Page 45 - Law Society of Hong Kong MPMC Manual v8 - With checklists (1 March 2018)

Practice Management Course | Unit 5
Business Planning

Financial health
• Identify gross and net fees for the last three years and year-to-date, and make
a comparison with budget
• Identify current financial position in relation to fees, disbursements, overdraft
and WIP
• Review borrowings
• Review the performance of the financial systems in terms of appropriateness in
cost and quality
Best practice
• What progress has been made in implementing quality management processes?
• What level of timeliness is being achieved?
• Is there congruence between service and client needs?
• What controls and monitoring operate to identify and manage cost to provide
services?
• What is the level of flexibility available in the service process?
• What attention and resources does the practice devote to innovation?
• Does the current service delivery process provide the opportunity for the
delivery of value-added services?

7. Data for this operational audit can come from a number of sources. The firm’s
databases, financial records, client registers, file registers, information in the public
domain, networking and generally available data.

The strategic audit
8. The operational audit reveals what the practice does on a day-to-day basis and how
it does it. By contrast, the strategic audit picks up the ‘big picture’ issues - the
implications that flow internally and in the marketplace as a result of how and in
which market(s) the practice operates.

9. The strategic audit is usually undertaken in the form of a SWOT (i.e., strengths,
weaknesses, opportunities and threats) analysis, which looks at both the internal
and the external factors.

10. Strengths and weaknesses are the internal features of the business. They are the
things over which the practice can usually exert the most control and for this
reason they are often referred to as the manipulable assets. They will include issues
that will probably be flagged in the operational audit.

11. Strengths are those things that make a practice more competitive than its
competitors; that is, what it is good at doing or the superior resources it possesses.

12. Some examples of strengths might be:

• Investment in appropriate technology that has the ability to enhance client
service.
• High level of client referral.
• Stable, competent staff.

13. Weaknesses are the things that the practice is weak at doing or the inferior
resources it has. Some weaknesses might be:

• High debt levels.

© The Law Society of Hong Kong (2018) Page 41