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Attorneys often view succession planning as solely applicable to retirement, but disruptive events can occur at any time, forcing a law firm transition. While some of these occurrences can be forecasted, others come with no warning at all. A sudden illness or disability can leave a firm leader unable to manage the regular legal operations of the practice, which makes succession planning a priority within a law firm’s business strategy. Without it, firms and clients can suffer significant setbacks as they deal with the uncertainty of the firm’s future.
These risks are particularly heavy for solo and small law firms. Many of these practices operate without succession plans and have no continuity plan should a disruption occur. These situations leave firm members struggling to handle disgruntled clients or aggressive creditors in the midst of disorganized transition.
While many states do not require law firm succession planning and offer no specific guidance, there are useful considerations and tips law firms can use to craft a comprehensive succession plan.
Depending on the goals of the practice leader or leaders, law firm transitions can take a variety of forms. Whether considering retirement or preparing for an unforeseen disruption, attorneys need a clear understanding of what they hope to achieve, so they know the best direction to take. They should ask themselves whether they want to remain somewhat active in the firm or completely move away from all firm operations. Attorneys must also decide whether they want the firm to continue after the transition or if dissolution is more appealing.
The answers to these types of questions help firm leaders make effective decisions about which of the following transitions they hope to achieve:
Firm Dissolution - For attorneys who do not want to invest additional money or make an effort to transfer their firm to another attorney, closure can be an attractive option. But closing a firm is no easy feat. Attorneys must create a plan that addresses their ethical obligation to leave all clients in the best position to secure alternate legal representation. This includes providing access to all necessary files, documents, and relevant data. Attorneys who prefer to sell their firms also need to obtain professional valuations to maximize profits while following all ABA rules related to the sale.
Partnering with Another Firm – This transitional option is often used by attorneys who prefer a slower movement away from the firm. Instead of walking away, the attorney chooses to form a partnership with another attorney or firm. As part of the merger, the attorney helps navigate a more gradual and smooth transition. This type of transition theoretically allows the attorney to lessen the inconvenience felt by firm clients. The time frame for these partner agreements can vary greatly depending on the terms of the agreement.
Choosing a Successor – Attorneys that hope to maintain the basic structure of their firm with a new leader at the helm may decide to choose their own successor. This option may allow the attorney a significant amount of time to groom the attorney who will lead the firm in the future.
Every law firm succession plan differs depending on the desires of the attorney and the specific details of the law firm. But the following are some components typically included within succession plans:
Clients are the backbone of any law firm, so a comprehensive succession plan must include strategies to maintain excellent client service to address client needs during and after transition. This includes providing written instructions on how and where client data is stored, along with the necessary credentials for access.
Client notification should also be part of the plan. For firms remaining intact after transition, giving clients plenty of notice makes it less likely that they will seek representation from another firm out of frustration. For firms that are dissolving, attorneys should give clients as much time as possible to make alternative arrangements at a different firm if necessary.
A succession plan should include a compensation structure addressing how the transitioning attorney (or the attorney’s estate) will be compensated going forward. For instance, if the practice is being sold, the attorney should have the firm valued to ensure a fair purchase price. If the plan is to transition clients to a new partner, the attorney may need to maintain some client files and data. When this is the case, attorneys should be compensated appropriately for their time and effort.
When the need for transition arises, those involved will need access to all relevant business records, including:
Documents like a will and power of attorney should also be included within the succession plan, along with detailed instructions for your family or estate executor. Family members are often named as estate executors, so it is important that at least one trusted family member has access to any estate planning documents related to the firm’s transition.
Once a succession plan has been created, attorneys should make sure to store it in a highly secure manner. The sensitive nature of the included data can be detrimental in the possession of the wrong person. Be extremely careful about your chosen method of storage, as well as anyone you choose to provide with access in case a disruption occurs.
Crafting a succession plan can feel like an overwhelming task, but attorneys should do it to protect their law firms and clients. No one knows when a crisis will occur, so it is important to be as prepared as possible. For law firms with a large number of retirement-age attorneys, it is even more critical to maintain a comprehensive succession plan.
Legal technology can play a major part in crafting a succession plan. It can be a time-consuming process, but legal technology can help attorneys save time by quickly providing necessary data. Legal practice management software keeps the firm’s various business components in one centralized location, which can make a transition easier and efficient to navigate. With a few clicks of the mouse, transitioning law firm members can access reporting pertaining to matter progress, invoice status, revenue, accounts receivable, and more.
Taking the time to solidify your firm’s succession plan is a daunting task, but is one that is critical to both your firm’s future and the happiness of your clients. If you’re not sure where to begin, start by compiling the below information in a secure location. A legal document management system can help keep this sensitive information from getting into the wrong hands, while also serving as the source of truth as future generations of lawyers need to access client data to keep the firm running smoothly.
