In most law firms, efficiency, productivity, and profitability are measured in ticks of the clock. Yet while time tracking is a law firm’s lifeblood, it’s also the bane of timekeepers’ existence. Many attorneys still track their time manually and wait till the last minute to figure out where all the hours went. By that point, memories have faded, and time is lost — not to mention how difficult it is to track time across multiple applications and devices.
Fortunately, it doesn’t have to be that hard. And while many legal practice management software platforms offer basic time-tracking features, leading solutions offer greater functionality that takes the pain out of tracking time. Let’s look at the five advanced timekeeping features that can help you capture more billable hours and elevate your law practice.
For accurate billing, you have to capture all of your billable hours. But that’s easier said than done in a world where attorneys and other timekeepers face constant interruptions, switch rapidly between tasks and matters, and work from places other than an office. With the constant time pressure on attorneys, paralegals, and other timekeepers, there’s hardly enough time in the day to get the work done, much less write down every task they complete.
That means by the end of the week (and sometimes month), timekeepers have to resort to piecing together their hours, a painstaking process that leads to lost time in two ways. First, attorneys often can’t remember all of their time billed in a week (much less month), and attorneys then have to waste precious time they could allot to billable matters reconstructing their timesheets. Research shows that law firms lose up to 30% of their fees when they don’t capture time concurrently with their work.
Advanced platforms include automated features that help timekeepers track every last billable second, turning timers on and off automatically when they detect billable activity. Leading platforms also add the ability to convert every automated time entry into a billing entry, so timekeepers won’t forget which time entry should be allocated to which matter. Data shows that an automated timekeeping feature helps law firms capture up to 200 more billable hours every month.
Timekeeping should always be top of mind for attorneys. But sometimes starting and stopping times can get lost amid the busyness of the day. And when attorneys are searching for contact information for a client or reviewing versions of a contract, there’s no visual reminder to keep track of their time.
Top legal practice management platforms offer a global timer available no matter where you are in the app and regardless of whether you’re working on a desktop, laptop, or smart device. A global timer ensures that time entries are synchronized across all pages, so timekeepers don’t lose track of time when they move to different parts of the platform.
Switching from task to task saps valuable minutes, even when you’re just tracking your time. Research from the American Psychological Association shows that “shifting between tasks can cost as much as 40 percent of someone’s productive time.” So, when a timekeeper switches from drafting a pleading or client letter in Microsoft Word to your time-tracking system, they are losing precious seconds at a minimum — and more likely minutes.
Recording time shouldn’t disrupt your workflow; it should seamlessly integrate into your daily tasks. Leading legal practice management solutions integrate directly with Microsoft applications where timekeepers spend the bulk of their time, including Outlook and Word, enabling you to track time while drafting documents or sending client emails. Instead of requiring timekeepers to enter their time manually, integrations make automated time tracking a natural part of your workflow.
Every client conversation matters — and so does the time you spend talking with your clients. Unfortunately, many attorneys have to rack their brains trying to remember how much time they spent on every conversation, and that can be hard to remember and record manually when you talk to multiple clients every day of the week.
Automated time capture features can automatically record the time spent on every call plus allocate each interaction to the right matter. Tying conversations to matters increases billing accuracy and helps avoid overbilling and underbilling, reducing the risk of client disputes, improving client trust, and raising timekeeper productivity. Leading platforms also offer secure storage for all client communications sent through their platform or device, so timekeepers can reflect back on every interaction when putting together their bills.
Today, few attorneys are confined to working at their desks. But manual timekeeping methods and online software have typically tethered attorneys to inflexible timesheets that they must manage in their office.
Time-tracking platforms with mobile apps allow timekeepers to track time anywhere, whether they’re at their desk or on the go. Mobile functionality caters to the dynamic, mobile nature of work today and ensures that attorneys have the flexibility to track time in the way that best suits their work style.
For law firms, time is money. You need a solution that optimizes your law firm’s ability to capture time and increase your bottom line without disrupting your timekeepers’ workflow. With the right platform, you can transform timekeeping from a cumbersome task into a strategic advantage for your law firm.
