The Function of a Law Firm Controller

Law Firm Controller Overview

A law firm controller is typically the individual responsible for overseeing and managing the financial and operational aspects of a law firm from the inside. In many cases, the controller is a member of the firm’s executive management team and is highly involved in many aspects of the ongoing strategic and tactical planning for the firm. The position is central to the management of cash flow, employee compensation, billing practices, revenue recognition , and a host of other activities that are vital to the success of the firm.
In many instances, the firm controller is also responsible for the strategic planning and implementation of practice development efforts within the firm. Because the controller maintains an ongoing overview of the numerous moving parts inside the firm, he or she is often the person tasked to keep the firm’s eyes focused on the prize, in terms of the financial and operational goals set for the firm.

Main Responsibilities

The core duties of a law firm controller encompass various aspects of financial management, strategic analysis, and compliance monitoring. A principal responsibility is the accurate preparation and presentation of financial reports, which requires the controller to gather and analyze firm financial data to provide insights into revenue, expenses, and profitability. Closely linked to this task is the development and tracking of budgets, which is critical for financial strategy and planning. By establishing and monitoring budgets that align with the firm’s goals, the controller helps management allocate resources effectively and stay on financial track.
Another crucial aspect of a law firm controller’s role is the management of cash flow. They closely monitor the firm’s cash position and revenue cycle, ensuring that funds are available for operations and expenses are paid on time. In addition, the controller is responsible for maintaining records for receivables, payables, and disbursements, which involves managing ledgers, tracking billings, and reconciling accounts. This financial oversight helps firms maintain accurate financial statements and stay organized with respect to their fiscal activities.
Beyond financial reporting and analysis, a law firm controller plays an essential role in ensuring compliance with legal and regulatory requirements. This includes overseeing the firm’s adherence to tax laws, labor regulations, and industry standards. By monitoring for compliance, the controller safeguards the firm against potential liabilities and helps avoid financial penalties.
In addition to these key functions, a law firm controller is frequently responsible for managing accounting staff, processing payroll, and coordinating audits and reviews. The controller’s comprehensive understanding of the firm’s finances also positions them as a valuable strategic partner to firm leadership, helping to assess financial implications of potential acquisitions, measure the performance of specific practice groups, and evaluate whether the firm’s pricing structures are optimized.
Through their multifaceted role in law firm finance, controllers are often instrumental in collaborating with external stakeholders such as banks and credit agencies. Maintaining strong relationships with these and other financial institutions can help firms secure necessary financing and navigate financial challenges more effectively.

Skills and Qualifications

The path to becoming a law firm controller usually requires an educational foundation in accounting or finance (typically a bachelor’s degree), followed by at least 5 years of related work experience (often in a firm accounting department.) In addition, certification in financial management (e.g., as a CPA) is highly preferred in larger firms, although it is not mandatory for a smaller firm controller.
Handling the financial statements (for example, as a CPA), overseeing the firm budget, and working with outside auditors are specific skills that any controller may be called upon to do. Other specific "hard" skills are also required, including accounting procedures, tax codes, cash management, and bookkeeping practices, among others.
However, controllers also need certain "soft" skills to be successful. They must have excellent communication skills both in writing and orally; therefore, a strong command of the English language (to include grammar and spelling) is essential. And because they will oversee a staff, managers need good leadership skills. A detail-oriented nature and ability to work well under pressure are also necessary to manage the accounting department and adhere to deadlines.
Controllers handle and oversee a large number of transactions including accounts payable, billing, and collections, all of which require a high degree of accuracy. Using spreadsheets to manage the financial data of the firm is critical to the job, so experience in spreadsheet software is a key component for performing the various responsibilities of a controller.

