You suspect that your law firm’s Law Firm Management Software isn’t cutting it any longer. For example, your administrative team spends valuable time every month making the adjustments to sync the system’s reports with your firm’s financial statements. Or you’re still using a legacy system that simply is not capable of producing the data necessary to manage your multifaceted salary and bonus compensation program, much less boost productivity. So, you investigate making a change and find more options than ever — from simple time and billing systems to sophisticated management suites that include CRM, document and email management, and advanced financial reporting.
How do you wade through the options and make the best law firm management software choice for your firm? We suggest that you start by answering four questions.
Question 1: What type of cases does your firm handle: contingency, fiduciary, timekeeping, billing, or a hybrid?
If your firm takes some or all its cases on a contingency basis, are clients responsible for hard costs (e.g., filing and expert witness fees, deposition expenses, etc.), or is your firm? The firm model is a critical component when evaluating systems. Many systems do one approach well while having gaps in the other functionality. Having holes can have grave consequences that are usually only discovered after implementation. In fact, the model you employ plays a vital role in the overall financial management of the firm. For example, think of the firm that has Personal Injury and Family Law Practice Areas. Personal Injury as a contingency practice is less about utilization and more about win ratios as opposed to the Family Law practice that is typically fixed fee or hourly.
Quick Note: If your firm accepts retainers for future fees and expenses, holds funds generated from settlements payments, or holds funds to be distributed as a future date to clients or others, it acts as a fiduciary. As you know, these funds cannot be mingled with a firm’s operating funds, and a firm must account for each client’s fiduciary funds on at least a monthly basis. In addition, some states require attorneys to hold funds in an IOLTA (interest on lawyers’ trust account) while others do not. All of which must be accurate, trackable, and efficiently reported.
Question 2: Does your law firm operate in more than one state?
Tracking, reporting, and understanding what jurisdictions are producing revenue and expenses are vital components of your business operations, especially if you’re a firm focused on growth. Likewise, every state you practice law in requires a separate IOLTA account and the accompanying reporting. Many practice management solutions do not take location into account. This may seem trivial but can play havoc when wanting to segregate reporting. Think of those firms in Corporate Law and work with Fortune 1000 companies. Those firms may take work from different offices within the same client and have other partners performing the work. Many firms want to track this type of data and have to do so manually.
Question 3: Is your firm one or multiple entities?
When a firm has multiple practice areas and/or in various states, we have seen them decide to separate them into different business entities or companies. They elect to structure the entities this way for ownership, compensation, or risk management reasons. That might mean that the first entity has a subsidiary or creating a parent entity for the first. As is true for firms operating in more than one state, systems in multi-entity firms must be capable of attributing income and expenses to the proper entity.
As a firm with multiple entities, you may run into challenges when it comes to integrating your operational systems. When considering a new management software, it’s essential to identify and evaluate the full suite of software each entity regularly uses. We have seen this employed in Group Practice Models, where many entities came together under one brand. To scale, it is imperative to have unified systems operating at the top level.
Question 4: What activities do you track?
Growing a Law Firm is not much different from growing and scaling any professional services firm. However, there are important metrics that Partners and managers need at their fingertips. Our clients have requested reporting on utilization rates, compensation, churn, and other metrics that drive the organization’s overall health.
For example, many firms set up compensation systems that reward some combination of client and/or matter origination (for a set period), management of associates, marketing activities, and billable hours; typically in the form of an Originating vs. Managing Partner Comp structure. While most systems can track these activities, not all can organize data in a way that supports multifaceted compensation programs.
If you’d like to consider a new billing or law firm management software system to help you collect and report the information your law firm needs quickly and accurately, let’s talk. We’d love the opportunity to schedule a complimentary one-on-one conversation to see how we can help you make your firm more profitable and your job of managing by the numbers more manageable.
You Have Many Choices for Software Partners
We’ll work together to analyze and select the software that will best serve your firm’s goals.
Lescault & Walderman has helped many law firms just like yours with their accounting and financial systems and processes. We can work together to find a solution that best meets your current and projected needs.
Here’s how it works:
1. Schedule your no-obligation one-on-one meeting where we sit down with your firm’s managers to understand the deficiencies in an existing system, assess a firm’s priorities and resources.
2. Receive a Complimentary Accounting Evaluation, where we take a deep dive into your current systems and processes.
3. Next, you get detailed feedback and recommendations that are custom-tailored to your firm’s needs.