Family and domestic relations law firm administrators often deal with three major challenges when handling their practice management duties – client relations, varied billing arrangements, and compliant trust accounting. If handled incorrectly, each of these important components can cause major headaches.
Busy family law firms need legal practice management software that helps navigate each of these challenges with the following features:
Domestic law clients are often going through some of the most stressful times of their lives. They may be dealing with the pain of a divorce, the financial challenges of a broken family, or the fear of losing custody of a child. When they seek out a law firm for assistance, these emotional situations can show up in the form of high expectations and limited patience.
All law firms need to maintain a high level of client service, but family law attorneys often feel an even greater responsibility to provide a premium client experience. This important goal can be met in several ways:
Family law firms need effective communication strategies to keep clients satisfied with the level of service being provided. Administrators should implement a proactive communication style where the firm initiates and maintains dialogue throughout the lifecycle of the matter. This keeps clients informed and comforted by the knowledge that work is being completed on their behalf.
Some of the tools that family law practitioners can use to implement this strategy include a client portal where clients can log into their personalized account any time of the day or night to view correspondence, see task deadlines, receive firm messages, and review billing information.
An effective calendaring system also helps family law firms support positive client experiences. With comprehensive calendaring, firm members can keep ahead of pending deadlines and court appearances, while also keeping clients informed about important dates.
It is not unusual for a busy family law practice to have multiple deadlines, events, and reminders on the calendar every day. They need a practice management system that provides administrators with a bird’s eye view of the entire firm, along with giving individual attorneys and teams calendaring information tailored to their specific caseloads. From discovery deadlines to mediation appointments, missing a deadline or court appearance can be detrimental to the attorney-client relationship, so domestic relations lawyers must have tools to always stay on top of their calendars.
Family law clients often wait until the very last minute to secure legal services. So, they may walk in the door for the intake appointment with a pendente lite or child support hearing already scheduled. Family law firms can address this challenge with legal practice management features that automate the intake processes. Automated workflows and conflict checks can streamline the process so representation can begin expeditiously.
Along with criminal defense practices, domestic relations law firms have been at the forefront of introducing alternative billing arrangements into the legal industry. Many of these firms have been offering flat fee uncontested divorces for years. While these alternative arrangements may simplify some matters, they may not be appropriate for all family cases. This creates a situation where family law firms may need to utilize multiple billing types within their caseloads. For that reason, firms need legal practice management and billing systems that can handle various billing arrangements with the following tools:
With a seamless invoicing process, family law firms can quickly prepare, generate, and deliver bills to clients regardless of their billing arrangement. Whether the matter is being billed on an hourly basis, as a fixed fee, or as a project, the firm’s billing software must have the capacity to leverage the invoicing process quickly and easily with minimal input from law firm staff. Once the billing method has been applied to the matter, the system should automatically use it in the generation of all invoices.
Whether working on a flat fee matter or using the traditional billable hour, family law attorneys need the tools to efficiently track time spent on a matter. For hourly billing, timekeeping data forms the basis of the invoice and how the law firm gets paid. Without tracked time, there is no compensation. For fixed-fee arrangements, timekeeping gives law firms a better sense of how hours are being spent by firm professionals.
Within a legal practice, wasted time equates to lost revenue. With time tracking data, family law firm administrators can review how time is being spent and make adjustments to improve efficiency, productivity, and profitability.
Effective timekeeping tools also add value to family law attorneys as they work away from the office. With cloud-based timekeeping software, they can accurately record their tasks whether they are in a courthouse, conducting a home visit, or attending a client mediation. Some practice management software options even offer automated time capture features that automatically track the amount of time spent on client calls, including those made from a cell phone.
As stated earlier, while many family law firms utilize flat fee arrangements for simpler matters, they may still use the billable hour for more complex cases. This is typically done through a retainer agreement, where the client remits an amount of money for the firm to hold in trust. As work is completed on the matter, the firm transfers money from that trust account to another firm account.
A lot of rules and regulations exist around the management and usage of trust accounts, so family law administrators need practice management software that promotes compliance and takes the pressure off firm members.
Family law firms need integrated accounting tools that help them maintain compliance with the rules of their respective state bars. Even a single mistake can lead to trouble that could have been avoided with the right practice management software.
Efficient billing systems automatically track client funds as they are moved from one account to another. They also provide firms with the capability to manage and report on multiple client IOLTA bank accounts. With comprehensive legal accounting tools, family law firms can maintain all their accounts in one platform for secure and accurate management.
The ability to run up-to-date and accurate financial reports is also necessary for compliant law firm trust accounting. Some jurisdictions require detailed reporting for individual trust accounts. In addition, should a disagreement or discrepancy arise, the ability to quickly provide a detailed report can mean the difference between clearing up the issue and making a bigger problem for the firm. With financial reporting capabilities, domestic relations law firm administrators can keep a consistent and accurate view of all the firm’s financial data.