If your law practice management platform isn’t making timekeeping as easy as possible with the features described above, it’s time for a change. Check out a free demo of Centerbase’s legal time-tracking software and start capturing more billable minutes.
Efficiency and precision are the hallmarks of legal billing software. Having the right tools can make the difference in streamlined processes and faster collections.
But while most legal billing software can help you accomplish these goals, top-of-the-line legal billing tools go above and beyond with a comprehensive suite of features that transform the way your legal professionals handle your law firm billing.
Here are the key features to look for in a game-changing legal software solution.
Precise timekeeping is crucial for legal professionals, and top-notch billing software recognizes the significance of accuracy. From tracking billable hours to capturing every minute detail, top software ensures that timekeeping is not just a task but an art form.
The right technology makes it easy to bill directly from the legal tasks being completed, whether that’s drafting a document, sending a text, having a phone call, or responding to an email — even when attorneys are out of the office. With these features, automated time tracking helps law firms eliminate time leakage and inaccuracies.
Good billing software automates routine tasks, but the best billing applications take it to a whole new level. Leading legal billing software integrates robust automation capabilities, reducing manual input and minimizing errors. From time tracking to invoice generation, automation ensures that your billing processes are not only efficient but also error-free.
For example, some platforms automatically create invoices for clients billed biweekly or monthly, pulling the data from a particular time range and eliminating the need for manual entry. These platforms can also send automated reminders to clients when payment is overdue, eliminating the need to chase payments. Finally, advanced tools track edits to pre-bills, then automatically forward them through the approval chain, so your bills are more accurate while wasting less time and paper.
Transparency builds trust. Instead of the traditional manual process of printing bills and stuffing them in envelopes, modern law firms have switched to online billing platforms. These platforms strengthen client relationships through clear and comprehensible billing practices.
For instance, top software provides a secure portal where clients can have 24/7 access to view, pay, and download their bills. It can also help reduce the need to answer client calls and emails about billing questions with detailed breakdowns of charges, making it easy for clients to understand the services rendered and to review their payment history.
While good billing software may support various payment methods, exceptional platforms go the extra mile by offering seamless online payment options, including ACH, credit cards, recurring payments, and more. Leading legal software platforms allow clients to view and settle invoices with just a few clicks, providing unparalleled convenience.
Integration with tools such as LawPay lets clients receive bills in their email inboxes and allows you to check the status of the email: whether it’s been ignored, read, or paid. This feature not only accelerates the payment process but also enhances overall client satisfaction. Additionally, it can ensure that funds are allocated to the right trust account so you don’t have to manually record each payment.
Compliance is a non-negotiable aspect of legal billing, but we all know how complex billing can be. Each client has specific preferences and requirements for how they’re billed, whether it’s an alternative fee arrangement, special discount, or unique invoice template. Then there are also the headaches of split billing, which can be incredibly difficult to track.
Leading legal billing software makes it easy for timekeepers to customize billing templates for each client and to split bills between different payors. Top software also incorporates LEDES (Legal Electronic Data Exchange Standard) and LSS (Legal XML Standard) codes, making it easy for firms, insurance companies, and other third parties to track legal work by task. Top platforms have built-in templates that make creating invoices in the LEDES or LSS format simple.
Good billing software may generate basic reports, but the best software takes reporting to new heights with centralized reporting capabilities and helps eliminate the silos that often exist between billing, accounting, and practice management. Advanced legal billing software provides a unified view of financial data, allowing law firms to analyze performance, track revenue, and make informed decisions all in one platform.
More advanced billing software offers easy-to-read reporting templates and dashboards for quick review plus unlimited ways to slice and dice your firm’s data with custom reporting that includes complex features like pivot tables. With these tools, partners can assess matter budgets, marketing teams can determine where to allocate advertising funds, and accounting professionals can calculate sales and other applicable taxes.
Legal billing software is no longer a luxury; it’s a necessity. But you don’t need to settle for a billing platform with bare-bones features that creates more work — and more headaches — for your timekeepers, accountants, and billing team.
Make sure your legal billing software offers these features. If not, sign up today for a free demo of Centerbase and discover how exceptional legal billing software can revolutionize the way you handle billing and position your law firm for success.
