FoxMandal managing partner Som Mandal said that all salary payments to fee-earners were now up-to-date, having been paid out in the last two weeks.
The office’s partners have still not received their drawings but Mandal said that he hoped that this would happen by the end of this month, although precise details still needed to be worked out.
He said that the firm has improved its cash flow situation by improving collection of outstanding client bills. “We were able to push a lot of our clients to pay back dues owed.”
It is understood that other financing has also been arranged privately. Mandal declined to comment.
The Delhi office ran into trouble last month in paying fee-earners because lock-up had doubled from up to 90 days to as much as six months, according to Mandal.
The firm is currently in the process of implementing further changes to prevent such cash flow difficulties from occurring in future.
FoxMandal’s offices other than Delhi have been unaffected.
Comments
Legal Dodo
Such is life and such is the nature of people ..... (I hope I didnt offend any Aishwarya Rai fans with that example....it was just that, an example) :-)
a) Assess all the infrastructure you are using - especially the real property. Do you own excess space? Have your leased excess space? If yes, ensure that all your staff work together. Keep the excess pace unoccupied. This helps save electricity costs. If you use air-conditioning - believe me - the savings can be substantial.
b) In case you are paying an above average rent for the space you are
occupying, negotiate with your landlord for a downward revision of the rent. After the recent global meltdown, there are hundreds of office spaces lying vacant. Your landlord will be put on the defensive and is likely to accede to your request, especially if you threaten to vacate.
c) Alternatively, negotiate for a right to sub-let. If you have excess space and your growth plans are not as aggressive as they were when you first leased your office space, short-term sub-letting makes a lot of sense.
d) Is your office located on a main road in a prime business location? If yes - then reconsider whether it makes sense continuing from there. For a law firm, such a location offers little advantage. Consider shifting into a suburb or into an office off the main road. Rents are considerably lesser in these areas. Perhaps, your staff's efficiency may also increase.
e) Do you have multiple telephone connections (landlines) or multiple Internet connections? If so, it makes sense to cut down on them.
f) If your office has good ventilation and natural lighting, consider making optimum use of the natural air and light. This could help cut down your electricity consumption.
g) Cut down on your marketing and promotional spending. Avoid sponsoring
seminars, conferences, moot-courts, local-events and/or business-round-tables.
In my experience, these are a colossal waste of time and money.
h) Similarly, stop attending such seminars, conferences or other events,
especially if you have to pay through your nose for it. If you are invited, and do not want to miss out on the networking opportunity, offer to speak at the conference. Often, organizers are short of speakers. If so, they will be more than happy to get a free speaker and perhaps may also give you a few free delegate passes, which you can share with your colleagues.
i) Avoid wasteful travel. If you have to travel, then do so and stay economically.
Staying in five star hotels and commuting in expensive chauffeur driven cars burn a significant hole in your pocket. You can stay just as comfortably in good service apartments and save on transport by using city taxi. Avoid overnight stay, if possible.
j) Avoid expensive lunches/outings and/or throwing lavish parties.
k) Cut down on the freebies that you give to your staff. Do they have free telephones? Are they provided with expensive cars? Impose a limit on
their telephone usage. Consider car pooling for the staff.
l) Cut down on your excess security and maintenance staff. Keep the minimum staff required to ensure security and cleanliness of the office. Invariably, these employees are sourced from a security or house keeping agency. Therefore, you are not firing anyone, and even better, they are not losing their jobs when you relieve the security and maintenance personnel of their duties.
m) Cut down on unnecessary subscriptions, especially foreign publications.
n) Hire interns, instead of fresh employees, for doing routine work or carrying out support functions.
o) Use Skype or e-mail to communicate and reduce telephone costs. Reduce stationary usage by printing only if you have to. Use both sides of paper while printing. For rough drafts, you can use the printer option to print multiple pages per sheet.
p) Cut down on giving corporate gifts.
q) Use the courier service only for important documents. For routine mails, use the postal service. It's much cheaper.
r) This is the most contentious point. Chop dead wood. In other words, identify the non performing staff and encourage them to leave. Almost every organization lands up making hiring mistakes and taking on people whom it should never have hired. Employees with an "entitlement culture," i.e. those who cannot look beyond their own nose, are the worst people to have around at any time, more so during an economic crisis. Such employees shirk work, avoid responsibility and mysteriously develop high fever or a severe tummy ache whenever a complex assignment crops up. They stop looking for work the moment they are employed. Once employed, they are the first to approach the HR Department to ascertain how many sick leaves, casual leaves, paid leaves and national holidays they are entitled to. They expect hefty pay hikes every six months and fudge their time/work records to show how well they are performing. While at "work," they spend time chatting, surfing the net, taking long coffee and smoking breaks and complain about just anything they can complain about. Invariably, whatever little work they do requires to be entirely redone. Such employees are a big nuisance and extremely demoralizing to have around. It's a big mistake to consider them as "family" and put up with them. Invariably, they go around bad-mouthing the organization at every given opportunity. Such employees are perhaps the greatest liability any organization can have, especially a service oriented organization like a law firm, whose human capital is its greatest asset. It's wise to be diplomatic while doing away with such employees. Give them glowing recommendation letters, if necessary. Words are free. Won't you be glad that your worst performer lands up joining your rival?
As I mentioned earlier, these are just random thoughts. Constructive criticism welcome. Feel free to add to the list.
Legal Dodo.
Kian - thank you for posting my suggestions on your blog. Your three additions too make a lot of sense, except perhaps that out-sourcing of back end operations may not be cost beneficial for an Indian law firm.
Your observation that law firms would pay an arm or a leg for this advise got me thinking further. Isn't is ironical for an organization to spend on getting cost cutting advise? I would add the following to the list.
1) Avoid upfront investment which is aimed at cutting costs. This not only includes paying a fancy price for a consultant to give you common sense advise; but also on other capital investments. For e.g. - someone may suggest that you replace the old air-conditioner with a new power saving model; or install solar paneling to cut down on electricity consumption. All this makes sense when the cash flow is positive. However, when you are cash strapped, one should avoid capital investment.
2. Sell your old equipment. No matter how big or small a law firm's size is - it accumulates a lot of "trash" over the years. This could be old furniture, computers, fax machines, telephones, etc. No point letting them accumulate dust. Once discarded, it's almost certain that you will not use them again. Sell them for whatever price you get. Often, you will not have to go far in search of a buyer. Invariably, there may be someone in the office itself who may be interested. Alternatively, if your office located is in a commercial complex, put up a notice on the unit owner association's notice board advertising the sale of your old equipment. You'll be amazed by the response.
No. 8 about marketing. Research in the HBR and other journals shows completely the opposite of what you have said. Firms can cut back on promotion but they must keep investing in marketing, such as client relationship and key account management. Marketing from a client value point of view cannot just be 'cut' from the budget when things are going poorly. The basics of promotion such as networking are crucial as well.
Point R - hundreds of studies show that downsizing is an ineffective way to cut costs and improve performance. Chopping dead wood as you say is much harder than it sounds and requires careful planning and strategic thought. Law firms in particular, which rely on their human assets cannot lay off people indiscriminately and not expect negative results on staff motivation.
Legal Dodo