Law firm accounting and billing software requirements checklist
If you’re an accounting professional who specializes in law firm clients, especially mid-sized law firms, you will be steering them into new software at some point in your relationship with them. Before you even begin to talk about software, you need to get a big picture of the law firm.
Start with people
Who needs buy-in for the new software? For sure the lawyers, but what about assistants, billing staff and the accounting manager? A clear picture of the stakeholders at the start of this process will help you as you get closer to your software decision.
Must haves vs. nice to haves
Are there special use cases within the law firm? This could be:
- Legal Electronic Data Exchange Standard (LEDES)
- Fixed fees
- Client budgets
- Special invoice formats
- Electronic invoicing and payment opportunities
When you understand the needs of your clients, you’ll be better prepared to steer them right.
Think of the workflow in the context of the law firm client:
- How do you onboard the client?
- What data will you capture?
- Who keeps that data?
- How do you ask for trust money?
- How do you deposit and track the trust funds?
- How do you track time and expenses for this new client?
- How are invoices generated?
- Where will pre-bills be produced?
- Do you need paper or electronic review?
- How are invoices sent to the client?
- Can the client make an electronic payment?
- How is the payment received?
- If trust funds are used, how will they be applied?
Figure out how you’re going to map this, so that you can also keep track of priorities within the law firm.
Which version of Quickbooks Online?
If you’re working with a mid-sized law firm, you’ll most likely want to steer them toward QuickBooks® Online Advanced. Defined user roles keeps most of the users out of the more sensitive areas of QuickBooks, such as payroll. Advanced is the application you want to use for firms that are growing. Advanced also has more advanced reporting, allowing the law firm to understand their financial health health in real time. Finally, batch accounting tasks that are available in Advanced make for real-time savings. Combined with LeanLaw, QuickBooks Advanced behaves like custom software for the law firm.
We asked a law office administrator from a mid-size law firm (30+ attorneys) to see what she put on her checklist when searching for law firm software. This list might not exactly match what you need to consider, but it’s a great start and truly enlightening on how broadly you must consider how you want your new law firm software to enhance and expand your firm’s efficiency and profitability.
When you think about timekeeping, if you buy a software that is well integrated, you’ve just streamlined the process. Flexibility is the other big consideration. A larger firm is likely to need multiple timekeeping, options including web-based, desktop and mobile (including iPads, tablets, and phones); calendar view; timers; and short codes. You’ll also need to think about whether you need fixed fee and hybrid timekeeping in addition to hourly; how to set up the client/matter entries; and the importance of interfacing with Outlook, Google or whatever online platforms you use.
You’re not only charging for time, but also for expenses. What about late fees? How is the invoice being presented? Do you have to mail it, physically (egads!) or can you send it online? (YES, you should.) What sort of invoice review workflow is provided? Does it keep the lawyers out of the accounting software (think of the mess they might make!) Does it allow for pre-bill review and appropriate segregation of roles?
What about billing from a retainer? How does the software handle that and the associated trust accounting? Is it easy to accept trust deposits? Pay an invoice from trust? Reconcile the trust account? Trust accounting can be a pain in the neck, so make sure your software makes the process easy.
If you don’t understand your law firm’s financial data in real time, you cannot understand the efficiency and profitability of your firm. Does the new software create reports with the time entry, expenses, trust transactions, and billing entries that you create? It better – otherwise, you’re going to pay someone to spend a lot of time manually entering data, which is a colossal waste of time. You should be getting reports on your timekeepers, on originating attorneys on accounts receivable and work-in-progress, trial balances, and more.
These are just some of the issues and data points you should be thinking about as you prepare for a new software era in your law firm. Also included in the list:
- Client/matter considerations
- Trust and retainer updates
- Accounts payable
- General ledger
- Conflict checks
- And much more
Remember to do your due diligence. It’s hard work to integrate new financial software into a law firm. You don’t want to make a mistake and do it again, another time. Make sure you have all your questions answered.
Understanding the software features you need is just part of choosing new financial software. Before you ever use a checklist, you should understand your users’ needs and the types of software available to meet them. And, once you decide, you need a robust onboarding process to make the transition as painless as possible. Stay tuned for more posts on those topics. Meanwhile, the checklist is a starting place in your journey:
Create your own checklist or download LeanLaw’s checklist, and modify it to your needs.