If there was a core message for attendees at last week’s annual 360 Legal Conference to take away from the day, it was the urgency of addressing financial questions.Steve Billot, a turnaround specialist from RSM Tenon, painted a fairly stark picture. He estimated that £500m could come out of the legal aid budget, that the Legal Services Commission would be slower to pay firms, while HMRC would harden its attitude on payments – all at a point when many lawyers’ PII premiums have risen significantly.

Against that background, Billot said, the fact that banks were challenging firms as never before when asked for finance ‘is not something to take personally’.

So with bank lending, and banks’ suspicions, both up, what should firms do to secure what Lloyds assured the audience was increased lending?

Banks and turnaround specialists tend to focus first on the ‘hard core’ of debt in the overdraft. For all practices, their overdraft figure will move up and down, often dramatically.

But if the ‘hard core’ – a point that the overdraft is never going below – is showing a sustained upward drift, that will ring alarm bells. Money, they say, needs to be put in to such a business through a loan, cash or investment, because their fear is that a business with significant hard core in the overdraft is wasting a lot of time managing cash that should be spent on managing the business.

Chris Marston of Lloyds TSB, which has increased lending to law firms 7% in the last year, listed information likely to unlock bank finance for firms, by convincing the bank that the firm is in control of its affairs, and to underline what is being financed.

  • Work in progress
  • Debtors
  • Disbursements
  • Creditors
  • Data on new instructions

Time was, Marston noted, that to ask a legal practice for such information was a sign that the practice was not trusted by its bank. In the current environment, he noted, having such information was likely to lead to cheaper finance, and more of it.