Accounting software for law firms
Small Business Guides
6 min read
Legal work has its own specialised accounting requirements. If you’re in the legal industry, it’s vital you choose law firm accounting software that helps you work smarter and faster. So how do you find the right software for your firm?
Run your legal practice more efficiently
Law firms usually have many different clients at a time. Some will be on retainer, others on fixed fees. Transactional charges and hourly rates will be used for some types of work.
One of the hardest aspects of running a law firm is often not the legal work. It’s keeping track of time – and then billing for it.
Doing this manually quickly becomes complicated. Online accounting software for law firms automates and simplifies the work.
But that’s just one advantage of online or cloud accounting software – there are many others. This guide explores the benefits of online accounting software and how to find the best package for your law firm.
Flexible tracking and billing
Law firms work in many different legal areas. These include business law, estate, divorces, criminal law, tort and real estate. Each one may be tracked and billed differently. So you need a system that can handle:
- hourly rates for advising and similar work
- fixed fees for tasks such as will writing
- transactional charges
- retainers, usually on a monthly basis.
You may also want to track your pro bono work. Even if you don’t charge for it, it’s useful to have a record of the time spent.
Accounting software needs to cope with different payment types. This includes direct bank transfers, credit and debit card payments. You may also need to use online services such as PayPal.
Fast and accurate invoicing
Tracking your time is one thing, but invoicing for it is another. You’ll need software that makes it quick and easy to create an invoice.
The best law firm accounting software makes it easy to:
- quickly set up invoice templates for different types of work. These can all be customized with your firm’s logo and design.
- import billing information from your accounts automatically
- send invoices electronically, via email
- track who’s paid and who hasn’t
- see when someone has viewed your invoice.
Nobody really goes into business to spend their precious time invoicing. So it makes sense to use software that does most of the work for you.
Five key benefits of online accounting software
If you’re a lawyer who’s often out all day visiting clients you’ll need to be able to access your accounts from any location. Online accounting software lets you do this:
- Work while you travel
With online software, you can log into your accounts securely over the internet and can use a laptop, tablet or smartphone. You could work on your accounts on the train home after a court case. Or raise an invoice on the way back from a client meeting.
- Automatic upgrades and backups
You don’t need to worry about software upgrades or backups of your accounting data. These will be handled for you behind the scenes by the software company.
- Instant recovery from theft or disaster
In the event that your practice has a break-in, fire or flood there will be virtually no down time. Your financial data is safely and securely stored online, so it’s easy to quickly get up and running again – just log in.
- Easy data sharing
You can give your bookkeeper and accountant remote logins. This will let them securely access the accounting information they need. It’s far safer than sending USB memory sticks through the mail or sharing files via email. You can control the level of access for each user.
- Simple integration with other software
The best software can sync with other business applications. You could have a specialized end-to-end solution – for example you could sync a timesheet application with your accounting system.
Tracking your time is one thing. Invoicing for it is another. You’ll need software that makes it easy and quick to create an invoice.
Compliance with tax legislation
Every business needs to comply with tax law. But lawyers must be particularly careful. So before you decide which accounting software to use, make sure it complies with both state and federal tax laws. This will save you trouble – and possibly an audit – at a later date.
Manage your staff using built-in payroll features
The best law firm accounting software will handle your payroll needs too. From interns to senior partners, it needs to be able to:
- handle setting up new employees
- process timesheets
- manage vacation and maternity or paternity leave
- manage sick leave and benefit payments
- process expenses claims quickly and easily
- process direct bank payments to your staff
- keep track of all tax-related information.
It makes little sense to have a separate payroll system. So choose one that’s easy to tie in with your accounting package and look for payroll software that makes things simple.
Use reports to see the big picture
A big benefit of accounting software for law firms is the ability to generate reports. This turns pages of numbers into easy-to-understand graphs and charts.
Reports can quickly show you which area of legal work is the most profitable for your firm. You can drill down into the figures and see which clients are profitable. This will help you steer your firm in the right direction.
Effective reporting tools give you great new insight into your firm’s financial situation. And it’s hard to build an effective business strategy without them.
Research and recommendations for law firm accounting software
Now you know what features you're looking for, how do you find a system that ticks all the boxes?
- Get recommendations from people you trust
Talk to business associates, partners and some of your successful clients. Find out what they use and why. Talk to your accountant or bookkeeper and see what they recommend.
- Read customer reviews
The internet makes it easy to find out what people think of products. So read discussion forums and ask questions online. Research the market. See which products are available, and which ones might suit your firm.
Make the right decision the first time
The accounting software you choose will become a core part of your law firm. That means it's important you make the right choice. You wouldn't want to have to change software after a year – so do the necessary due diligence before you buy.
Understand your requirements now and for the foreseeable future. Then find the best system for the needs of your practice. It will make life much easier for you and your entire team.