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Partner's Capital: How Much Is Enough?
As more and more professional services firms struggle to find balance in today's turbulent and recovering economy, some are finding the need to focus more attention on the balance sheet as opposed to relying primarily on the income statement to guide management decisions. While the income statement is often viewed as the most important decision-making document available to the management and ownership of a professional services firm, the balance sheet offers critical insights into a firm's ability to weather tough times with financial strength and endurance.
In the context of this article, partner's capital is defined as the amount of tangible owner's equity on the enterprise balance sheet exclusive of the net equity in accrued receivables and work in process (“ARWIP”). There will be more on this key ARWIP aspect later. Working capital is defined as the net difference between the combined total of operating cash and marketable securities, net of short-term, interest-bearing debt and certain trade payables. Working capital is often calculated and evaluated on an accrual basis of accounting, which would include accounts receivable. Using an income tax/modified cash basis of accounting, receivables and most trade payables are not considered as part of the computation of net working capital. Balance sheet leverage is defined as the proportion of interest-bearing debt in relation to ownership equity. An overleveraged or undercapitalized firm has too much debt and not enough owner's equity. This is the primary focus of this article.
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Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
Law Firms are Reducing Redundant Real Estate by Bringing Support Services Back to the Office
A trend analysis of the benefits and challenges of bringing back administrative, word processing and billing services to law offices.
Bit Parts
Summary Judgment Denied Defendant in Declaratory Action by Producer of To Kill a Mockingbird Broadway Play Seeking Amateur Theatrical Rights
Risks of “Baseball Arbitration” in Resolving Real Estate Disputes
“Baseball arbitration” refers to the process used in Major League Baseball in which if an eligible player's representative and the club ownership cannot reach a compensation agreement through negotiation, each party enters a final submission and during a formal hearing each side — player and management — presents its case and then the designated panel of arbitrators chooses one of the salary bids with no other result being allowed. This method has become increasingly popular even beyond the sport of baseball.
Disconnect Between In-House and Outside Counsel
'Disconnect Between In-House and Outside Counsel is a continuation of the discussion of client expectations and the disconnect that often occurs. And although the outside attorneys should be pursuing how inside-counsel actually think, inside counsel should make an effort to impart this information without waiting to be asked.