Accounting is one of the most tedious and stressful parts of running a law firm. Thank goodness there’s technology to handle some of the most burdensome tasks. If you’ve already got a practice management application that handles your accounting, it is taking care of every task it possibly could? Is it maximizing your time? If you aren’t sure whether you have the optimal accounting software for your law firm, or if you’ve had your current solution for a while and aren’t sure whether it’s the latest and greatest option, check out the five essential legal accounting software features below and compare it with your law firm’s technology.
Using multiple systems for accounting, billing, and invoicing hampers productivity and leaves your firm vulnerable to mistakes from users manually inputting data. Top-tier legal software seamlessly integrates general ledger firm and trust accounting with timekeeping, billing, and more.
Fully integrated accounting ensures that your accounting operations are not only highly efficient but also remarkably accurate. The software automatically recognizes your data, eliminating the need for manual data entry and reducing the risk of errors.
Leading law practice management platforms allow you to track your bank accounts, operating accounts, and related information in one central place. With fully compliant trust and firm accounting, you can monitor every dollar moving in and out of your firm without fear of penalties. A centralized approach provides a comprehensive view, streamlining financial management.
In these tools, you can also generate detailed accounting reports in seconds. Top legal software has built-in budget, trial balance, profit and loss, and general ledger reports. This feature allows you to filter and view your accounting data with a single click, providing valuable insights into your financial performance.
These platforms also allow you to gain insight into firm and client financials at a glance. Their dashboards will populate with customized views that allow you to see overdue bills, deposits, unbilled expenses, outstanding vendor bills, and more, saving you time and clicks. Better yet, advanced legal accounting software allows you to control access permissions, so you can restrict users and groups from editing, viewing, or sharing specific categories of data, including financial reports, billing rates, account balances, and more.
Clients often expect firms to manage multiple trusts and retainers for a single matter. Top legal software rises to this challenge by enabling easy management of multiple trusts and retainers under one or many matters. This feature enhances efficiency and meets the modern service expectations of clients.
With modern legal accounting software, you can track multiple IOLTA accounts efficiently by automatically assigning accounts for each client trust. This feature provides visibility into the flow of money in and out of your accounts, ensuring accurate and transparent financial management. These tools also perform automatic three-way trust reconciliations, comparing your bank balance to your trust ledger and to individual client ledger balances, improving compliance with state bar requirements and IOLTA best practices.
Top legal software automates the recording of client payments. Once a payment is deposited, it’s instantly reflected in your accounts and financial statements, making your payment processes more accurate and efficient.
These systems also streamline client funds management by automatically accounting for trust/retainer funds. You can set a replenishment threshold that automatically notifies clients when their retainer funds are running low and then auto-apply replenishment funds to bills.
Some tools even have functionality that identifies matters with accounts receivable balances and available funds, allowing you to quickly create bill payments. The software facilitates smooth transactions, from identifying available funds to writing checks from your IOLTA to the operating account.
Accounting accuracy is paramount for any law firm. Top legal software incorporates double-checking accounting security to limit human errors. These systems flag entries that don’t reconcile with the rest of your data, keeping your accounting data accurate, consistent, and audit-ready.
If you accept credit cards, and you definitely should to meet client expectations, your software should not only integrate with tools like Plaid that help you add, match, and reconcile credit card transactions, but it should also ensure the payment processing service fees are properly allocated to your firm’s operating account rather than the client’s trust account to avoid noncompliance with IOLTA accounting rules.
While basic law practice management systems can handle fundamental accounting tasks, investing in top-tier legal software unlocks advanced features that elevate efficiency, accuracy, and compliance. The comprehensive financial management capabilities that leading legal software offers streamline operations and empower law firms to navigate the complexities of modern legal accounting with confidence.
Ready to upgrade your legal accounting practices? Contact us for a free demo today.
Strategic financial planning is essential to ensure firm stability and growth. Modern law firms need precise financial data to target opportunities to improve their bottom line and set them up for success, all of which can be accomplished with industry-leading law practice management software (LPMS).
