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If you’re like most people, managing your clients’ funds is unfamiliar territory. Most of us don’t have an accounting background, and accounting isn’t a subject that’s included in law school curriculums.
You can’t just tuck your clients’ settlement funds in with the rest of your law firm’s general funds, and you certainly can’t stuff those crisp dollar bills in a pillowcase for safekeeping. To establish trust with your clients and ensure your law firm upholds its ethical responsibilities, you need to learn some accounting principles.
In this guide, we’ll give you a quick overview of the basics of attorney trust accounts and describe how you should manage settlement proceeds and other funds on behalf of a client.
(Note: your state will have its own rules governing how you handle client funds. We encourage you to read those too.)
Simply put, you need to know about your firm’s financial performance. But, you also need to be able to meet your legal, regulatory, and ethical obligations, such as preparing your federal and state income tax returns and managing your clients’ money. Accounting practices enable you to prepare financial statements, capture expenses, and create budgets and forecasts. The better you understand your law firm's finances, the easier it will be to make smart decisions for your business and to avoid legal and ethical headaches.
Let’s start by reviewing some common accounting terms that you should know.
There are two main reasons that lawyers should keep their clients’ funds separate from their personal or business operating accounts and from other fiduciary accounts. First, lawyers have a fiduciary responsibility to their clients. Second, it’s essential that the public have confidence in the trustworthiness of the legal profession.
That's where trust accounts come in. Trust accounts are designed to safeguard client and third-party funds from loss. These separate accounts protect clients’ funds from being used to satisfy the firm’s financial obligations and from being seized by the firm’s creditors.
Not all client funds need to go into a trust account. A general rule of thumb is that if funds are for tasks that aren’t yet completed, they should go into the trust account. But if the funds have already been earned, they should go into the firm’s operating account.
Here is a list of common client funds that you should place in a trust account:
It’s equally important to know what funds shouldn’t go into a trust account. By depositing the wrong funds into a trust account, you change the nature of the account, opening it to the risk that it could be raided by firm creditors.
Here is a list of funds to avoid depositing in a client trust account:
IOLTA, which stands for interest on lawyers’ trust accounts, is a type of trust account that raises money for charitable purposes, primarily for providing legal services to indigent people. IOLTA programs came to be in 1981 after Congress passed laws allowing checking accounts to earn interest and after the Supreme Court and state court rules created IOLTA programs.
All 50 states, plus the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, operate IOLTA programs. The majority of states require lawyers to participate, though two programs are voluntary and four others allow lawyers to opt-out.
When lawyers receive a large sum of money that belongs to a client, such as a settlement payment or advanced fees, they should deposit the money into a trust account, where the funds can earn interest for the client. However, if the amount of money is small or if the lawyer only holds the money for a short time, the costs of collecting interest might outweigh the amount of interest the funds can earn.
However, an IOLTA account allows lawyers to deposit smaller funds from one client into a pooled, or combined, trust account with other short-term client funds. IOLTA trust accounts are typically checking accounts to facilitate fund access.
Because it is unethical for lawyers to benefit financially from funds that belong to their clients, lawyers can't earn interest on these accounts. With IOLTA, the interest that the funds accumulate is passed on to each state’s IOLTA program to fund charitable causes.
The goal of an IOLTA is to offer access to justice for individuals living in poverty without taxing the public or charging lawyers and their clients. The interest generated in IOLTA accounts supports civil legal aid and improvements in the justice system.
More specifically, IOLTA programs use the interest generated to fund free, non-criminal legal assistance for low- and middle-income people. The assistance includes helping provide access to health care, housing, government benefits, employment, and educational services. These services are provided by lawyer volunteers on a pro bono basis and by legal aid attorneys.
IOLTA funding also supports self-help and other educational resources, such as legal information websites and legal assistance hotlines. Other programs supported include alternative dispute resolution programs, public service projects, victim services programs, court-appointed special advocate programs, pro se assistance resources, minority lawyer recruitment initiatives, and law school scholarship programs.
IOLTA programs work with financial institutions to maximize their revenue, requiring banks to pay interest rates comparable to non-IOLTA accounts and negotiating to increase interest rates and lower service charges.
To find the IOLTA program in your jurisdiction, visit the National Association of IOLTA Programs directory.
Trust accounts are governed by state rules of professional conduct. Most of these rules are based on the American Bar Association’s Model Rules of Professional Conduct. Model Rule 1.15, titled “Safekeeping Property,” sets forth lawyers’ obligations with respect to client and third-party property:
(a) A lawyer shall hold property of clients or third persons that is in a lawyer's possession in connection with a representation separate from the lawyer's own property. Funds shall be kept in a separate account maintained in the state where the lawyer's office is situated, or elsewhere with the consent of the client or third person. Other property shall be identified as such and appropriately safeguarded. Complete records of such account funds and other property shall be kept by the lawyer and shall be preserved for a period of [five years] after termination of the representation.
(b) A lawyer may deposit the lawyer's own funds in a client trust account for the sole purpose of paying bank service charges on that account, but only in an amount necessary for that purpose.
(c) A lawyer shall deposit into a client trust account legal fees and expenses that have been paid in advance, to be withdrawn by the lawyer only as fees are earned or expenses incurred.
(d) Upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person. Except as stated in this rule or otherwise permitted by law or by agreement with the client, a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or third person, shall promptly render a full accounting regarding such property.
(e) When in the course of representation a lawyer is in possession of property in which two or more persons (one of whom may be the lawyer) claim interests, the property shall be kept separate by the lawyer until the dispute is resolved. The lawyer shall promptly distribute all portions of the property as to which the interests are not in dispute.
You should always review their state’s rules, which may include additional requirements for managing funds and setting up trust accounts.
If lawyers don’t adhere to the rules in their jurisdiction for trust accounts, they’re likely to be subject to disciplinary action. Depending on the severity of their transgression, they may face anything from a reprimand up to suspension and even disbarment.
So, let’s take a closer look at how law firms can meet their ethical responsibilities for trust accounts.
When you receive funds from a client or on behalf of a client, and this money is an advance payment for services, costs, or fees or is a settlement payment, you must take great care to handle this money in accordance with your ethical and fiduciary duties. What follows is a brief summary of some of these duties:
To satisfy this duty, a lawyer must deposit client funds into a trust account that is clearly identified and labeled with the client’s name or as an IOLTA account.
Be especially careful when setting up an IOLTA account. It’s very likely that you'll need to choose a financial institution that your state bar has approved before you can set up an IOLTA account. The bar may have specific registration requirements that you must follow. You may need to register the account with your state’s nonprofit that administers civil legal services. You’ll also need to obtain the nonprofit’s taxpayer identification number.
