Like any other business entity, financial management is one of the core functions of a law firm. Apart from maintaining proper accounting and selecting the best banking options there are certain other things to be considered for efficient financial management of a law firm.
One such consideration is that since only lawyers may have an ownership interest in a law firm, a firm can not easily raise capital through public offerings. Therefore, each law firm must have a sufficient asset protection and risk management strategy.
The strategies a firm uses to manage risk can include transferring some risks to another party, avoiding risks altogether, reducing the negative effects of risk, or abeing sufficiently capitalized to bel able to accept the consequences of a particular risk. Getting ample insurance coverage is one way of transfering risk.