Here are five steps to optimize your law firm’s financial planning.
Take the pulse of your firm’s financial health by reviewing your financial statements from your LPMS. Automated, detailed income statements and balance sheets save time and reduce the risk of errors associated with manual data compilation. Reviewing financial and performance reports can help you identify areas of concern so you can take proactive measures to address potential issues.
The most accurate records are found in an LPMS that integrates timekeeping, billing, and accounting data all in one platform. Integration helps firms avoid double-entry recordkeeping between multiple software applications and ensures data congruency across the entire system: if you enter data once, it populates everywhere.
Leading LPMS platforms also integrate general ledger firm accounting and trust/retainer accounting in one platform. For example, Centerbase’s accounting tools double-check all of your client and firm accounts and complete a three-way reconciliation of your trust accounts, comparing your bank balance to your trust ledger to the sum of your individual client ledger balances, keeping you compliant with IOLTA best practices and state bar requirements.
Conduct a comprehensive assessment of the financial objectives you set for the firm in the previous year. Review your progress against goals, examining aspects such as unexpected expenses, marketing outcomes, and shifts in advertising costs. A detailed analysis enables informed adjustments to your business strategy for the coming year and helps you adapt to changing market dynamics.
Your LPMS likely has features for setting and tracking financial goals that allow you to monitor your fiscal performance in real-time. Leading LPMS platforms give you easy access to key metrics with customized dashboards and reporting that allow you to quickly evaluate whether you are meeting their financial objectives and make data-driven adjustments.
After scrutinizing whether you met last year’s goals, it’s imperative to update your firm’s budget for the upcoming year. Consider any changes in the business landscape, including new expenses or variations in revenue. Smart resource allocation and accounting for unforeseen expenditures are critical to maintaining financial stability.
Your LPMS can help you create, manage, and update budgets seamlessly. Top platforms integrate with other financial tools that allow you to adjust budget allocations based on changing circumstances, ensuring that your budget accurately reflects your firm’s financial priorities.
Understanding incoming and outgoing cash and taking preemptive steps to address potential cash flow challenges are imperative. LPMS makes it easy to track client payments, invoicing, and expense management in real-time so you can take a constant pulse on your cash flow. This data can help you negotiate extended client payment terms and manage expenses more effectively.
Identifying opportunities to reduce costs is integral to enhancing net revenue and overall profitability. Law firms can explore various strategies, including adopting more cost-effective solutions and streamlining operational processes. Your LPMS can identify areas where you can optimize costs. Check your software’s expense tracking features to analyze spending patterns and identify opportunities for negotiation with suppliers. A detailed breakdown of expenses can help you make informed decisions on cost-reduction strategies.
Finding new ways to boost your firm’s revenue can be difficult, but data from your LPMS can highlight the way. LPMS with robust profitability reporting tools can help you track profitability at the individual, practice group, office, and entire firm levels to pinpoint how to improve your firm’s financial performance. Based on your results, you may want to expand your firm’s service offerings, target new client demographics, or revisit pricing structures.
LPMS with advanced automation features, such as automated time capture, can help ensure that you are maximizing your attorneys’ billable hours. This software can also help you accelerate invoicing and follow up with slow-to-pay clients, improving your revenue stream.
Engaging the services of a professional accountant or financial advisor provides valuable insights and ensures that financial decisions are grounded in expertise. Your LPMS is a collaborative platform where financial professionals, such as accountants or financial advisors, can access relevant financial data. Centerbase offers accountants a free login to help with end-of-year audits.
Strategic financial planning ensures modern law firms run like a business. Following these tips and optimizing your use of your LPMS can position your firm for sustained growth and profitability.
Check out Centerbase’s robust accounting and financial management features to learn how we can help you strengthen your law firm’s financial performance.
As the year’s end approaches, it’s time for law firms to close their books and start end-of-year audits. This annual task ensures that accounts are balanced and sets the stage for a financially sound start to the new year. However, this process can be stressful if your law firm doesn’t follow accounting best practices.
Here’s a step-by-step guide that will help your law firm sail through the audit process. (You can also download our handy end-of-year accounting checklist for law firms here.)