Here are some suggestions that may help you avoid depositing funds into the wrong account.
You must avoid commingling your firm’s operating funds with client funds. Depending on the number of funds that you are holding for your clients, you will need to proceed in one of two ways with the allocation of funds:
When you include client funds in an IOLTA account, you have an ethical responsibility to manage each client’s funds separately. To do so, you will need to set up a ledger for each client. You can set up a ledger in a legal practice management platform, or you can use Excel or accounting software like QuickBooks.
For each client, you must maintain a separate ledger of all funds received and deposited and all funds paid or distributed out of the account. You must also show the balance of funds in the trust account.
Note that there is one exception to the rule against commingling client and firm funds: you are permitted to keep a reserve of firm funds in your trust account to cover bank and credit card fees, so long as you maintain proper records.
Every time you receive or disburse funds from a client’s trust account, you must notify your client. That means you must contact your client whenever you deposit money or withdraw money to cover incurred expenses or pay for fees that you’ve earned. You must give the client a statement of the services you rendered or the expenses you paid on their behalf. This statement must also show the amount you are withdrawing from the account to cover these costs.
In some states, you may be required to notify your clients of the amount they owe before you take the money out of the trust account. This advance notice is required to allow the client to dispute the fee or expense. If you don’t comply with this rule, you might face a claim that you engaged in the misappropriation of client funds.
Here are some tips that will help you avoid fee disputes:
Clients have the right to ask for details about their funds. When this occurs, you must provide a report that shows how you have used their money in a timely manner. This is why it’s so important to maintain accurate records of client funds at all times, so you have an accurate audit trail showing all client-related fund activity.
This report, called a client trust ledger, shows all deposits and withdrawals from each client’s trust account in chronological order. Note that no account should ever have a negative balance, which would indicate that you’re disbursing money that you have not received.
Additionally, every month, you should reconcile your transaction records against your client trust accounts. Most jurisdictions require lawyers to reconcile their accounts on a set schedule, whether monthly, bimonthly, or at the time of audit.
Law firms have a unique way of reconciling their accounts: three-way reconciliation. This process checks your law firm’s books against the trust account balance and all individual client ledger balances. The sum of all of the individual client ledgers must match the balance in your books and the account balance.
To perform a three-way reconciliation, take these steps:
Three-way reconciliation offers yet another safeguard to protect client funds. It ensures that all money entrusted to your firm is correctly kept and isn’t being paid to cover another client’s charges, firm expenses, or bank fees. It’s important to conduct this activity frequently because if the bank has made an error, then you only have a short period to request a correction. It also ensures that if you have made an error, you correct it quickly to minimize the risk of harm to your client.
Here are some tips to reduce the risks in the account reconciliation process:
Handling trust accounts is challenging, especially when you have so many other responsibilities. But, lawyers are ultimately held accountable for all of their client funds in trust accounts. That’s why it’s so important to regularly review your accounts for compliance and take steps to avoid the most common trust account mistakes:
Lawyers should not mix their operating funds and client funds in any account. But while this principle sounds simple, it’s hard to implement.
Say, for example, that your client sends a check to cover both legal fees and costs. You’re being paid a flat fee for services, and the costs will cover the court fees when you file the client’s personal injury lawsuit. It may be tempting to deposit all of the fees in your operating account, because the bulk of the check is covering your fees, and write a check from one account to the other. However, that would be impermissibly commingling fees.
Because the check covers costs that have not yet been incurred, you should deposit the check into the trust account to hold those fees for your client. Then you should write a check payable to your operating account for the fees. It’s important to take all earned fees out of the trust account to pay for client invoices to avoid commingling.
It always takes some time for checks to clear. That’s why it’s important to get notice that a deposit has cleared before you write a check against funds in your trust account; otherwise, you’ll have a negative balance, which will show up when you reconcile your accounts and be a red flag that you aren’t following appropriate accounting procedures.
Don’t be pressured into sending clients settlement proceeds immediately. Wait for a notice from the bank that the deposit has cleared. To avoid upset clients, explain your bank’s policy on holding funds and your procedures for disbursements in advance.
If your firm isn’t tracking funds properly, or if you are short on cash one month, it can be tempting to dip into a trust account to pay for business-related expenses. After all, you’ll earn the money soon enough, so it doesn’t matter whether you wait until you’re actually ready to invoice the client, right? Or you might plan to put the money back into the trust account as soon as more money comes in.
Either way, this is wrong. It’s unethical to transfer unearned money from the trust account to your operating account to cover expenses for your firm or another client. You’d also be violating a number of other ethical duties, including failing to account for your client’s funds, commingling business and client funds, and failing to maintain accurate records.
If you don’t limit who has access to your trust accounts, you’re putting client funds at risk and breaching your ethical responsibility to safeguard them. And if you aren’t following good accounting practices and regularly reconciling your accounts, you may not notice if a check goes missing or if someone writes a check to themselves until it’s too late.
Law practice management software and online banking systems can alert you in case of problems like these. You can also ask the bank to send you an email whenever a check clears. Additionally, consider implementing physical safeguards, such as keeping trust account checkbooks locked in a cabinet.
Memories fade, so recordkeeping is important. It’s especially important when you have a fiduciary duty to track your clients’ funds and to be able to give clients account statements on demand.
To make sure you don’t lose track of checks, make sure you write the client’s name and matter number on each check that you issue. This will also help you reconstruct records in the event your records are lost, hacked, or destroyed. If you have to rebuild your client ledgers using bank statements and old checks, you’ll be able to more quickly get back up to speed.
When you receive funds for a client trust account, don’t record it as income in your accounting software. These funds are your client’s property, not your own. If you record them as firm income, not only are you breaching your fiduciary duty to your client, but you are also creating a potential mess with taxing authorities and regulators, including the IRS.
ABA Model Rule of Professional Conduct 1.15 recommends that lawyers should maintain trust account records for at least five years after the termination of the representation. Some states require longer periods and start the retention period with the last disbursement of funds.
Best practices suggest that you should keep online records as well as hard copies of every important document. Print and securely store all client ledgers, monthly reconciliation reports, and trial balances for receipts and disbursements. And, make sure to back up your electronic records frequently.
The best approach to managing retainers is one that complies with your jurisdiction’s requirements, meets your clients’ expectations, and is the easiest for you to manage.
In many cases, that will mean that you should keep client retainers in your trust account. A few jurisdictions will allow you to keep a retainer in your operating account. Check your state’s rules if you’re not sure of the requirements.