Family law clients have a lot on their plates as they try to care for their families and traverse the waters of domestic relations law. Family law firms can alleviate some of their worries by implementing legal practice management tools that promote excellent client service, streamline various billing arrangements, and promote accurate trust accounting.
Centerbase, a legal practice management software company that provides mid-sized law firms with a cloud-based platform to streamline legal operations, has acquired Family Law Software, the leading workflow software for family law legal practices.
Used by thousands of family law professionals, Family Law Software automates financial forms and calculations related to divorce proceedings. With this acquisition, Centerbase expands its already robust practice management, billing, and accounting product to better serve the complex workflow of family practice attorneys.
“Our aim has always been to provide mid-size law firms with a completely configurable tool they can use to streamline operations, touching on everything from billing and accounting to timekeeping, document management, client communication and reporting,” says John Forbes, CEO and Founder of Centerbase.
“Currently, 40% of our customers have a family law practice, so we are acutely aware of the demands and complexities of the practice. Because of this, we know Family Law Software is the perfect complement and enhancement to Centerbase. It enables us to deliver more value to our combined client base of 5,000.”
Family Law Software was created in 1996 by Wendell Smith and Dan Caine, founders who also developed the income tax software purchased by H&R Block in 1993 that is still used by millions today.
“When we started Family Law Software, we wanted to combine our tax knowledge and software skills to build a platform that could simplify the family law case management workflow,” says Family Law Software President and Co-Founder Dan Caine. “For almost 25 years, we have expanded and refined that product, and we now offer robust planning and negotiation tools, as well as the financial documents family lawyers need. Now with Centerbase, we will be able to expand the footprint of who we serve, which, for a mission-based company like ours, is the ultimate measure of success.”
This acquisition comes at a time of accelerated growth for Centerbase. Following a banner year in 2020 and continued momentum year-to-date, Centerbase has invested heavily in its core product while exploring feature and practice area specific integrations.
“As part of our initiative to modernize the Firm’s infrastructure, we teamed up with Centerbase in 2019 and Family Law Software in 2020,” says Paul Kanjorski of Sessums Black Caballero Ficarrotta Family Law PA. Kanjorski continued, “We’re over a year on both platforms, and I can say that Centerbase and Family Law Software have helped us gain efficiency, capture more billable hours, and reach new levels of profitability. Most importantly, we were able to continue to service our clients at a high level despite the massive challenges of the last 18 months.”
This announcement follows Centerbase’s recent growth equity investment from Mainsail Partners and underpins the company’s commitment to aggressive growth and strategic expansion.
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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 work space. 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 Family Law Software
Family Law Software is the leading workflow software for divorce professionals. Thousands of divorce professionals and individuals facing divorce use Family Law Software to automate financial forms and calculations related to divorce proceedings. With FLS, clients may calculate and negotiate child and spousal support payments based on state-specific rules and tax rates; complete robust scenario planning; divide assets; and conduct financial projections. For more information, visit familylawsoftware.com.
When law firms are impacted by a cyber attack, they must take immediate steps to address the data breach and minimize its impact. While these tasks generally occur in the days following an event, the most effective response requires the existence of an incident response plan before an attack occurs. By contemplating the potential impact of these disruptive events ahead of time and crafting a plan, law firms can be better prepared to respond.
Read on for a checklist of steps that law firm attorneys and administrators alike can take to appropriately respond to a data breach:
According to the ABA’s most recent Legal Technology Survey Report, only about a third of respondents have an incident response plan in place. Yet, the ABA notes that incident response plans are critical to law firm operations, providing firms with a roadmap of steps to take when a data breach occurs. These plans require a significant amount of preparation, but the effort is worth its benefit should a breach occur.
There are numerous models for law firms to follow when crafting their own incident responses, but every plan should include these general provisions:
Formal Opinion 483 of the ABA Standing Committee on Ethics and Professional Responsibility states that “when a breach of protected client information is either suspected or detected, Rule 1.1 requires that the lawyer act reasonably and promptly to stop the breach and mitigate damage resulting from the breach.”
Stopping the breach may entail a number of different steps, including:
Once the breach has been stopped, firms need to take “all reasonable efforts” to restore operations and resume client services.
Then, firms should next take steps to determine how the data breach occurred, which may require the assistance of a tech expert. Attorneys and administrators should ask probing questions, such as:
The information and evidence gathered can be used to ensure that the current breach has been effectively stopped, while also helping to identify what steps can be taken to prevent future attacks. An analysis of the lost or accessed data also promotes honest and transparent disclosure of the breach to clients and other impacted parties.
After the problem has been identified, firms must move quickly to address it. Affected systems need to be secured and vulnerabilities removed. The appropriate tasks depend on the nature of the breach. For example:
When identifying impacted parties, firms should analyze the type of data that was compromised. Did the data loss include the last name of a person along with at least the first initial of the first name? Did it include social security numbers or tax ID numbers? Were financial accounts, credit card data, drivers license numbers, or medical information compromised? If any of these details were stolen, then the impacted person or business should be notified.