Review and organize all financial records, including invoices, receipts, bank statements, and expense reports. Ensure that all transactions are accurately recorded and categorized throughout the year to maintain a real-time overview of your firm’s financial health.
Check whether billable hours are up to date. Nudge your attorneys and other timekeepers to get their time in regularly as you head into the holidays. Automated time capture can make it easier for your timekeepers to stay on top of their billables.
Run your accounts receivable reports to understand what amounts are outstanding. These reports can help you determine what amounts to chase down and what to write off.
Develop a comprehensive list of clients with unpaid invoices, including their name, matter number, amount owed, and date overdue. Prioritize invoices for action, starting with the most recent unpaid ones. The odds of collection decrease with time, especially when you’re trying to collect over the holidays. Start reaching out before Thanksgiving to clients who have been historically slow to pay outstanding balances.
We recommend starting the collection process by sending reminders to clients regarding their outstanding balances. If you aren’t already, accept online payments to make it easier for clients to pay you in just a few clicks.
For aged invoices, consider offering clients the opportunity to settle a portion of the debt in exchange for forgiveness of the remaining balance. You may also want to set up a payment plan for clients who might need another quarter or two to pay your law firm back in full.
Review all expenses your firm incurred throughout the year. Verify that these expenses are accurately recorded, categorized, and supported by proper documentation. If you have any outstanding debts with vendors or contractors, settle them before you close your books.
Update records of your firm’s fixed assets. These long-term assets have a usage life of longer than a fiscal year. Some examples of fixed assets are new laptop computers, software, and office furniture.
Run depreciation calculations for these assets using your accounting software. You may be able to write off this depreciation as a tax deduction.
Review and verify all payroll tax withholdings and payments. Make sure you accurately report these taxes to federal and state authorities.
Verify and update employee and contractor records for W-2s and 1099s. Confirm that all necessary information is accurate.
After you have finalized and entered all of your revenue, expenses, and data into your financial systems, run the following financial statements:
After you record all revenue and expenses, perform bank reconciliations to ensure that all financial records line up with bank statements. Investigate any discrepancies thoroughly.
A best practice is to reconcile your statements monthly and as soon as bank statements arrive. Otherwise, your law firm will need to contend with 12 months of bank statements in a short period, making it more challenging to identify errors.
Additionally, many jurisdictions require law firms to reconcile client trust accounts at least quarterly, if not monthly. You should still complete year-end trust account and retainer reviews. Your annual review is an opportunity to double-check reconciliations done throughout the year and correct any mistakes. The ledger sheet for each client’s trust account should line up completely with the corresponding bank statements.
Also review client retainer balances to determine which retainers need to be replenished. Ensure that all earned funds have been appropriately transferred into operating accounts from retainers held in trust.
After you have finalized and studied your year-end financials, close your books. You may want to set a lock date to prevent future changes plus a password to limit access.
The next step is to review and adjust your billing and accounting practices based on what you learned. For example, your data will show whether you need to adjust your time tracking and billing practices to ensure that all timekeepers record their tasks and send out bills on time.
The best way to prepare for the end-of-year audit is to stay on top of your firm’s accounting all year long. By following these best practices, your firm won’t build up problems over the year.
Stay tuned for our next blog, where we’ll explore how law firms can financially prepare for the new year. In the meantime, contact us to learn how we can help you close the books on this year.
Agile, streamlined processes are what modern law firms need to effectively handle the full gamut of activities required to take a matter from client intake to paid in full. . Firms are under constant pressure to optimize their workflows, reduce manual errors, and maximize billable hours. Technology can address these challenges. But do you have the right technology to be effective — meeting client, staff and attorney expectations?
That depends. Have you embraced workflow automation yet? To get ahead of the curve, you’ll want to look into law practice management systems that offer more than out-of-the-box solutions — you need workflows personalized to your law firm’s needs.
Some workflow automation is better than none, right? Well, it depends. Although the standard workflows that come with some legal practice management software can be convenient and save time, they fall short of custom workflows in several critical ways.
