Solicitors are a vain lot. We say this not out of admiration for their sartorial elegance but as a reflection of the first part of a well-worn business axiom – ‘turnover is vanity, while profit is sanity...’

As Professor Stephen Mayson has indicated, this is a dangerous road to take. Too often firms equate success with bringing in work and thus keeping their fee-earners occupied, without taking the time to evaluate whether they actually make any profit out of it. Such a policy also risks clogging up fee-earners with too much work, which delays completion of files, billing and payment.

That assumes, of course, that firms bill promptly and follow up late payment, something surveys consistently show they are poor at doing. No wonder that, in Mayson’s estimation, many practices will have little appeal to external investors, although this is something firms need to address whether or not they want investment.

Stories abound of firms where partners are earning less than their staff, while the number of collapses during this recession is unprecedented. This should act as a stark warning to those who think they can maintain the old – dare we say amateur – ways of doing things.

BDO partner Steve Billot told a recent conference that law firms fail for lack of cash, not profit. And the end of that business axiom, of course, is that... ‘cash is king’.