Lead Your Law Firm
to a Successful Future
Managing a firm goes far beyond just practicing law. All too often lawyers feel that accounting function is a necessary evil but it’s not worth their time to pay attention to. In reality however, profitability, is the most accurate and honest measure of the firm’s success. Successful law firms do not hide from financial issues, they meet them head on. This means that partners do not sit on their finances for weeks and months at a time waiting for their CPA to pay a visit. They take matters into their own hands and implement the appropriate tools, systems and external resources needed to manage not just any business, but a legal business.
The one thing that all successful law firms have in common, which seems to differentiate them from their less successful counterparts, is that they have spent the time implementing systematic and repeatable business processes.
Systematic processes make things simple, hold people accountable and create structure in an organization. Without good processes, you are constantly playing catch-up, and that leads to inefficiencies and the inability to scale.
From marketing, client intake, operational efficiency, billing and financial visibility, the most successful law firms have created structured, repeatable processes to maximize their efficiency. They have created standardized processes for all areas of their business, heavily utilizing to automate and streamline tedious administrative tasks.
Every attorney is busy, we know that. As is every CPA, banker, financial advisor and every other professional that is in the service business where the client is a number one priority. Are you too busy to make a change? If you just pause for a moment to step back and assess your practice, I guarantee you that results will be very rewarding.
You do not have to do this “makeover” all on your own – as professionals, we surround ourselves with other trusted professionals to help us run a successful practice – CPA’s, bankers, insurance agents, etc.
From the experience CPA Solutions has had working with law firms, there are few key areas which law firms can review and have the most room to improve at their firms:
Integration of Billing and Collections System
At most firms, law practice management and business accounting are in two separate systems and in many cases the same data needs to be entered twice. This means every time a transaction is entered or edited, it must be done in both systems which leads to incompleteness and errors.
There are two solutions to this problem: 1) keeping business accounting and practice management in one system in which case data will only need to be entered once, reducing costly errors and the time spent on data entry in the practice or; 2) integrating practice management system into accounting system through automation. While you still be operating with two systems, integration will eliminate double entry and manual input. Controls also must be in place to reconcile the two systems.
Tracking Income by Practice Area
Determining which case types produce the most revenue, where the firm should invest its marketing dollars, which practice areas aren’t worth the firm’s time.
Allocating Costs Properly
Allocating direct costs to matter files as they are spent, understanding everything must be billed at the time of expense, accounting for all overhead costs.
Staying Compliant with IOLTA
In most states, IOLTA accounting is mandatory. Staying compliant with IOLTA accounting regulations is a major component of a successful firm.
- Commingling of funds. Avoid any type of co-mingling, be it: client to client, client to law firm funds, or client’s multiple matters co-mingling.
- Three-way reconciliation. Depending on the state, firms are required to perform a three-way reconciliation every 30 to 60 days. Utilize technology which allows this process to be automated.
- Own the compliance process. Don’t take the easy way out and pass compliance issues to internal bookkeepers. As a successful firm you simply cannot. Your firm’s ability to practice law cannot be compromised. This means that to remain compliant, legal-specific tools and professionals that are experts in your industry are necessary.
Efficiency, profitability and prosperity can be achieved by any law firm. But to get there you need a commitment, consistency and alignment with other professionals that have the skills and experience in the legal industry.
To set up your consultation to see how we can help your firm, give us a call at 407-650-9088.