Out-of-the-box workflows follow a one-size-fits-all approach, assuming all law firms have similar processes. However, a generic workflow might not work for different practices because, for example, criminal defense workflows differ markedly from those of a real estate firm. Pre-built workflows might miss steps critical to your practice or include irrelevant steps that can lead to inefficiency and redundancy.
Generic solutions can also hurt adoption. Employees are more likely to engage with technology when it aligns closely with their daily tasks. Out-of-the-box workflows might not resonate with lawyers and staff, leading to low adoption rates. When users don’t fully embrace automated processes, your firm won’t realize the full value of your investment in technology.
A personalized approach to workflow automation can significantly enhance the efficiency of a number of law firm processes. Here are just a few examples:
Workflow automation, especially when personalized, helps law firms work the way they want, and do it faster and more efficiently. By automating tasks like client intake and billing, law firms can reduce errors, accelerate results, and enhance client satisfaction. And, beyond saving time and boosting profitability, customized workflows help firms work the way they’re used to, encouraging adoption and sustaining the usefulness of the software for the firm.
Get a demo today to discover how Centerbase can customize workflows to meet the needs of your law firm.
Let’s face it: there isn’t enough time in the day for attorneys and staff to complete all the work that has to be done in a law firm. That’s why so many firms have turned away from manual processes toward law firm management software.
But not all legal practice management software platforms are created equal.
Almost every platform has basic features, including collecting client information, checking for conflicts, storing documents and templates, recording billable hours, tracking expenses, and managing invoicing.
Industry-leading law practice management software is different. Not only does this software take manual work off your plate, but it also streamlines the practice of law, improving productivity and smoothing operations.
Here are just some of the many ways that advanced legal technology can help your law firm simplify operations and optimize its overall productivity.
Too many law firms have multiple systems to corral their data and documents, including client details, case documents, emails, and more. Advanced software platforms centralize information, allowing firms to store and manage all client and matter-related information in one place, from client lead through intake, matter creation, invoicing, and payment. No more clicking tabs to piece matters together. Plus, using a single repository for the entire client lifecycle eliminates the redundant work of maintaining data across multiple tools.
Users can create, track, and organize cases, manage deadlines, assign tasks to team members, and send conflict checks and bills from a matter, ensuring everyone is on the same page regarding case progress and upcoming deadlines. Version control and audit trails help maintain the integrity of legal documents, ensuring that the latest versions are always accessible.
Many timekeepers don’t record their billable hours as they work. When they record their billable time days later, they lose up to 50% of their hours.
Market-leading legal software offers automated time capture that automatically records time for every minute spent on a matter, including phone calls, emails, and texts, even when you’re away from your desk. Leading platforms also coordinate time entries with matters, expediting bill creation and improving billing accuracy.
Advanced platforms enable law firms to automate repetitive tasks, such as document assembly for frequently used documents, client intake, and billing. For example, firms can automate workflows that send client reminders and follow-up emails for overdue invoices.
And configurable billing workflows can be customized to match your specific billing requirements including approval workflows. This flexibility ensures that the billing process aligns seamlessly with your needs, reducing the time you spend on manual adjustments and reviews.
Online invoicing and billing helps you meet client expectations for a seamless customer experience while shaving weeks off your billing cycle. Automated billing solutions like ePre-bills help your firm review, approve, and send out bills up to 20 times faster. Plus, solutions that integrate time and expense tracking make it easier to capture billable activities, costs, and expenses, reducing the time spent manually reconciling hours and expenses.
On the client side, leading platforms offer self-service portals that allow clients to access electronic invoices and make online payments. This convenience not only enhances the client experience but also accelerates the payment collection process. Clients can ask questions and make payments seamlessly, reducing the time spent on follow-up calls and emails.
The practice of law is complex enough — there’s no room for additional chaos. A commitment to leveraging law practice management software to its fullest potential can transform how your law firm operates.
Get a free demo to learn how Centerbase can help you hit your productivity and profitability goals in one fell swoop.