No matter which account you choose, the key is to keep good records of your client trust funds. You must make sure you know which client and matter to associate the retainer with. You must also keep each client’s retainer funds separate, and, if you’re keeping the retainer in your operating account, keep it separate from other firm funds. This is why client ledgers are so important: you must be able to segregate each transaction for each client and keep up to date with each client’s balance.
It’s also prudent to keep your clients apprised of the status of their retainer balance. That way, when the retainer fee is running low, you won’t ever have work in progress that exceeds your retainer balance. Legal practice management software can alert you when a client’s retainer dips below a certain level.
Settlement checks can pose another accounting quandary for lawyers—especially if settlement checks are jointly payable to the lawyer for fees and expenses with the balance going to the client.
Settlement checks are the client’s property and should be deposited in a client’s trust account or an IOLTA account—never in the firm’s operating account. Before depositing the check, make sure the client and the firm both sign the check if the check is made out to both parties. Record the client number, matter number, and matter description on the check. Copy or scan the check, saving the copy in the client’s file.
The lawyers should present information to the client that explains how they propose to disburse the funds. This statement should spell out what funds will be payable to the client, what portion will cover fees and expenses, and what if any, portion will be paid to a third party. You should be able to get a copy of the expenses paid from your practice management system.
Sending a report for the client to review also allows time for the settlement check to clear. Lawyers cannot advance funds from a trust account to pay the client while they wait for the bank to process the check.
After the check has cleared and the client has approved the disposition of funds, the lawyer should transfer the funds from the trust account to the client. Before doing so, prepare an invoice detailing your fees and expenses, then write a check from the trust account payable to your firm. The check should include the client’s name and matter number. Be sure to record the transaction in your client’s account ledger, then deposit the payment in your firm’s operating account. Write any other checks to your client and third parties as required by the settlement statement.
Finally, check for a zero balance. Run a client ledger report that shows all deposits and checks written. When you’re satisfied that you’ve reconciled all of the transactions, send the settlement statement, settlement check paid invoice, ledger report, and signed settlement agreement to the client, saving a copy of everything you send in the client’s file.
With so many moving parts in trust accounts, it’s easy to see how a lawyer might make a mistake. That’s especially true if you’re using manual bookkeeping methods or Excel spreadsheets to keep track of your accounts. It’s always prudent to run your accounting methods by a professional accountant who has experience with trust accounts and IOLTA accounts.
If you're worried that you've made a mistake, a smart first step is to check with a practice management advisor in your state. Many of these advisors work confidentially, so they can advise you without reporting any ethics violations to the bar. Visit your state bar website to learn whether you have access to a free advisor.
In most cases, the safest bet is to self-report a mistake and take good faith steps to correct it immediately. The failure to report can be as bad as, if not worse than, the initial accounting mistake.
As you can see from this guide, trust accounting can be challenging. But it doesn’t have to be another headache on top of the stresses of your law practice.
The first step is to put down the pencil and paper—or even the Excel spreadsheet. And if you want to really get serious about your accounting and recordkeeping, you need to ditch small business accounting platforms that weren’t designed specifically to meet lawyers’ needs.
You need a legal practice management platform that includes full billing and accounting capabilities, making sure that you’re able to track every last penny and satisfy your ethical obligations to your clients.
To find a tool that’s able to resolve your biggest trust accounting challenges and meet your firm’s needs, look for a platform equipped with the following capabilities:
Features like these can make the difference between an inefficient trust account management process that’s prone to errors and bookkeeping and accounting systems that run like clockwork, enabling you to meet your ethical obligations and client trust account reporting requirements.
A budget is an estimation of revenue and expenditures for a specific period of time.
By thoughtfully creating a budget ahead of the coming fiscal year, you can better align anticipated revenue and expenses with your law firm’s goals. Successful budgeting involves critically thinking about your financial expectations so that strategies can be implemented to promote greater profitability and prevent financial pitfalls.
Budgets also provide a measuring stick for periodic review throughout the coming year to determine whether desired milestones are being met and adjust as needed. With a comprehensive budget, you can be proactive in addressing your firm’s financial issues before they become serious problems. This will provide a bird’s eye view of financial performance on a monthly, quarterly, or yearly basis which will help facilitate adequate forecasting.
Therefore, law firms need a budget to help with managing, mitigating, and minimizing financial risk.
These nine tips will help you build a solid budget for your law firm as you wind down this year and prepare for 2022:
Setting goals is the first step in budgeting. Goals act as the benchmarks of every budget and dictate the allocation of firm capital. In an environment centered around putting out one fire after another, goals allow you to set your focus on something positive.
First, brainstorm all the goals you’d like the firm to achieve within a particular time frame. Classify them according to the following categories:
Make sure these goals are specific, measurable, and realistic to current circumstances. Keep these goals in mind as you create your law firm budget. Look for opportunities to further them, in addition to identifying potential pitfalls that may derail your progress. Also, don't forget to review your firm’s goals throughout the year, just as you would review the budget. This will help keep you focused and moving in the desired direction.
To grow, law firms must invest in areas like technology, people, marketing, and other revenue-building tools. Think about what your firm will need in the coming year to attract new prospects and continue providing high-level service to existing clients. Once you have identified those expenditures, include them in your budget.
Remember those realistic goals that we spoke about in tip #2? Well, the same concept applies to your revenue expectations.
Let’s start with what you should classify as revenue. First, there’s the revenue your firm will incur through daily operations before any deduction of related expenses. Then, there’s the revenue that remains after all expenses are deducted. This is your firm’s net income, otherwise known as profit or the bottom line.
Just like goal setting, start by thinking about an end result and what your firm will need to do in order to achieve it. For instance, how many clients will you need to service over the next three months to bring in the desired level of revenue?
One more point about revenue: be sure to consider its seasonality, as different practice areas may incur more or less work at different times of the year. With that awareness, you can account for these business patterns and budget accordingly, so that necessary funds are still available during the less profitable months.
Keep your eyes on the prize - and the prize is always the profit margin. The profit margin is the main benchmark that indicates the wellness of your firm’s financial position. It measures the effectiveness of your firm’s income and expenses. It also points you in the direction of the most successful revenue streams and the most problematic expenses.
Every budget includes costs and spending - there’s no way around the fixed and variable costs of doing business. The goal is to tackle them in a way that makes the best possible use of revenue.
Fixed costs are expenses that remain somewhat consistent over time. These may include internet, telephone service, and software licenses.
Variable costs change depending on use and other factors. They may include travel costs, insurance premiums, marketing strategies, and continuing education fees. Incidental one-time expenses also fall under the variable costs. These are unexpected expenses that pop up from time to time, like equipment repairs or the cost of revamping your law firm website.
Both fixed and variable expenses should be factored into your 2022 budget.
