basis for strategic decisions.

Start by using any of the resources above or book a one-to-one discussion to see how we can support your firm’s financial objectives. Book here

About the Author

Paul McCluskey is the Managing Director of Gemstone Legal, a specialist consultancy focused exclusively on law firm finance and risk management. With extensive experience in the legal sector, Paul is an approved Lexcel assessor and consultant for the Law Society of England and Wales, and an independent, regulated finance broker. He brings together a deep understanding of law firm financial operations, regulatory compliance, and risk management to support firms in improving financial performance while meeting their professional obligations. Paul’s practical, insight-led approach enables firms to make more informed decisions about finance, client money, and operational risk.