#RecipeForSuccess: Providing Niche Services to Legal Firms

#RecipeForSuccess: Providing Niche Services to Legal Firms

Legal firms are unique in their bookkeeping and accounting needs. They have tax compliance requirements like any business, but they also have to comply with the State Bar Association’s Code of Ethics. Penalties for non-compliance can be as severe as disbarment, losing their license to practice law. If a lawyer works in multiple states, they are required to comply with all state requirements in which they practice law.

As the legal industry moves from an in-house, server-based setup towards the mobility and security of cloud-based applications, there are significant opportunities to advise, project coordinate or provide ongoing services.

At 4700Group, we are passionate about working exclusively with legal firms and have formed a #RecipeForSuccess for embracing the unique challenges that law firms provide.

What is a #RecipeforSuccess? Developed by QuickBooks ProAdvisors®, the #RecipeforSuccess campaign provides key ingredients and steps for accounting pros and their small business clients to achieve success. 

Master Chef:

Gale Kirsopp, CEO, 4700Group


Special Sauce:

  • Expensify
  • ShareFile                                                


Step 1: Learn the functionality of Clio. Based on the 2016 ABA Legal Technology Survey, Clio is the most widely used legal practice management application. Clio enables a law firm to maintain all their calendar tracking, including court dates, appointments and time allocations, collaborate with outside counsel, provide a secure portal for document sharing, time tracking by case, and tracking the source of funds for all client trust and direct payments. Many of the required State Bar compliance requirements are handled with Clio.

Step 2: Set up QuickBooks Online (QBO) for a legal firm. Roll up your sleeves and start deboning the chart of accounts. The default legal COA in QBO needs to be modified. Also, remove all the inventory accounts and review the COG accounts, and income accounts will either need to be renamed or removed. Very few law firms have products they sell! Then, start adding the accounts a law firm needs to have for reporting purposes – for example, Advanced Client Costs, another current asset account. These are client expenses a firm pays on behalf of the client. The client will reimburse these costs. Therefore, they are not an expense to the law firm, but rather, a “loan” to the client.

Step 3: Review and modify your services list. When a bill (invoice) in Clio is approved in real time, it will push into QBO as an invoice. This invoice will reflect the details of each line on the original Clio bill. The services list needs to have the services posting to the correct accounts. Not all services on an invoice post to an income account. See advanced client costs above.

Step 4: Reporting. Law firms are notorious for lack of timeliness on invoicing their clients. As a result, it can be 60+ days after services are provided before a client receives their bill. The client often is not responsive to a legal bill with 30-day terms when they have waited 60+ days to receive their bill. Establishing a scheduled A/R report for the firm to review weekly goes a long way in establishing your value. It also demonstrates your understanding of cash flow.

Special Sauces

  • Expensify. In our experience working exclusively with law firms for the past eight years, lawyers do not carry cash. They do, however, carry credit cards, and usually several. And, just like the elusive dollar bills, the paper receipts are, too. Expensify has made a significant difference in accurately posting charges to the correct client and appropriate accounts. Before using Expensify, we would be sending out a report weekly asking if any of the charges coming from the credit card bank feed were client specific expenses.
  • ShareFile. Law firms are familiar and comfortable with portals because they use them with their clients. They are not familiar with QBO or accounting. ShareFile makes sharing information comfortable for a law firm. As one law firm recently said, “ShareFile is the magic vault.” We upload monthly and quarterly reports into ShareFile for the firm to access. The result is that our law firms look at the reports more often than when we put them under My Custom Reports for them to run or email, and get lost, in the inbox.

What’s your #RecipeForSuccess? Working with law firms has its unique challenges, but if you do your due diligence and are prepared, the work can be very rewarding. What’s your #RecipeForSuccess for working with a niche business? Share your comments on Twitter using #RecipeForSuccess.