If the past two years have taught us anything, it is to expect the unexpected. That’s why it’s necessary to budget up to 10% over the estimated figures for expenses and revenues. This will help ensure that your firm is adequately prepared for any unpredictable event that may occur during the coming year.
The uncertainty of the times has resulted in some budgeting trends that reflect a legal environment still recovering from a pandemic. These include:
In this digital era where information is just one click away, you’re never alone when it comes to accessing knowledge and expertise in areas that benefit your law firm. Numerous budgeting tools are readily available and specifically customized for the legal profession. Access these tools for assistance with the budgeting process or reach out to an accounting professional for help with creating a solid budget that will put your law firm in the best possible financial position for 2022.
Legal operations is everything that it takes to run a law firm aside from the actual practice of law. It encompasses strategic planning, legal project management, financial oversight, and legal industry expertise.
The goal of legal operations is to improve law firm performance. Legal operations experts cover a broad range of fields, including data analytics and reporting, engineering, finance, and marketing. Operations professionals work with law firm management to choose the right legal technology, identify and manage risks, and monitor compliance. And above all else, their goal is to deliver value, whether that’s through keeping costs down or increasing productivity and efficiency.[/vc_column_text][/vc_column][/vc_row][vc_row type="in_container" full_screen_row_position="middle" column_margin="default" scene_position="center" text_color="dark" text_align="left" overlay_strength="0.3" shape_divider_position="bottom" bg_image_animation="none"][vc_column column_padding="no-extra-padding" column_padding_position="all" background_color_opacity="1" background_hover_color_opacity="1" column_link_target="_self" column_shadow="none" column_border_radius="none" width="1/1" tablet_width_inherit="default" tablet_text_alignment="default" phone_text_alignment="default" overlay_strength="0.3" column_border_width="none" column_border_style="solid" bg_image_animation="none"][vc_column_text]The seemingly sage advice to “run your law firm like a business” misses the mark. Law firms are businesses. They exchange services (and sometimes goods if they’ve productized their services) for money. They also meet the standard definition of a “business,” which is an organization engaged in commercial or professional activities.
So why have so many law firms resisted the idea of acting like the businesses they are?
Some lawyers claim it’s because the law is a noble profession. But, it’s more likely that law school doesn’t teach them how to run a business. Many aren’t well-versed in financial principles. They don’t value measurements and metrics.
For too long, lawyers have focused on practice, not process. But in recent years, clients have forced law firms to take a hard look at the numbers, their productivity, and their operational efficiency. With competition at an all-time high and clients demanding better service at a lower cost, it’s essential for law firms to rethink their business model.
Enter legal operations.
In the late 1980s to early 1990s, legal operations was a fledgling concept among in-house counsel, with corporate legal departments primarily focused on managing outside counsel.
Over time, that focus shifted. By the mid-2000s, corporate law departments were starting to look to legal operations for strategic insights into their outside counsel spend and risk profile.
In the last 20 years, the role of legal operations has become much more prominent, helping organizations manage complex legal issues and retaining the services of legal service providers to drive efficiency and lower costs. These issues continue to be focal points today, along with one more: establishing a culture of continuous improvement.
Today’s clients continue to place pressure on law firms to deliver competitive pricing and better service. In response, firms are striving to maximize their resources so they can do more with less. Now, law firms have adopted much of this mindset, looking for ways to reduce costs, automate processes, and drive greater efficiencies.
The Corporate Legal Operations Consortium (CLOC) has identified 12 key legal operations functions. Though CLOC envisioned these practices would be implemented by in-house legal teams, most apply to legal operations roles in law firms today.
Here is a list of the typical functions:
All of these functions may be combined within a department, or they may be carried out separately under the oversight of a legal operations manager.
The biggest challenge that legal operations professionals face is change management. The law is a system based on precedent and law firms are no exception. Lawyers are generally change-averse and prefer to maintain the status quo. It’s hard to convince lawyers that they need to do something differently, especially if what they’ve always done seems to still be working.
Other challenges include budgeting and resource allocation. Law firm leaders are often reluctant to add budget items or headcount to new initiatives, especially if they’re still skeptical about the value that a legal operations team can provide.
Tackling these challenges will require you to establish a business case for a legal operations role or team. If you can quantify the payoff in terms of time saved (automating manual processes with technology), dollars saved (optimizing vendor pricing), and client satisfaction (knowledge sharing and more efficient staffing), you’ll be more likely to convince firm leaders that legal operations is worth the investment.
Recruiting a strong leader with a finance background, technological acumen, and legal experience, whether as a practicing attorney or as a leader in another firm, can lend the department credibility. And, of course, getting quick wins on small projects early can prove value and increase the likelihood of buy-in on more ambitious projects.
Legal operations helps law firms drive efficiency across the board.
Between timekeeping, billing, and accounting, law firms have a lot to manage financially. That’s not even including client demands for lower rates and alternative fee arrangements! Legal operations can help firms build financial models that help choose optimal fee arrangements that please clients while yielding a profit. They can also compare firm vendors and help structure competitively priced deals.
In other words, legal operations helps law firms create more value.
On the operational front, legal operations rescues overworked staff from a variety of tasks, including contract management, knowledge management, and data governance. Legal operations professionals can help firms choose the right solutions to capture and track information to ensure nothing falls through the cracks, empowering lawyers and other staff to do more with less.
Law firms are known for being reactive. But, legal operations allows firms to adopt a more proactive approach. For example, legal operations can use data analytics and reporting to predict the right course, set reasonable goals and metrics, and develop a long-term strategic plan to improve the firm’s market position.
Law firms often invest in solutions serially, looking to solve one problem at a time, but with legal operations software, the key is to find a comprehensive solution that can evolve along with your law firm.
Effective legal operations software for law firms should handle solutions such as e-billing, timekeeping, accounting, matter management, document management, reporting, and client portals. The more interconnected these systems are, the more intelligence they deliver, and the better your firm’s results will be. It’s even better if the legal operations platform integrates with other systems, allowing firms even greater insight into matters and projects while enabling seamless client service.
Comprehensive legal operations software solutions help law firms save time, reduce costs, and improve client service. Some of the ways that law firms can use legal operations software to enhance their performance include the following:
Strong law firms can use the efficiencies generated by legal operations software to differentiate themselves in a crowded market. With the right legal operations tools in place, firms can improve their client service and deliver greater value.[/vc_column_text][/vc_column][/vc_row]
Wellness is not an adjective often used to describe the legal community. Studies show that mental, emotional, and physical health issues have become more common among legal professionals as they struggle to deal with the demands of their chosen careers.