Financial Decision Making Role

A law firm controller will be involved in long-range strategic financial decision making within the organization. They will work with the executive committee to establish policy guidelines for the organization. The executive committee will present fact-based policy needs to the controller and the controller will provide analytics and advisement towards meeting those needs. The decision making process secured through a collaborative effort will allow for policy deliberation.
The controller will, with the executive committee, develop a financial strategy & budget that will translate into growth. Formulating a financial strategy & budget should take into account: This will translate into a budget that will aim for growth in a structured way to help the firm achieve established goals. This will include: The controller will look at the allocation of hard dollar/investment dollars. The controller will be able to strategize between what hard dollar investments are needed and then what is needed in soft dollars. This will help the firm develop a financial strategy with an accurate financial forecast look that should be modeled on a 3-5 year growth plan. The growth plan should: The buck stopped at the controller in regards to the administration of the budget. This will let the organization know that the controller is invested in the overall fiscal responsibilities of the firm. The controller should operate as the head financial representative of the firm. With a strong handle on all financial controls, a controller can provide direction towards the goal of the organization.

Collaboration with Other Departments

When you think about the firm controller’s role, it’s easy to visualize the intersection of finance and accounting matters and the accounting system the controller manages. But that is a fairly narrow view of the role. The truth is, the firm controller has a duty to and does in fact interact with numerous other departments. How well that interaction occurs is what enables the controller to be efficient and accurate in the day-to-day financial management of the law firm.
Below are some common interactions that controllers have with other departments: Whereas most controllers have direct interaction with human resources staff, they confine their interaction with the marketing department to a much lesser degree. Legal administrators have a direct interface with the controller, particularly regarding internal financial reporting and general inquiries. IT staff interacts with the controller on a number of topic areas , including interfacing between systems, software installation and upgrades, database security and general computer usage and functionality. Controller interaction with disaster recovery/office-wide. Controllers should have a close working relationship with the individuals overseeing the firm’s disaster recovery plan because many essential aspects of the disaster plan directly interface with the Financius, Aderant, and Elite systems. Controller interaction with the filing system. Controllers need to understand the inner workings of the firm’s filing system. If the firm’s system does not clearly classify the filing system into four basic categories, a breakdown in the closing procedures can occur. Controller interaction with collection staff. Controllers must interact with the collection staff instantaneously during the collection process.

Challenges for Law Firm Controllers

The role of the law firm controller is not one that can be easily defined by a job description, or a list of duties to be completed on a daily basis. While controllers are often responsible for managing the accounts and finances of a law practice, they also need to ensure that they prepare for, and respond to, changes and challenges within the industry and the wider business world. Some are better equipped to handle certain hurdles than others, but there are a number of common challenges that all law firm controllers will be forced to deal with at one time or another. Financial risk – Managing financial risks is arguably the toughest challenge law firm controllers face, given the level of responsibility it brings. Controlling the day-to-day financial processes of the law firm requires confidence and a level of trust from a number of different parties. Controllers need to be able to maintain an accurate budget, while still allowing other areas of the business the freedom they need to operate. Regulatory changes – Another major challenge for law firm controllers is keeping up to date with the latest regulatory changes. It may come in the form of the adoption of new technology such as e-billing, or legislation that alters how law firms must pay taxes and how they are treated from an employment law perspective. Law firm controllers are required to possess an extensive knowledge of both local and national laws, and be completely compliant with them at all times. Technology and IT infrastructure – Adopting a robust IT infrastructure is integral to ensuring that financial strategy and accounting processes remain up-to-date. As technology continues to evolve, controllers realize that they must keep up with industry advancements in order to keep their law firm competitive in a time when clients are becoming increasingly selective.

Career Advancement

The growth potential for a law firm controller is substantial. Having acquired the knowledge, experience, and acumen in managing every aspect of the financial side of the firm, the controller looks to the future for a seamless career path. Often this translates into long-term work at their current firm; other times it leads outside of the legal setting. A "reinventing" of self occurs , as many controllers step away from law firms and into positions in other types of organizations, i.e., executive roles in other industries or in accounting firms, to name a few. Controllers have also transitioned into more analytical roles such as forensic accounting, business manager for a practice group, and a position as chief financial officer. Alternatively, controllers have found their professional advancement through ownership of very small boutique firms.