More Accurate and Efficient Accounting For Lawyers
By Mary Elizabeth Hammond
A reliable accounting system is pivotal to the success of a law firm. Effectively managing accounts and finances ensures that law firms remain compliant, allocate appropriate resources and funds to ensure the greatest return, and ultimately get paid for their services.
However, most lawyers have little to no accounting experience. As a result, accounting becomes a daily task that is time-consuming, non-billable, and often a source of stress. Fortunately, lawyers can use legal accounting software to automate difficult, frequent tasks that eat up potential billable hours.
In this article, we’ll explain how legal case management software with accounting features can make your life easier and your firm more profitable.
5 Legal Accounting Software Features That Will Benefit Your Firm
1. Expense Tracking
Tracking expenses in a law firm is time-consuming, tedious, and leaves a lot of room for human error. People may misremember their expenses or just log them incorrectly. A ledger or envelopes full of receipts can easily be misplaced, destroyed, or disorganized.
Legal case management software enables law firms to:
- Maintain an accurate account of where money is being spent,
- View expenses incurred on behalf of a client
- Keep tabs on all billable and non-billable expenses
- Store information securely in one centralized location
2. Invoicing and Client Payments
For your firm to be profitable, you’ll need effective invoicing. Inefficient accounting systems require staff to spend hours of unbillable time creating invoices, manually sending them out to clients, and following up on unpaid or late invoices.
This process is prone to errors, sucks up staff time, and often leads to a pile of unpaid invoices. In fact, 73% of 2,000 surveyed legal professionals claimed that getting paid was a challenge for their firms.
Legal accounting software can streamline this process with auto-generated invoices, automated invoice reminders, and a platform that provides clients with multiple ways to pay invoices. Provide your clients with the flexibility to pay with credit card or ACH payments.
According to 2021 data from MyCase, MyCase users who accepted online payments received invoice payments 32% faster than those who didn’t accept online payments. Additionally, 61% of surveyed lawyers stated that their firms collected more money because of online payment processing.
3. Trust Accounting Management
Keeping track of clients’ trusts and accounts is a complicated and extremely important task. According to the American Bar Association, law firms have a responsibility to ensure that one client’s funds are not commingled with another and that client funds are never used to pay for law firm expenses. These client funds include retainer fees, settlement funds, advanced costs, and court fees.
To ensure funds are properly used, firms must maintain accurate and detailed records of all cash flow. Failing to comply with trust accounting standards is a form of malpractice that can lead to serious repercussions for a law firm, including the disbarment of its lawyers.
Legal accounting software can act as a safeguard to ensure that every account and transaction is properly tracked and no funds are improperly used (even by accident).
4. Time Tracking
Time tracking is another crucial element of your law firm's profitability. Tracking more billable hours means more money for your law firm. Accurately tracking billable time is tougher than it seems and when done manually, leads to opportunities for inaccuracies. Leaving your time tracking to memory is leaving money on the table.
The American Bar Association recently found that attorneys who wait until the end of the day to log their hours lose up to 10% of billable time. When they wait longer than a day, that number goes up to 25%.
Legal case management software provides time-tracking features to help lawyers consistently and accurately track time and increase their billable hours. Get automated prompts to track time when you log a call, send an email, save a note, or upload a document for a case. Easily keep tabs on where time is being spent for each case and even find missed billable time.
5. Accurate Financial Reporting
Accurate financial reporting gives you an overview of your firm’s cash flow. This allows you to make data-driven decisions that can reduce overhead and create opportunities for financial growth.
On the other hand, inaccurate reporting is a major disservice to your firm. Making decisions based on poor data can lead to a loss in revenue.
Legal accounting software can produce reports about outstanding balances, online payment activity, and invoices. It can also showcase how each employee is monetarily contributing to the firm.
Ensure Accurate Accounting and Reclaim Billable Time
A reliable legal accounting software solution can help you log more billable time and relieve the stress of managing the accounting for your firm. To effectively and efficiently handle your law firm’s accounting, you need a reliable solution that can automate time-consuming tasks, provide accurate reporting, and help your firm remain compliant.
Ready to see how legal accounting software can help you achieve those benefits and get more billable time back? Try a risk-free, 10-day free trial of MyCase.