In 2019, The ABA and Hazelden Betty Ford Foundation conducted a national study on attorney substance abuse disorders. The project, which included 15,000 attorneys from 19 states, highlighted some shocking statistics among licensed, employed attorneys:
In comparison to other professions, lawyers are reportedly three times more likely to suffer from depression, according to the American Psychological Association. Additionally, the legal industry has the 11th-highest incidence of suicide among professions.
Legal professionals typically deal with numerous demands on any given day. The myriad of cases, clients, deadlines, and expectations seemingly never end.
When working in a stressful law firm environment, some attorneys feel they need to sacrifice their own self-care in order to succeed in their professions. This decision can have detrimental effects on legal professionals, potentially leading to mental health challenges and substance abuse.
The entire legal industry is notorious for unhealthy work habits. It’s no secret that attorneys commonly clock 70-to-80-hour work weeks and these practices may extend to operations and support professionals like legal secretaries and paralegals. Working this many hours leaves little room for personal time, family, physical activity, or even sleeping. It also contributes to a pattern of poor eating choices and elevated stress levels.
Studies show that the stress of working too many hours raises cortisone levels within the body, increasing the risk of stroke, diabetes, and cancer. According to a study done by The University College London, the risk of heart disease increases by 67% for people who work long hours compared to people who work a standard eight-hour day.
Another report, published in the American Journal of Epidemiology, suggests that long work hours can lead to long-term brain damage or dementia. Researchers found that middle-aged workers who clock more than 55 hours a week develop diminished mental skills at a higher rate. These deficiencies show up as short-term memory loss and the reduced ability to recall words when compared to those working a standard 40-hour week.
The ABA has started to recognize how problematic the lack of attention to individual wellness has become. In 2017, the ABA House of Delegates approved Resolution 106 which amended the ABA Model Rule for Continuing Legal Education (CLE) to include at least one hour of mental health and substance abuse credit every three years. Several states have followed suit with mandatory mental health or substance abuse CLE courses.
Wellness is not a one-size-fits-all concept because different people need different strategies to help them feel healthy and at their best. Wellness includes an improved work-life balance, better stress management, and a positive mindset that prioritizes self-care. Unfortunately, many law firm environments make it difficult for legal professionals to achieve a level of wellness. Demands for billable hours coupled with demands from numerous clients can make a work-life balance impossible.
For the individual, the path to wellness is a very personal journey. You may have to practice different strategies before finding a routine that builds positive habits within your life. There is no magic pill or secret recipe. Wellness requires a holistic approach that touches various aspects of your life to craft a more sustainable and healthy work-life balance. This may include some of the following elements:
Many law firms fail to classify employee well-being as integral to the firm’s existence, but the legal industry has a responsibility to promote wellness among its members and employees. Lack of transparency about wellness promotes the stigma that exists around attorney mental health. Firms are uniquely situated to address these issues by making wellness an aspect of their overall firm culture.
Wellness policies have become a common expectation among job seekers, so firms can better situate themselves competitively to attract new talent with these policies in place. They also promote a more enjoyable workplace, which can improve the firm culture.
Law firms need policies in place that include some of the following provisions:
In this digital age, technology has become essential to the delivery of legal services. Law firms use tech tools for a variety of reasons, including matter management, calendaring, client communications, and billing. While this reliance on technology has helped law firms improve client relations and the provision of services, it has also made the legal industry a common target for cybercriminals looking to steal valuable client data.
This increased risk has become all too apparent over the past few years, as several well-known law firms have been forced to deal with the disruptions of a cyberattack. The methods used by these criminals are becoming increasingly complex, which means that the frequency of law firm hacks will likely increase.
For this reason, law firm leaders and administrators must implement cybersecurity measures to fight this persistent threat. It is an ongoing battle that requires a consistent response.
Ransomware is often the weapon of choice for cybercriminals targeting law firms. With this type of hack, a third party takes control of a firm’s files by encrypting them and denying any access to firm members, unless a requested amount of ransom is paid.
A ransomware attack can leave an entire firm without the ability to work, which immediately decreases revenue. Additionally, the firm may face consequential damages, including:
Another common type of cyberattack against law firms involves an email phishing scam, where hackers pose as firm clients or third parties to trick employees into disclosing sensitive data or transferring funds to fraudulent organizations. Attorneys are particularly susceptible to email fraud attempts due to the personal relationships that may have with their clients. A spot-on impersonation may lower a target’s defenses, leading to significant losses.
In one infamous New York case, a law firm was successfully sued for malpractice by a client after hackers impersonated one of the firm’s attorneys to secure a fraudulent $2 million wire transfer. The attackers were able to gain access to the attorney’s AOL email account and analyze previous interactions with the client to successfully carry out the impersonation.
As you likely gleaned from the above, the financial and professional consequences of both ransomware attacks and phishing scams can be detrimental to a law firm, so it is critical to take the necessary steps at your own firm to prevent such an occurrence.
Preparation is the only adequate protection against a cyberattack. This starts with understanding the threat and the role that technology plays in reducing it. Attorneys have a duty to not only comprehend the practice law, but also the technology necessary to protect attorney-client privilege and sensitive client data. Most states specifically include this in their rules of ethics because the reluctance of attorneys to introduce technology tools into their law firms increases the chance for a breach.
By refusing to implement tech security measures, attorneys may be found in breach of their professional duty. In addition to ethical consequences, firms also face regulatory enforcement actions from the Federal Trade Commission when client data is not sufficiently protected.
However, there are steps that you can take to strengthen your firm’s protection against security hacks:
Cybercriminals capitalize on limited knowledge and bad habits. Law firms that ignore best practices and utilize weak security systems are essentially opening the door for attackers to access valuable data.
One of the most effective steps a law firm can take is consistently educating and training employees. Human error accounts for a significant number of cyberattacks on businesses. Training sessions should occur on a regular basis to educate employees about their role in preventing breaches. Regular reminders should also be a part of the training plan to ensure that these important duties remain top of mind.
When armed with the right tools, educated employees provide law firms with a strong first line of defense. By acting in a responsible manner, they help close gaps of vulnerability and provide your firm with greater protection.
A detailed audit identifies weaknesses before a breach can occur. The first step of an audit should include an inventory assessment to help your firm understand where you stand with respect to technology products utilized.
Technology consists of both hardware and software, as well as data. Hardware includes the maintenance of all computers, servers, laptops, and printers within the firm. Smart devices should also be included with hardware because they are often the vehicle through which attorney-client privilege is breached.
Taking inventory of software products involves a review of all licenses, keys, and passwords. Firms also need to make sure that all software is updated on a regular basis with the most recent versions. Outdated software is more likely to lack sufficient protection against continuously evolving cyberattack techniques.