Written by Robin Neill
More and more law firms are recognizing how important it is to manage themselves like a business to survive in today’s competitive market. Businesses operate with efficiency, strategic planning, and a keen eye on the bottom line — principles that law firms can adopt to enhance their operational effectiveness. By embracing business management practices such as budgeting, law firms can optimize their resources, streamline processes, and invest in technology to improve their service.
A budget provides a structured roadmap for financial stability, strategic decision-making, and sustainable growth. Creating a law firm budget requires careful planning, collaboration, and attention to detail. Here are seven steps that can help your law firm create an effective budget.
Budgeting shouldn’t be a last-minute task. Law firms should initiate the budgeting process well in advance, ideally in the third quarter. Starting early ensures firms have ample time to assess their current financial standing, analyze past spending patterns, and anticipate future costs.
A fundamental step in budgeting is examining the firm’s profit and loss (P&L) statement from previous years. By comparing actual expenditures with previous years’ data, law firms can identify trends and patterns.
Areas to focus on include salaries and rent, which tend to be the largest expenses in a law firm budget. Don’t forget to consider inflation.
Setting clear, measurable, and realistic goals is fundamental to the budgeting process — and those goals must align with the firm’s overall strategic objectives. Whether the aim is to sustain current levels of success or to expand to new locations or practices, having a well-defined vision guides the budgeting process effectively.
For instance, a law firm planning to increase its partner count from 10 to 20 in the next year needs to account for higher advertising costs, additional attorney salaries, and potential increases in professional dues and liability insurance.
Successful budgeting necessitates collaboration between key stakeholders. This includes financial experts, managing partners, human resources professionals, and accountants. Each participant brings a unique perspective to the table, ensuring that the budget addresses all aspects of the firm’s operations.
Regular consultations and brainstorming sessions with these stakeholders can provide invaluable insights and foster a culture of financial transparency within the firm.
While analyzing the P&L statement, law firms often overlook certain unexpected costs. Items such as professional liability insurance, litigation expenses, or regulatory compliance costs can fluctuate, impacting the budget unexpectedly. By accounting for these variables and having a contingency fund, firms can avoid financial strain when unforeseen expenses arise.
Recognizing that employees are a firm’s most valuable asset, law firms should offer a competitive salary and benefits such as health insurance, retirement plans, and professional development opportunities. A comprehensive benefits package can attract top talent and ensure staff retention and satisfaction. Additionally, employee well-being initiatives such as mental health support programs or flexible work arrangements can enhance productivity and foster a positive work environment.
Law firms must factor in the costs of these employee benefits while budgeting. Firms should also take into account salary increases, such as cost-of-living adjustments, to stay competitive in the market.
Law firms should invest in advanced legal software with accounting features to track expenditures efficiently. These legal technology tools provide detailed reports on profitability based on various parameters, such as attorney performance, case type, and office location. Implementing artificial intelligence-driven tools can deliver insights into future financial trends and assist firms in making proactive budgeting decisions.
Transforming a law firm into a business entity demands a proactive approach to budgeting. Law firms can use budgets to position themselves for sustainable growth, client satisfaction, and long-term success.
Centerbase has a robust suite of tools designed to optimize law firm financial performance. Get in touch for a free demo of our tools and learn how our software can improve your law firm’s profitability.
Written by Robin Neill
Law firms, like any other business, need to have a firm grip on their finances to thrive and grow. Yet many law firms struggle with budgeting and other tasks that help their firm run like a well-oiled machine.
In this article, the first in our new series on budgeting for law firms, we’ll explore the challenges that law firms face when it comes to their finances and the benefits of a law firm budget.
Why do law firms struggle with budgeting?
Budgeting has never been a favorite task of legal professionals. After all, attorneys don’t typically go to law school to earn a business degree. They’re trained to understand the intricacies of the law, not the detailed aspects of business planning.
However, the business side of law is just as important as legal practice. The problem is, law schools don’t offer courses that teach business skills, such as how to manage law firm finances. This knowledge gap can hinder attorneys’ ability to feel confident about business financial decisions.
Moreover, most attorneys don’t want to focus on the numbers. They want to practice law and provide legal counsel to their clients. There’s no extra time in the billable day to crunch the data and generate budgets. This can overshadow the importance of understanding a law firm’s financial health and lead to neglecting the practical business aspects of running a firm.
