It’s Time to Get Yourself The Best Law Firm Accounting Software
Legal practice accounting and bookkeeping can be a pain. The task is widely loathed by managing lawyers who prefer practicing law to crunching numbers. Consequently, smaller law firms end up relying on the office manager, assistant, or any other employee with relatively limited experience in finance. Unfortunately, this may lead to error-ridden, inconsistent records.
Attorneys trying to save money or maintain control of their accounting may end up in even more bleak situations where accounting functions and tasks are postponed for nights and weekends. Notably, most attorneys acknowledge taking hours to complete non-billable administrative tasks.
To avoid this, most firms outsource their accounting functions, but this has its drawbacks. Having your records in someone’s hands limits your sense of control and can be pretty expensive. While you may get the monthly financial reports, it’s still difficult to steer your ship without a real-time view of your finances.
A great law firm accounting software could be the answer to all your needs. The technology will let you access accurate, real-time financial insights to help you minimize costs and make the right decisions.
Choosing The Best Law Firm Accounting Software
Law firms have several unique accounting needs, and it’s essential to identify the right billing tools designed to address these specialized needs. Therefore, when shopping and going through different product reviews, pay attention to the following critical features of excellent law firm accounting software.
Retainers are excellent tools for facilitating law firm payments. But unfortunately, most practices usually collect the initial retainer then lose track of the other elements till the retainer runs out. A great time and billing solution shouldn’t just pay the retainer invoices but also track the retainers to allow you to reach out to the client for additional payments if the balance gets low.
Law firms aren’t like other businesses. Instead of billing by the client, you’ll bill based on the matter. Established multi-disciplinary firms may have numerous varying billing schedules, and even a solo practitioner may bill differently according to the nature of the services they’ve offered.
The accounting solution you choose should easily develop different billing structures for each matter. What’s more, it should offer a comprehensive view of all matters belonging to respective clients.
Lawyers usually handle trust accounts. In this industry, trust management and daily firm operations are so intertwined. That’s why your dedicated accounting software needs in-built escrow functions. This should comprise a comprehensive billing solution suite, including fund tracking, account management, and bank reconciliation.
Legal practitioners are subject to heavy scrutiny. As a result, relevant paper trails must support every action. So when looking for accounting software for your firm, always chose one that can produce the necessary reports required by regulating agencies like the state bar. For instance, in most states, law firms must produce three-way reconciliations for each trust fund.
Professional usually use standard billable rates. But for law firms, you’ll use tiered rates. Depending on the task at hand, a single lawyer may bill various rates.
As a result, the accounting software you choose should simplify how you enter the different rates to ensure accurate billing of clients. What’s more, you should easily specify a rate for any matter addressed separately from the standard rate table.
Law firms operate with three main billing models: contingency fees, flat fees, and billable hours. Your preferred software should align with the three basic models, including various matters for a specific client.
If you’re a relatively smaller practice, you probably use only one model. However, support for the three alternatives allows you to explore more billing options as your company grows.
The Importance of a Reliable Law Firm Accounting Software
From the best legal practice accounting software features, it’s clear just how much these advanced tools can impact your operations and bottom line. Here are the main advantages of the software:
- Better expense tracking – You need a comprehensive view of your expenditure for a successful practice. From your company’s overhead expenses to costs incurred on your clients’ behalf, you must constantly maintain accurate cost records. Recording payments in ledgers and saving receipts isn’t enough. Reliable accounting software will have zero uncountable expenses, sufficient memory, and adequate backups.
- Precise trust accounting – This is among the critical tasks for lawyers, offering a wide range of responsibilities and rules. Failing to follow state guidelines and maintain accurate records can lead to adverse consequences with the state bar and clients. But if you have a reliable legal accounting program, you’ll easily collect, reconcile, and track every dime that enters or leaves your client trust accounts.
- Improved invoicing – This process is tedious and time-consuming if you don’t have the right accounting tools. From gathering insights and rounding up your records to creating invoices and sending them manually to clients, you’ll need more time and human effort for a complete and error-free process. Accounting software takes care of the heavy burden and improves your invoicing efficiency.
- More reporting options – Reliable law firms accounting tools allow experts to review their company’s financial health and identify areas of improvement. The software also allows you to run numerous reports on your billing practices, expenses, accounts receivable, and realization.
- Accurate time tracking – A great legal accounting software will enable timely and accurate tracking to aid your firm’s success. The traditional time tracking approaches requiring you to jot down tasks and times on sticky notes can lead to underbilling and overbilling. But a reliable software will enable quick and efficient time tracking to protect your reputation and bottom line.
The Bottom Line
If your law firm still relies on legacy, paper-based accounting solutions or lop-sided, non-legal billing technology, you could be jeopardizing your practice’s productivity. Adopting and maintaining the best law firm accounting software will reduce the time wasted on repetitive accounting tasks. It also reduces the number of erroneous entries in your accounting books.
A reliable IT partner will help you utilize and secure this crucial business resource. At Mathe, we’re entirely focused on ensuring you get the most from your IT functions, meet your demands, and maximize returns.
Schedule a free consultation to get the best accounting solutions for your law firm.
With over 35 years in the business of supporting and implementing technology for the SME market, and 6 years previously in Corporate IT and Voice. I have seen a great deal of change. The only common thread is I have always focused on the Business Wise application of Technology. We always try to look 5 years ahead of the current technology to make sure our clients are on the right track to meet current and future needs.