Under most state ethics rules, attorneys generally have a duty to notify impacted clients of cyber incidents, particularly when the breach compromises confidential information or impairs the law firm’s ability to provide legal services. Though notification to former clients is not specifically addressed in many jurisdictions, law firms may still have a duty to notify them if their data was impacted.
But the duty to inform also extends from general state laws concerning data breaches. For instance, a breach of clients’ personal health records may fall under the Health Breach Notification Rule, which could require notification to the Fair-Trade Commission (FTC) as well as the media. This type of breach may also trigger notification requirements under the Health Insurance Portability and Accountability Act (HIPAA).
Firms need to comply with all federal, state, and local laws in notifying impacted individuals and businesses. States differ in the amount of time given to provide notification, but most typically set a 60-day limitation.
Details typically included within notifications include:
It is also useful for law firm attorneys or administrators to consult with any law enforcement working on the case to ensure that the information provided does not hinder the investigation.
The FTC offers the following advice for businesses when notifying impacted parties:
A cybersecurity data breach is not over once the initial disruption is addressed. These incidents have lasting effects and law firms can continuously support impacted parties by taking the following steps:
According to the American Bar Association, 25% of all U.S. law firms have experienced at least one data breach. In other words: the risk to client confidentiality is at an all-time high.
Increased reliance on remote working arrangements, along with ever-evolving cyber threats, has resulted in an extra level of urgency for law firms to protect sensitive client data. Virtual work arrangements create various opportunities for breaches, while cyber attackers constantly seek to hack law firm security measures.
Additionally, law practices have been increasingly subjected to client data breaches caused by user errors and socially engineered attacks involving ransomware. They have been targeted by hackers that view the legal industry as an easy target based on the tendency of law firms to use outdated technologies and easily breached systems. When these breaches occur, sensitive client data can end up in the wrong hands. Clients are forced to deal with the ramifications of their information being used for nefarious reasons, while law firms must contend with potential lawsuits, ethical consequences, damaged reputations, and the loss of profitable business relationships.
The hesitancy of the legal community to embrace innovative technology has added to this vulnerability because most law firms lack both the necessary technology and strategies to deal with looming threats. Even those that have made some efforts often use platforms that are outdated and highly susceptible to data breaches. Threats constantly evolve with greater sophistication. Without a strategy for promoting client confidentiality, law firms leave their client data unprotected.
Lack of technology is no longer a valid excuse for client data breaches. Changes to the ABA Model Rules speak directly to the importance of technology.
ABA Model Rule 1.1: Competence, Comment [8] states, “To maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice including the benefits and risks associated with relevant technology, engage in continuing study and education, and comply with all continuing legal education requirements to which the lawyer is subject.”
In addition, ABA Model Rule 1.6: Confidentiality states, “(c) A lawyer shall make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of a client.”
Client data breaches not only lead to financial consequences for law firms, but can also result in detrimental ethical challenges.
As law firms work to protect client confidentiality, they can implement strategies to guard against data breaches that originate both internally and externally. The following are some simple, but effective, steps:
The biggest vulnerability faced by any law firm, regardless of size, is employee error. Security experts estimate that more than one-third of business data breaches result from some form of employee negligence, error, or intentional act. These actions typically include phishing scams, loss of hardware, abuse of access privileges, or simple security mistakes. Law firms must identify and address these poor behaviors to effectively lessen opportunities for client data breaches.
An aware and proficient team makes the best weapon against client data breaches. Every member of firm personnel, from partner to receptionist, must understand and respect the vital importance of client confidentiality and protecting client data. Firms should provide mandatory training that promotes the highest levels of awareness and diligence. Without employee involvement, internal vulnerabilities and threats may not be identified, which can ultimately result in employees becoming the channels through which breaches occur.
Data encryption provides an effective technology tool for protecting sensitive data. Once encrypted, data becomes indecipherable should it wind up in the wrong hands due to loss or theft. The viewer must utilize the correct encryption key to unscramble the encrypted gibberish back into legible text.
Law firm encryption typically occurs in a couple of ways. Encryption in transit protects data as it is sent electronically within the firm or externally. This is commonly referred to as end-to-end encryption. Encryption at rest refers to the encryption of data that is stored on hard drives, laptops, or mobile devices.
But even with its high level of protection, many law firms fail to use encryption methods. According to some legal ethics experts, ABA Model Rule 1.6 classifies encryption failures as potential breaches of ethical duty should the data warrant special precautions. This risk seemingly requires law firms to evaluate whether each client matter necessitates encryption and take appropriate measures. Failing to do so could result in ethical violations.
Tech providers consistently create new strategies for preventing system breaches, but these tactics only work when the systems and software are updated on a regularly scheduled basis. This includes VPN, antivirus, anti-spyware, and spam filters.