Finally, many attorneys think they can set their firm’s budget once and forget it. Attorneys may struggle to balance client demands with long-term strategic planning for the firm. Law firms must recognize that budgeting is not a one-time event but rather an ongoing process that requires regular monitoring and adjustment.
Fortunately, there’s a growing understanding within the legal industry that law firms are, at their core, businesses. While the law is the foundation of the work, the business side is equally critical for long-term firm sustainability and growth.
Why budgeting matters for law firm success
Why is budgeting so important for law firms? The answer lies in its direct impact on the firm’s financial sustainability. Here are three key reasons why law firms should prioritize budgeting.
Where can law firms get help to improve their budgeting?
Law firms don’t have to go it alone, muddling through the budgeting process. a variety of resources that can help.
First, consider whether you need to bring in an outside expert, such as an accountant or financial manager. You need access to an expert who understands the intricacies and challenges specific to law firm budgeting.
Podcasts and online resources can provide insights into financial management best practices. Attorneys may also seek advice from local or state bar associations, which may offer salary surveys and other useful financial data.
Additionally, attorneys should embrace collaboration. The legal profession is filled with experts who love to share their experiences and provide feedback. Asking for referrals and engaging in dialogues with peers can lead to fresh perspectives and better financial management.
And, of course, legal technology is a game-changer for financial management in law firms. Implementing a robust system that tracks expenditures and provides meaningful financial reports is essential. These tools should offer insights into cash flow, expenses, profitability and more.
Budgeting leads to a stronger law firm bottom line
Budgeting isn’t just about numbers; it’s about building a strong foundation for the future of a law firm. When attorneys recognize the importance of budgeting and seek the right expertise and tools, they can positively transform their firm’s financial practices.
Sign up for a free demo to learn more about how Centerbase can help you take the pain out of the budgeting process.
Written by Carson Bailey, M. Ed.
The legal landscape is evolving rapidly, driven by advancements in legal technology. Law firms continually seek ways to improve efficiency, streamline operations, and provide better client service — and that requires them to integrate new software into their daily workflows.
However, introducing new software to a law firm often faces resistance. Lawyers and staff prefer to focus on delivering legal services, so adopting new technology can disrupt their routines. Moreover, lawyers and staff view software training as a bore and a chore. The traditional sit-and-get training format often doesn’t meet the needs of adult learners, frustrating them and turning them against new software before they can even try it.
When legal professionals aren’t fully trained on software, they often don’t fully use that software or neglect it outright, reducing the value of your law firm’s investment.
Fortunately, learning management systems (LMSs) have revolutionized training and encourage the adoption of new legal technology. Before we dive into the benefits of using an LMS for software adoption in law firms, let’s quickly review what an LMS is.
What is a learning management system (LMS)?
An LMS is a software platform that facilitates the creation, management, delivery, and tracking of educational content. Leading legal software providers offer a specialized LMS designed to meet the unique training, compliance, and knowledge management needs of legal professionals and staff.
A software provider’s LMS is a foundational part of software training; it’s a centralized hub for all training-related activities, delivering, tracking, and managing various types of professional development and knowledge resources and streamlining the learning process.
How can law firms implementing new software benefit from an LMS?
An LMS can enhance the efficiency, effectiveness, and accessibility of training on new software for lawyers, legal professionals, and other staff. It empowers users to become proficient with software tools, ultimately contributing to improved productivity and the successful integration of software into the law firm’s operations.
At Centerbase, self-guided learning through our LMS accelerates the training process, giving users a head start before our virtual and in-person training sessions. Our LMS kick-starts the learning process, so users know what functionality Centerbase offers and what questions to ask, streamlining their training and ensuring they understand the solution and its benefits before using it.
Here’s a summary of the benefits of our LMS.
Start optimizing your law firm software adoption with an LMS
An LMS is pivotal in offering flexible, relevant, and personalized training experiences. By adopting the right training methodologies and involving the right stakeholders, law firms can navigate software implementation challenges and equip their teams with the skills needed for a competitive edge in the legal industry.