Data inventory requires the consistent monitoring of what data is stored and how it is maintained. Law firms should consider designating a data administrator who regularly audits the firm’s data for ethical and regulatory compliance.
The second layer of the audit involves answering numerous questions about the firm’s security, such as:
Answering these questions will give law firm leaders and administrators a clear view of where the firm stands with its technology and where it still needs to go.
The services of a security expert can be useful during an audit to ensure that firm networks adequately store firm data. If employing an expert is not an option, a security consultant can also be contracted to assist with the audit.
The bottom line: law firms need to craft a security plan and implement it. Basic tools, such as spam filters, anti-spyware, antivirus programs, and network security protocols should be implemented. But your responsibility does not end there.
Many law firms often neglect their first point of contact with the outside world, which is the firm website. When cyber attackers see an outdated website, they may target the law firm under the assumption that their inadequate security measures extend to the entire firm.
Document management is another important component of an effective cybersecurity plan. Law firms maintain countless documents and files that must be handled and stored correctly. A secure document management system prioritizes the protection of files while they are in storage, as well as during transmission. A comprehensive practice management system and email encryption are two tools that law firms can use for successful document management.
A reliable backup system must also be a part of a law firm’s security plan. Cyberattacks can interrupt business in an irreversible way. A backup system helps you get back to work quicker, even in the wake of a disruptive ransomware attack.
Some law firms hire a security consultant that specializes in cybersecurity. Others contract an outside security expert to guide auditing, consulting, and implementation. Firms should include this necessary expense in their annual budgets. Firm leaders and administrators may also consider the cost of purchasing a cyber liability insurance policy for the firm.
Vendors should also be included in law firm security plans. Firms use third-party vendors for a variety of services and products, but they often take for granted that these providers are employing adequate security practices. Firms should review the security certificates of every vendor to ensure that their security protocols are up to par. Law firm vendors need an understanding of the unique importance of protecting law firm data. Their commitment to the protection of client data should match, or exceed, that of the law firm.
When law firm leaders fail to plan, implement, and enforce strict cybersecurity protocols, they are potentially exposing the firm to costly and damaging attacks. Though it will take some time and money to get adequate plans in place, when done correctly, it is one of the best investments a firm can make to deter fraudsters and keep client data secure.
DALLAS, TEXAS – November 5, 2021 – NetDocuments, the leading cloud content management platform where legal professionals do work, today announced the winners of their Inspire 2021 Partner Awards.
NetDocuments’ second annual Partner Awards recognize leading companies spanning the ISV network, implementation providers, international partner companies in Asia Pacific, EMEA, and Latin America, as well as partners across all NetDocuments business segments.
This year, the winner of the Inspire 2021 Partner of the Year Award was presented to Centerbase, a legal time & billing, accounting, and practice management platform. Centerbase is recognized for its relentless effort and understanding of the NetDocuments capabilities. Over the course of the partnership, Centerbase has been able to develop a superior integration with NetDocuments, supported by active and driven marketing of the integration, and has ultimately provided advertising of interactive updates and technical support to the thousands of NetDocuments customers. It is for these reasons that Centerbase was selected to be the recipient of this year’s award.
Rob Joyner, VP of Sales and Marketing at Centerbase, was virtually present to accept this prestigious award, “On behalf of the team at Centerbase, thank you to our friends at NetDocuments. Over the past five years, it has been an amazing partnership, we have been able to accomplish so much in the way of helping mid-size law firms. We are excited to continue the partnership and do great things in the future.”
Inspire 2021 is a virtual global conference designed for NetDocuments customers and partners. Tailored product and educational sessions; customer and partner case studies and innovation; and subject matter expertise are on display to showcase intentional innovation – innovation you can depend on and that’s inspired by legal teams around the world.
“The NetDocuments partner ecosystem has always been an integral part of our annual educational conference, and this holds true for Inspire 2021,” said Reza Parsia, VP, Strategic Partnerships, NetDocuments. “Our partners are constantly pushing the envelope to innovate and help our customers get the most out of their NetDocuments platform experience. Our second annual Partner Awards rewards this drive for “intentional innovation” and honors the ‘Partner of the Year’ across eight categories.”
The 2021 Inspired Award Winners, including all Partners of the Year, can be found online at www.netdocuments.com/inspire.
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About Centerbase
Centerbase is a cloud-based legal operations system that empowers midsize law firms to run their practice with confidence. It’s a highly scalable and configurable system that liberates legal teams from manual work by automating routine tasks and connecting them in a single collaborative workspace. Boasting a comprehensive feature set of billing, accounting, and practice management tools plus the ability to offer full-history data migrations, Centerbase has become the go-to solution for midsize law firms. For more visit centerbase.com.
About NetDocuments
Founded in 1999, with more than 3,400+ enterprise customers worldwide, NetDocuments is the legal industry’s most trusted cloud-based content services and productivity platform. Complete with state-of-the-art built-in security, compliance, and governance solutions, NetDocuments offers document management, email management, and collaboration technology complete with disaster recovery, enterprise search, and matter-centricity features. For more information about NetDocuments, please click here.
Most law firm leaders do not enter the legal industry with an accounting background, but a basic understanding is important to ensure the proper management of your law firm’s finances. Decisions about billing processes, the acceptance of payments, and trust accounting form the foundation for a firm’s financial success. Therefore, it is critical for law firms of all sizes to properly position their financial systems. It will not only save time and boost profitability but will also prevent several potentially serious compliance issues.
A lot goes into navigating the world of law firm accounting. Let’s explore some of those vital components:
Every firm is different, so identifying the best banking option depends on your specific needs and goals. The wrong bank could create financial complications for your firm and result in serious legal problems.
When choosing a bank, consider the following:
After conducting this research, you can make informed decisions about your best banking options and make plans to open the necessary accounts.
Law firms typically need a business checking account for the management of general business revenue, a savings account to set aside money for taxes or emergencies, and an IOLTA account for holding client funds in trust.
Some law firms also choose to open a money market account to take advantage of a higher interest-earning rate, as well as a business credit card for strategic practice growth.
For law firms that hold client funds in trust, the IOLTA account comes with its own set of detailed accounting rules and tasks. Noncompliance can result in severe penalties, so it is important to understand the complexities of trust accounting.
With so many different rules in place, it can be challenging to stay on top of all of them. Even still, some mistakes show up more often than others, with the most common stemming from these IOLTA rules:
As businesses, law firms must stay on top of their federal, state, and local tax obligations. The specifics of the obligations vary based on the type of practice, but most firms have a responsibility to pay the following types of taxes:
This is not an exhaustive list and firms may have a variety of additional tax obligations. As such, firms need a tax professional in their corner to help them navigate these vital responsibilities.