Unfortunately, far too many law firms implement new technologies and then fail to keep them fully updated. Without consistent updates, these tools may become vulnerable to ever-changing cyber threats. Outdated systems place client data at risk and may even open law firms up to liability should a breach occur. Law firms need systems in place to ensure that necessary system updates occur.
Third-party law firm vendors can also place client confidentiality at risk if they fail to follow strict security standards. These parties can create a weak link in the chain of client data that they are entrusted with during the course of business.
When choosing to work with a vendor, law firms need to closely evaluate the vendor’s security protocols. They may also include specific security requirements within the controlling contract and ensure that the vendor’s insurance policy adequately covers any breaches that may occur.
Legal tech companies routinely use cloud-based storage for their technologies. When managed correctly, these platforms offer great benefits to legal practices. But without proper security protocols in place, cloud storage becomes extremely vulnerable to cyber-attacks. Therefore, law firms need to ensure that cloud-based service providers maintain their networks with technical competence and top-notch security features.
Law firms cannot ignore the role of document safety in the promotion of client confidentiality. With document management systems in place, firms benefit from multi-level security that limits access to reading, deleting, or editing sensitive documents both internally and externally.
These resources can also help firms quickly identify breaches by creating a detailed trail of everything related to a document's life cycle. Firms have access to specific information regarding who made changes and when. They can also review information about document transmission and downloads. These types of security checks protect client confidentiality and provide clients with the assurance that their information is being handled effectively.
The transfer of documents creates the biggest risk of breach. The transmittal of a document to the wrong recipient is a mistake that cannot be undone. If that document contains sensitive or confidential information, the law firm has created a substantial risk should the data be used against the firm or one of its clients. Email is largely considered the fastest and easiest method of sending documents to colleagues and clients, but it is also one of the biggest security risks a law firm can take. This highlights the importance of viable alternatives for sending secure client communications. With tools like client portals and secure document transmission systems, law firms are not forced to rely on risky email transmissions. The credentials of all recipients can be confirmed to ensure client confidentiality and prevent documents from ending up in the wrong hands.
[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]Over the past couple of years, it has been exciting to see Centerbase grow so quickly. As CEO and Founder, I can tell you—it wasn’t always like this. The core ideas that evolved into Centerbase date back to 2003, and the journey from where we began to where we are now has been a long one.
Now, we find ourselves at an exciting moment in Centerbase history. Today, we announced a growth equity investment from Mainsail Partners, a growth equity firm that invests in bootstrapped software companies just like ours. I'm excited to see the potential this represents for our future: our customers, our employees, and our product.
I've been an entrepreneur for as long as I can remember. As a kid, I vividly remember going door-to-door selling plant seeds to anyone who would give me the time of day. I was born into a family of entrepreneurs and from that day on, I never looked back.
In 2014, I started Centerbase. From the beginning, we were laser-focused on developing a great product. As for picking a single vertical focus, that lesson came more slowly. However, it soon became clear that we had the opportunity to truly improve the lives of legal professionals and revolutionize the way they manage their firms.
2015 was the real turning point. We hired more staff, brought on more developers, we truly went all-in. That year we dedicated our efforts to building out a customizable platform. We met with dozens of law firms with the goal of trying to understand what their needs were and how we could possibly solve them. What we managed to do was take the best methodologies, practices, and efficiencies we found present in big law firms and discovered a way we could affordably package them up for mid-sized firms to capitalize on. We saw time and again that lawyers hated tracking time and we knew if we could automate that process, we could add tremendous value. Our agility and hunger to continue driving value even led us to launch a native accounting system. (In retrospect, that project was way over our heads, but we managed to complete it in just seven months.)
With that, we had a product that was truly a full system of records for law firms.
The 2017 ABA Tech Show was the first time we went “live” with Centerbase. By the second day, there was a line at our booth—not of law firms, but of legal consultants who were sick of selling legacy legal management products. Their enthusiasm was proof that our decade of research had paid off. We were on to something! We were offering the legal world something it had never seen before: a cloud-based, configurable management system that could revolutionize the way they practiced law.
The next three years were a time of torrid growth.
The growth was exciting, but it also made us realize how much work there was to be done. It wasn’t long before I started to notice that the resources I was long relying on were starting to hold us back. Our implementation team was at capacity; our product and marketing teams were asking for UX/UI specialists and content managers; our developers needed more resources to maintain our pace of innovation. Put simply, we were growing faster than we could keep up with.
I mentioned we've always had good timing at Centerbase. We launched our product just as the legal industry was ready to migrate away from on-premise, legacy technologies. We specialized in mid-sized law firms and discovered just how underserved that market was. Then, just before the pandemic, we launched two of our most innovative product features yet: Automated Time Tracking, which records and then converts any time spent texting and calling clients into billable time entries, and Electronic Pre-Bill Approval, which allows attorneys to review and edit paperless pre-bills without having to print and circulate stacks of paper. With the advent of the “new normal” working remotely became essential and attorneys were especially excited about these features.
