Photo: Raphael Daniaud/iStockphoto.com.

It's not unusual for law firms to collect a disproportionately large share of their annual revenue in the fourth quarter, with much of that coming in just before year's end, but how hectic the holiday week is, if at all, varies widely, according to New Jersey law firm leaders.

Yes, some firm leaders have told tales of an office buzzing with activity around the typically sleepy holiday week.

“New Year's Eve is usually a long day here,” one law firm leader once told the Law Journal.

Alan Zuckerman recently described a similar scene at his own firm.

Alan Zuckerman/courtesy photo

“We do take Christmas Day off, but that's about it,” Zuckerman, managing partner of Cherry Hill-based Flaster Greenberg, said in a recent interview. “None of us take vacation between Christmas and New Year's, that's for sure.

“We try to explain to clients—we have good relationships with our clients—that collecting money by the end of the year is important to us,” he said.

Zuckerman said firm and practice leaders meet and endeavor to get bills paid swiftly over the course of the year, and the firm gives clients a 30-day billing cycle. 

But December, including the holidays, is a crunch. It begins with a significant meeting early in the month, where “we do sit down … and go over outstanding accounts receivable,” Zuckerman said. The full accounting staff and management team work the holiday week, not only to get money in the door, but to calculate and pay out partner compensation. 

The urgency is largely because the firm is a C corporation and so getting receivables in by year's end has tax implications, as well as partner compensation implications; the latter because partners are paid salaries over the course of the year from their draws, and then are paid year-end bonuses based on cash collected, not time billed. No one wants to wait a full year to get paid on a matter, he said.

Zuckerman, like other law firm leaders, pointed out that corporate clients are often similarly motivated by tax considerations to get bills paid by year's end.

Clients call the shots at Parker, Ibrahim & Berg in Somerset, too, and it's precisely for that reason that there's no real year-end push, according to managing partner Sanjay Ibrahim.

Sanjay Ibrahim/courtesy photo

“I definitely see acceleration in payments,” but “it's not a control issue” for the firm, he said. “In today's world, you don't have much control over that scenario. … It depends on the clients that you have.”

The firm's institutional clients have very defined processes when it comes to getting and paying bills. ”These are big clients who are going to do what they need to do,” he said.

“We're not making extra calls to make the collections” in December, he said. “It's on the client side.”

With wired funds and detailed billing guidelines, “I think this issue is definitely not what it used to be,” Ibrahim added.

James Flynn, managing partner of the Newark office of Epstein Becker & Green and the firm's general counsel, also shrugged off the idea of a year-end collections crunch.

“This year and last year here, we haven't had any major crunches,” Flynn said, noting that efforts to carry out a smooth end of the year begins in October. “Our collections have been more even throughout the year.”

Accounting staff and others will be working during the holiday week, but won't be interacting much with clients, and “I don't think we're going to be sitting around waiting for a particular wire transfer,” Flynn said.

Some New Jersey firms and offices avoid the December crunch by having an offset fiscal year. For Drinker Biddle & Reath, including its two New Jersey offices, the fiscal year ends Jan. 31; and at Sills, Cummis & Gross in Newark, it's a Sept. 30 end date, according to prior Law Journal reports.

Haddonfield-based Archer & Greiner for years has been one of these firms, ending its fiscal year on Sept. 30,

“Anybody who said, let's change that, I would say no,” said managing partner Christopher Gibson.

When December rolls around, “everybody's making that pitch” to clients for a payment, and “I think they get inundated,” Gibson said.

He added that any deal that can be made in December can also be made in September.

And those deals are indeed worked at Archer, and elsewhere, he said.

“Nothing's off the table,” Gibson said. “Everybody's cutting deals. Let's face it, the whole legal profession has become more of a negotiated, let's-make-a-deal concept.”

Some firms, however, say they avoid end-of-year dealmaking.

“We do not offer discounts for clients to pay by year's end,” Zuckerman said. “That seems counterproductive,” because a client could simply hold off on paying, knowing that a discount offer would be coming later, he said.