For firms that do not have an accountant on staff, a contracted Certified Public Accountant (CPA) can offer valuable guidance for meeting tax obligations and limiting tax liability. Accounting professionals can also help firms with financial forecasting, reporting, payroll needs, and trust accounting.
It is not an easy task to calculate legal time, so law firm payroll poses challenges that do not exist within other industries. Firm members may have varied pay structures, which requires a payroll process that offers flexibility.
Payroll accounting includes such components as:
The rise in outsourced legal work adds another layer to payroll duties. Law firms should carefully categorize employees and independent contractors for payroll and taxation purposes. Incorrect classifications could lead to fines and legal consequences.
Invoicing is arguably the most important part of law firm accounting, as it is the mechanism by which firms bill for the legal services they provide. Improper invoicing can have many negative consequences, including unbilled tasks, sporadic billing, and unpaid invoices.
Law firms can choose an independent legal billing system to handle invoicing tasks, but the most streamlined option incorporates legal billing into a legal practice management system. With these platforms, firms benefit from advantages such as simplified approval processes, tracked invoice changes, and the ability to process numerous types of fee arrangements.
Some legal practice management systems include extensive data reporting capabilities so firm leaders can quickly access financial reports with just a few clicks of the mouse.
Once the invoices have been sent out, law firms need processes in place to actually receive payments and manage collections. After all, there is nothing to manage if revenue is not going into the firm! While most firms still accept cash and checks as payment from clients, electronic payment methods have become more common within the legal environment. This requires having a system in place to accept these payments, and the choice of provider could mean the difference between accounting success and failure.
Law firms should utilize a payment processor that recognizes the specific rules that attorneys are obligated to follow. Standard payment processors typically maintain a percentage of each transaction as their fee. When these fees are deducted, it can potentially break state trust accounting rules.
Lawyer-friendly payment services provide law firms with the option of paying processing fees directly from the firm’s operating account instead of the trust account, which significantly lessens the possibility of non-compliance with IOLTA accounting rules.
Mastering law firm accounting is no easy feat. However, if you keep the above components in mind and put them into practice, in addition to following the tips below, you’ll be well on your way to navigating your firm’s finances successfully and without penalty.
The landscape of law firm recruitment is changing dramatically. Whether seeking to attract new attorneys out of law school, entice lateral hires, or retain current members, law firms are taking unprecedented steps away from tradition in hopes of engaging and keeping top legal talent.
Over the past year, many law firms have sought to entice new firm employees with signing bonuses, but these financial incentives proved to be only one piece of evaluation criteria for candidates.
When considering a move to a new firm or the merits of staying put, candidates are basing their decisions on much more than the firm paying the biggest bonus.
Conventional considerations like compensation, promotion potential, and bonuses remain part of the equation, along with some new metrics of comparison:
The social and financial challenges brought on by the pandemic created an environment where candidates are increasingly evaluating potential employers based on their reputations. They classify socially responsible firms as those that took steps to protect their employees during shutdowns. They may have cut partner compensation to maintain associate salaries or provided vast support for remote work.
Candidates view these actions as real-world examples of a law firm’s values and they factor them in when making employment decisions. They want more than a large paycheck. They want to work for law firms that align with their own values and beliefs.
Law firm candidates have also become more cognizant of the culture that a firm offers. With the added stress of the last couple of years, candidates want an environment that makes them feel valued for more than their billable hours. They seek opportunities with firms that promote a healthy work-life balance and prioritize the mental health of firm members.
Today’s candidates do their homework, researching “Best Places to Work” lists and searching social media for insight into a firm’s culture. Working within a positive environment has become top-of-mind among law firm prospects. They have a new appreciation for the things they find most important and they are willing to hold out until they find them.
It took a global pandemic, but the legal industry has finally accepted the value of remote working arrangements, and even with the return of some sense of normalcy, many candidates are simply unwilling to return to a traditional office setting with traditional office hours.
According to an American Bar Association (ABA) survey, the vast majority of attorneys report feeling this way, with no desire for pre-pandemic office arrangements.
Of those lawyers surveyed, 36% stated their preference for the ability to set their in-office schedule from week to week. With this greater demand for remote work, candidates prefer law firms equipped with the technology to offer these options.
Law firm leaders and administrators are taking note of these candidate expectations and are making adjustments to their recruitment and retention efforts. A look at trends in the general legal landscape reveals increased usage of the following strategies:
Even the most traditional of law firms have recognized how critical flexibility has become in attracting quality candidates. That does not mean that 100% remote options need to be made available for every candidate. Instead, firms can craft various hybrid options to meet this need, which might look like two days of remote work and three days in the office each week. It may also mean that some attorneys work mornings in the office and remotely every afternoon.
The traditional 9-to-5 has quickly become an unpopular option. Legal professionals have gotten accustomed to spending more time with their families and having more control over their work-life balance. By offering at least some level of flexibility, law firms better leverage initiatives to recruit and retain talent.
Flexibility offers an additional value. Remote working arrangements can substantially widen the candidate net for new hires. Geographic limitations are lessened so that firms can seek talent from broader markets with lower salary averages.
Corporations are not the only entities ramping up diversity efforts. Law firm leaders are also recognizing the value of these initiatives. Internally, it creates a more enjoyable workplace where attorneys from various races, genders, abilities, and sexual orientations feel valued. Externally, a significant percentage of candidates consider the diversity of a firm when making employment decisions.
The customary practice of solely recruiting from top law schools ignores a vast market for incredible and diverse talent. Along those same lines, it may not benefit firms to only seek lateral hires from the biggest law firms. Substantial talent can be found at legal practices of all sizes and law firms are beginning to recognize that fact.
Law firms use Ideal Candidate Profiles (ICPs) to identify qualities, characteristics, and achievements they desire in a potential hire. These tools have been used for years, but recent changes within the legal recruitment realm have brought about a need for adjustments.
Law firm recruiters are taking a serious look at their current ICPs and making changes to meet this new normal. Consider criteria such as technical skills or a proven track record of success working virtually.
Stress, overwork, and burnout have long been associated with the legal community. While some industry conversations have taken place over the years about the dangers of these working habits, discussions about employee mental health really began to take center stage during the early days of the pandemic.
In response, many law firms have implemented programs aimed at preventing burnout and promoting mental wellness. Tools like regular check-ins, free access to mental health resources, and greater flexibility are being used to demonstrate a commitment to the emotional, wellness, and development needs of firm personnel. Recruiters should highlight these initiatives to attract potential candidates, and firms can leverage them to keep their top talent happy within the firm.
In order to remain competitive in today’s legal recruiting environment, firms need to step outside of the traditional sign-on bonus and instead look at other benefits of interest.