In spring of 2021, another incredible opportunity presented itself. I have always been against the idea of outside investment because I've been so bullish on the potential of our team achieving greatness on our own. And I still believe that. However, when your great team starts to indicate they could be even greater with more resources, you start to wonder what that would look like. And that’s when I got a call from Mainsail Partners.
We had talked with several different growth equity firms over the years, but Mainsail Partners always stood out to me because of their reputation for preserving the “core” of the companies they partner with. Our company started small and grew organically, which has been fulfilling. I didn’t want to lose that connection to our success and with Mainsail, I’m confident we won’t.
Rather, I think we’re going to be able to do a whole lot more, a whole lot quicker. The team at Mainsail are experts in growing companies of our size. With them, we will have new resources and experience to draw from. We can make new investments in our teams and continue hiring great people and empowering them to make an impact for our customers.
I recognize this is just the start of the marathon. We have a long road ahead and to finish first, we will need to continue to innovate.
Connecting deeply with our customers has been crucial to our ability to serve them, and that practice will only deepen. Going forward, our primary focus will remain on the product and relentlessly solving the needs of our customers by bringing them the absolute best tools available.
Now with all that being said, we are hiring! We have a fantastic team dedicated to helping law firms capture more time, get paid faster, and provide the best client services possible. With the momentum and the support behind us, we are looking to continue growing and if you want to join us on this mission and come to work every day where you’re empowered to make an impact, join us.
I’m incredibly proud of what our team has accomplished to date, and I can’t wait to see what we can achieve in this next chapter.[/vc_column_text][/vc_column][/vc_row]
The billing department is the lifeline of a law firm, ensuring that the practice effectively bills and collects compensation for services rendered. Its reach extends from the time tracking phase to reporting on key financial metrics. If the billing department proves unsuccessful at fulfilling its duties, the entire firm may suffer fiscal losses, including inadequate cash flow and an inability to manage overhead costs.
Law firm billing departments typically have two major goals in mind. One is to streamline the invoicing process, so that timekeeping administrators can spend more hours on billable client tasks. The other is maximizing billing accuracy to promote timely payments and reduce client disputes.
Unfortunately, three common challenges may get in the way of these goals:
Practice management software can play a significant role in helping law firm billing departments overcome their challenges and meet firm goals. Keep reading to learn how.
Many law firm billing departments rely solely on a limited number of people to manage the entire invoicing process - from time tracking to invoicing and payment collections. If that handful of people becomes overwhelmed or unable to fulfill essential tasks, the entire invoicing process can suffer, creating a financial risk for the firm. This type of narrow setup is also vulnerable to personnel changes. The separation of even one member of the billing department could mean that a vital piece of the billing machine grinds to a halt.
Law firms cannot afford to trust such an important, business-critical process to only a couple of employees without safeguards in place that standardize the processes so that they can be learned and applied by other members of the firm when necessary. Tools like automation and e-billing help law firms create a systematic process that can be understood by managing partners and administrators, as well as easily taught to new members of the billing team.
Practice management software provides law firm billing departments the level of flexibility they need to maximize even the most limited staffing capabilities. It provides mechanisms for simplifying processes, eliminating the need for multiple software services, and systematically managing department tasks. Once firms set their billing processes in place using practice management software, they can ensure that their billing processes will successfully proceed, no matter what changes or limitations may occur within the billing department.
Law firm billing departments take on a variety of responsibilities under the watchful eyes of firm managers, partners, and administrators. After all, every single firm member relies on the billing department to ensure that money earned translates into actual revenue (and payroll). With such high stakes, billing departments need streamlined processes that result in timely and complete collections.
Practice management software assists with this goal in a number of ways:
Another huge benefit of practice management software is the inclusion of trust accounting resources. Trust accounting is one of the most important law firm billing department duties. Inadequate practices can place firms at risk of potential ethical violations, but the right tools help billing teams handle trust accounting accurately and in compliance with jurisdictional requirements.
Legal practice management platforms offer all of these billing and accounting solutions in cloud-based software, which provides a level of remote accessibility that has become absolutely essential within today’s law firm environment. When unexpected business interruptions occur, law firm billing departments need the ability to continue invoicing and collecting payments. Cloud-based practice management makes that happen.
Law firm administrators and partners want detailed billing data that helps them keep a pulse on the fiscal health of the firm. Without this information, they cannot make informed decisions about the firm’s direction. Legal practice management software helps billing departments generate the reports that the partners need.
It only takes a few clicks to generate data-specific matters, practice areas, or the general ledger. Year-over-year reporting provides detailed comparisons between current and past years, while month-over-month reporting offers shorter timeframe reviews.
