Far too many solo and small law practices utilize outdated and ineffective tools for their legal accounting needs. If you are one of them, you could be putting your firm at a significant disadvantage. Inadequate legal accounting software can lead to excessive amounts of time spent on accounting tasks, as well as the potential for increased billing errors. Whether you are stuck in the stone-age of paper systems or using accounting software that is not tailored to the practice of law, it is past time you make the change to effective legal accounting methods and here are six reasons why:
- Expense tracking
You cannot have a successful law practice without detailed knowledge of where money is being spent. From your firm’s overhead costs to expenses incurred on behalf of a client, you need to constantly maintain an accurate record of these costs. When there is no adequate legal accounting software in place, your attorneys and staff may attempt to track expenses by saving receipts or writing payments in a ledger.
This type of practice is potentially problematic for a number of reasons:
- Receipts and pieces of paper can go missing, leaving you with unaccounted for expenses.
- The memory is unreliable. You or your staff may forget to enter an expense into the ledger or enter it incorrectly.
- This type of data can disappear. A ledger or envelope of receipts can be lost or even destroyed.
- Accurate trust accounting
Trust accounting is a major responsibility for attorneys, as clients rely on their lawyers to hold and keep their funds in trust. But trust accounting comes along with a lot of rules and responsibilities, so it is vitally important to keep accurate records and follow your state guidelines. Failing to comply with trust account regulations can lead to serious problems with your clients and the state bar.
The right legal accounting software takes these specific rules into consideration, allowing you to collect, track, and reconcile all money going into and out of your client trust accounts. It may provide safeguards to ensure that funds are earned before they are withdrawn and help you in the prevention of overdrawn accounts.
- Legal specifics
QuickBooks is one of the most widely used accounting software packages among businesses across the board, and that includes the legal profession. Many lawyers choose to use this software to handle their firm accounting needs. While QuickBooks offers many benefits, it is not customized for law firm usage and the specific needs of a legal office. For example:
- To segregate client trust accounts from firm operating accounts in QuickBooks, you need to establish a separate company profile within the program. Moving funds from a client’s trust account for invoice payment also requires extra steps, which can be particularly cumbersome for firms making 10 or 20 of these transactions each month.
- QuickBooks also requires you to manually review trust account balances and send out replenishment requests to clients.
- QuickBooks does not offer the mobile time tracking services that busy, modern law offices need.
- Invoicing
Law firm invoicing can be extremely time-consuming and tedious without the right legal accounting software. Your attorneys may have to look back and review client matter tasks in order to submit their times to support staff. Your support staff may have to go around the office trying to round up time tracking records from the attorneys. Then, once all of that is completed, your staff has to sit down with an outdated, inefficient accounting system to create invoices and manually send them out to clients. The entire process can be unreasonably time-consuming and filled with opportunities for inaccuracies.
The right legal accounting software provides your staff with a quick and efficient manner of creating customized and detailed invoices for your clients. TimeSolv’s legal accounting software is easy-to-use and promotes accuracy within your firm’s invoices. Time tracking records are quickly imported into invoices that are completely customizable to your firm’s needs.
- Reporting options
A large part of accounting is the ability to review your firm’s financial health on a regular basis, identifying areas for potential improvements. Lawyers need accounting software that allows them to run numerous reports about the firm’s billing practices, realization, accounts receivable, and expenses.
TimeSolv offers more than 30 reports in various formats, so you can keep a constant eye on practice. These reports also give you the tools to properly gauge your firm’s profitability. After all, your law office is also a business, so why wouldn’t you choose an accounting software option that helps you increase profits.
- Time tracking
Accurate and timely time tracking is crucial to the success of your law firm, so it is also a top reason why you need the right legal accounting software. Gone are the days of jotting down times and tasks on the corners of legal pads or sticky notes. This type of time tracking is unreliable and often inaccurate, leading to the overbilling or underbilling of clients. You are either going to damage your clients and reputation by overcharging clients or damage your firm’s bottom line by undercharging for your valuable services.
The right legal accounting software gives your staff the tools they need to quickly and efficiently track the time they spend on client tasks. It also provides true mobility, so your attorneys can track that time whether they are sitting in their offices or having a working lunch. TimeSolv utilizes a cloud-based time tracking system that is highly available, convenient, and easy-to-use. Your attorneys can access it from their desktop applications or from a convenient application on their tablet or smartphone. Tracked time is then easily accessible for staff members when its time to create invoices.
Your law firm has specific accounting needs, and you need a legal accounting software that adequately meets those needs. TimeSolv takes pride in providing lawyers and law firms with comprehensive and useful accounting tools. Click here to take advantage of their 30-day free trial.
About Erika Winston:
Erika Winston is a freelance writer with a passion for law. Through her business, The Legal Writing Studio, she helps legal professionals deliver effective written messages. Erika is a regular contributor to TimeSolv and a variety of other publications.