By offering flexible work arrangements, improving diversity initiatives, reevaluating ICPs, and prioritizing mental health, you put your organization in the best possible position to attract and retain top talent.
Centerbase, a legal practice management software company that provides mid-sized law firms with a cloud-based platform to streamline operations, is pleased to welcome Bob Freeburg as Chief Technology Officer.
The hire follows Centerbase’s recent growth equity investment from Mainsail Partners and underpins the company’s commitment to aggressive growth and strategic expansion. Following a banner year in 2020 and ongoing momentum year-to-date, Centerbase has continued to invest heavily in its core product and its people while exploring feature and practice area specific integrations.
Those investments and enhancements are what attracted Freeburg to Centerbase. “It’s an exciting time to be joining the legal technology industry,” says Bob. “I look forward to learning more about the customers that trust Centerbase to run their firms, learn from them how we can do better, and continue moving the current Centerbase product features to the next level to serve our clients more efficiently.”
A performance-driven leader with over 25 years of innovative technology experience, Freeburg comes to Centerbase from Curantis Solutions, where he started as Chief Technology Officer in March 2017 before being promoted to Chief Operating Officer/EVP of Technology earlier this year.
At Curantis, a cloud-based hospice and palliative care management platform, Freeburg was responsible for technology, product delivery, operations, and account management functions. Bob was involved with filing four patent applications for newly developed technology. In the role, he implemented key processes gaining significant experience working with sensitive information in a cloud environment.
Similar to the legal industry Bob will be serving at Centerbase, he worked with clients at Curantis to deliver a modern cloud platform solution. “Although this can be challenging, (it) presents an opportunity to help clients achieve operational efficiency when this transformation is done right,” says Bob.
Prior to Curantis, Freeburg spent the majority of his career at Parago, a rewards-based incentives company. He served as a key member of Parago’s (Blackhawk Engagement Solutions) executive leadership team and was instrumental in growing the business from a startup to acquisition by Blackhawk Network in October 2014.
As Chief Operating Officer and Group Vice President for Technology at Blackhawk Engagement Solutions, Bob managed a technology and operational scope encompassing four incentive companies acquired by Blackhawk Network.
Parago was included on the Dallas Business Journal’s “Best Places to Work” list in 2009, in addition to the “Fastest Growing Businesses” list in 2010.
In 2010, Bob was also named a CIO 100 award winner for his achievements in delivering innovative technology solutions while improving client satisfaction.
Freeburg graduated from Baylor University with a B.A. in Computer Science, working in consulting and technology delivery roles at Arthur Andersen LLP, Excel Communications Inc., and Teleglobe Communications prior to joining Parago’s executive leadership team in 2000.
It has been a challenging couple of years for the legal industry, requiring law firms to make unprecedented administrative shifts.
For many firms, business interruptions resulted in financial challenges that left leaders hesitant to invest in additional technologies. Far too many uncertainties remain and leaders recognize a need to be cautious with spending decisions.
Even with this reluctance, you can leverage legal technologies to your advantage by taking a critical look at your current usage and assessing what will be needed in the foreseeable future.
Every firm, regardless of size, can maximize its current technologies, but it takes strategy and analysis to make that happen. With evaluation, training, identification, and planning, you can get the most out of your current systems.
The first step for maximizing your current law firm technology is an evaluation of existing systems and how they are benefitting your firm.
Many firms implement technologies with a “set-it-and-forget-it” mentality without an ongoing evaluation of utilization, but important questions need to be asked on a regular basis, such as:
Technologies like legal practice management and legal billing software offer users a variety of features related to various aspects of law firm management. They also routinely introduce new features as innovations develop. One legal practice management software may include more than 20 features relating to everything from timekeeping to document management. With so many options, it's quite possible that many law firms only use a portion of what these platforms have to offer.
You should review each of your current technologies and their individual features. That information should then be compared with your firm’s needs to ensure that each technology is being utilized to its fullest potential. Upon doing so, administrators may ultimately find no use for additional technologies.
Another boundary to maximizing current legal technologies is a lack of usage among law firm personnel. There can be any number of reasons behind these discrepancies, including a lack of proper training, discomfort with new technologies, or an unwillingness to change traditional processes. Whatever the cause, firms can maximize current technologies by identifying usage obstacles and addressing them.
A technology analysis may reveal that some platforms are no longer vital to a law firm’s success. For instance, a recently implemented software may offer a feature that law firms once relied upon another platform to provide, making the older software no longer necessary.
Analysis may also reveal that a firm is still paying for technology acquired years ago even though it is no longer being utilized by firm members. This may occur because payments are automated or the firm administrator may routinely approve payment with no knowledge that staff members have stopped using the system.
Under both of these circumstances, firms may be able to find substantial financial savings by leveraging the most useful software and ending subscriptions for unnecessary platforms.
Inadequate training creates another impediment to maximizing legal technologies. Employees cannot effectively use technologies if they do not understand how to navigate them. Law firms need systems to evaluate the employee skill base for each of its technologies. When deficiencies are identified, a training strategy should be implemented that addresses the need in a way that empowers employees to leverage technologies.
One of the first determinations that a firm administrator should make is from what source the training will commence. That includes who will conduct the training, the time commitment, and how much money will be allocated. The most cost-effective and timely resources for employee training are often found with the technology provider, where employee training programs may be included within the subscription packages. This is a useful resource for training staff members on a specific technology platform.
Training takes time and, especially in a law firm setting, time is a precious commodity. Administrators need to determine how much time will be set aside for necessary training, as well as how it will be managed among employees. Firms must be cognizant of their members’ already-full plates and develop a training schedule that does not overwhelm employees. Details such as training techniques and rollout methods should also be considered under the training umbrella.
The final consideration for the training piece is the cost of the training. Firms must recognize this expenditure as a necessary expense for maximizing current technologies. It is an investment in the firm’s growth that pays off with greater efficiency and increased productivity.
Part of assessing current technologies is identifying trouble spots that may be getting in the way of full maximization. The problem may lie in employee training, but the following impediments may also be at play:
Firm administrators should acknowledge these concerns and find ways to address them. Messaging is key when dealing with this type of pushback. Leaders need to understand the benefits of legal technology and how it can better position the firm for financial success.
After completing a detailed assessment of current technologies, you will have a more accurate view of your firm’s needs moving forward. You may determine that weaknesses identified during the analysis are best handled through new technologies, or law firm forecasting may demonstrate a future need that will require a different tech specialty.
Armed with the information gathered from evaluation, training, and identification, you can thoughtfully plan and make decisions about moving forward while also maximizing the firm’s current technical resources.