Practice management software allows law firm billing departments to customize their reporting and generate data sets relating to:
With comprehensive reporting, partners and law firm administrators can gain deep insights into a variety of additional firm details, including average hourly rates, budget compliance, law firm efficiency, and more. The modern e-billing solutions of practice management software give billing departments the ability to extract rich data from invoices and generate detailed reports that would otherwise take an inefficiently unreasonable amount of time.
The expansive responsibilities placed on law firm billing departments necessitate a system that streamlines processes and promotes maximum efficiency. Legal practice management software provides the features that improve processes and drive law firm revenues.
There is a lot involved in the financial management of a law firm. Fortunately, with a good understanding of the principles of law firm finances, firms can reap the benefits of a quality time & billing and financial software system that allows them to handle their firm’s management with ease.
Let’s dive in.
It is common knowledge that improper handling of trust accounts results in the highest cause of bar issues for attorneys. It is imperative that the firm’s trust account be handled by a manager who knows what they are doing and that the managing partner maintains close oversight as well.
Your firm’s legal software should have the ability to track each client’s trust fund balances. By having your time & billing software and your financial software all on one platform, you can maintain accurate records without the need for double entry into two systems. Each month, the firm’s manager should reconcile the firm’s trust account with the bank statement, and following that reconciliation, he or she should run a report showing the trust account balances for each client. The total from the client trust listing report should match the total for the firm’s reconciled bank balance. These reports should then be provided to the managing partner for full transparency.
A common mistake that leads to bar complaints is when a firm transfers funds to the operating account before the client has been billed. Trust funds should remain in the trust account until the client’s regular billing cycle. When funds are transferred to pay an invoice, it is important that the invoice template is clear as to what has been billed and transferred from the client’s funds, and that invoice should be provided to the client so that they have a clear understanding of their trust account’s status.
The firm should not keep more than a small amount of the firm’s funds in the trust account. The sole purpose of keeping firm money in the account is to cover any potential wire fees that may result from an automated clearing house (ACH) coming into the account.
Another common mistake that firms make is transferring funds from the trust account before they have cleared. Gone are the days when a certified check can be treated as cash. Standard protocol is to wait 7-10 days for a deposit to truly clear before drawing on those funds. If the funds are drawn before they are confirmed to be “good,” the firm is essentially using another client’s funds.
It is important that law firms use Engagement Letters (EL) to spell out the agreement between the firm and the client. The EL should define the scope of work, the agreed rates the client will pay for the work, how often the client will be billed, and any interest fees the firm charges for late payments. It should be signed by a partner and countersigned by the client.
Non-representation letters are often overlooked by firms. If a firm discontinues work for a client, or if they provide a consultation to a potential client but do not engage in the work discussed, it is important to send a non-representation letter so that there can be no claim made that the firm was responsible for handling the matter.
Like any business, law firms have a cost of doing business. Do you know what it costs your firm to have an attorney working on a case? You may think it is just a matter of their direct compensation, but there is more to it than that. By using cost accounting methods, you can combine your attorney’s direct compensation and their share of the firm’s overhead and divide it by the number of hours they typically bill annually to know what their break-even rate is. By calculating this rate, you know what you need the attorney’s billable rate to be in order to receive any profit from that attorney’s time. Taking the time to perform this exercise is very valuable to your firm.
Accepting credit card payments from your clients can result in faster payment, improving your law firm's cash flow. It can also result in receiving payments that you may not otherwise receive if you have clients with cash flow issues. It is important to use a credit card processing service that will allow for the separate distribution of your fees to your operating account, in addition to your retainers and settlement payments to your trust account. Law Pay is an example of a service that can assist with legal settlement accounting.
Many businesses charge their customers a fee for using credit cards. It is important for law firms to understand that the ability to follow this practice varies from state to state. You need to consult your state bar to determine whether it is considered ethical in your state to pass on those fees to your clients. You will also want to consider, even if you are allowed to pass on those fees, whether it is good business practice for your firm to do so. Will passing on those fees leave a bitter taste in the mouths of your clients? Are you better off increasing your rates by $5 an hour to cover the cost of accepting credit cards?
Do you know what your billing and financial reports mean? The best way to have accurate reports that you can rely on and to avoid the issue of having to practice double entry recordkeeping between multiple software applications is to use one software that hosts both time & billing and financial data in one platform. For example, by having everything in one place you should be able to accurately and efficiently run reports that show you things like effective billing rates so that you know if after write-downs and write-offs your attorneys are billing at a rate that is higher than their break-even rate so that your firm will see a profit.
The dictionary defines real estate as property comprised of land and/or buildings. Just as that broad definition can include various types of transactions, the practice of real estate law encompasses a variety of different matters. While some real estate attorneys primarily focus on litigation cases, others may spend the majority of their time negotiating land sale contracts. These variations make customizable legal practice management features a must for real estate law firms.
There is a lot to consider when it comes to real estate law, including land use, purchase, rental, and compliance issues. To get a better feel for this expansive practice area, let’s take closer look at some specific real estate practice areas:
These matters center around the sale of single-family homes between individuals or families. Attorneys working in this area tend to focus on assisting home buyers and sellers through the transactional process of buying or selling a home. They may also represent client interests when disputes arise over contracts, titles, financing, permits, or zoning.
These matters focus on the sale, rental, and purchase of commercial properties. They include issues related to contract review and drafting, construction and buildout, land use, easements, and restrictions. Commercial real estate attorneys may also offer advisement about financing issues.
These matters may involve residential or commercial properties. Law firms usually represent the property owner and assist with conflicts over nonpayment of rent, lease term violations, and property use. Property management law firms may routinely appear in court for eviction or nonpayment procedures.
These cases generally involve commercial or small family operations that are primarily used for agricultural needs. Attorneys working in this practice area may provide legal counsel to farmers and other businesses working in production agriculture or other farm operations.
This emerging area of real estate law reaches the residential and commercial sectors. Attorneys may focus on environmental issues related to contaminated land, or environmental restrictions, real estate cleanup, and the protection of buyers and sellers.
A single real estate matter may have numerous components. For this reason, real estate firms may organize their cases into projects, where attorneys and support staff work on teams to handle matters in a more efficient manner. When promoting a collaborative working environment, law firms need practice management features that support communication and help keep everyone on the same page. Here are some of those features:
With workflow automation, law firms can better organize and manage the most complex real estate cases. Workflow refers to the individual steps that go into the completion of a legal matter from beginning to end. When law firms attempt to manage workflows manually, they often end up wasting valuable time and fostering inefficiencies within the practice.
Many practice management platforms include workforce automation solutions. These features help law firms streamline the complexities of real estate matters. From purchase offers to escrow details, automation tools assist with the assembly of relevant documents, the management of closing dates, and the successful completion of real estate matters.
Real estate law firms benefit from workflow automation through the minimization of errors and reduction of risk, data collection and reporting capabilities, and opportunities for continuous workflow improvements.
When law firm team members work in various locations, and at different times, they need the ability to collaborate remotely on documents, contracts, and forms. Cloud-based practice management systems typically offer document management tools that allow members to access and work on documents from virtually any location with unlimited data storage.
Real estate often involves vast and frequent negotiations. Attorneys need to see all matter details in one centralized location so they can create notes, track various versions, and share documents internally or externally, when appropriate.
Quick document search tools save time by making it easy to search databases and documents for specific details. Real estate lawyers can quickly locate a variety of documents, including such items as disclosure agreements, purchase contracts, or inspection certificates.
With the complexities of their matters, real estate law firms must have tools that help them organize, edit, and maintain all relevant documents.
Real estate transactions typically involve numerous deadlines and important dates. There may be mediation appointments, contractual targets, court appearances, or scheduled closings. A comprehensive calendaring system helps real estate law firm administrators keep everyone informed and on track to meet all matter deadlines, from an individual attorney to an entire project team.
Features like automated notifications and secured client portals also help real estate firms keep clients informed about upcoming events and deadlines. These tools allow attorneys to spend more time on profitable tasks while meeting their professional duty to keep clients in the loop.
Real estate law firms may offer their clients any number of payment structures and arrangements. From flat fee options for simple contractual sales to hourly billing options that require client retainers. Firms need legal billing systems that can handle these variations and promote the efficiency of invoicing procedures.
Whether the firm is billing with a flat fee for a simple matter or through a retainer arrangement for more complex cases, real estate law practices need to ability to customize the billing systems quickly and easily in a way that efficiently addresses these billing options. They need a legal practice management system that can manage them all.
Real estate law includes a wide range of specialties, from residential sales to multi-million-dollar commercial transactions. To be consistently successful, real estate law firms need practice management tools that can be tailored to the specific needs of these complex undertakings.
It doesn’t matter who you talk to. Check-in on any firm administrator or managing partner communication platform, and you will find conversations regarding the challenges of finding help. There is a shortage of good talent and the difficulty in recruiting that talent is felt across the board by firms of all sizes and locations.
The reasons for today’s hiring challenges are as varied. However, as the number of firms faced with this roadblock increase, there are some common themes.
There was a significant decrease in law school enrollment from 2010-2015 due to the shortage of law firm job opportunities during that period. Result: if you are looking for a mid-level attorney, you are going to be competing for a very small pool of potential candidates.
With the pandemic, many firms experienced an uncertain future. Firms with practice areas that were impacted by temporary changes in the legal climate saw layoffs and downsizing. With the fear of the unknown, many attorneys are loathe to making any change if they feel their current position is secure, even if they would have been planning to make a change before the pandemic hit.
Gone are the days when a large number of women went into the secretarial and paralegal fields if they wanted to work in a professional office. The legal secretary as a profession is a dying art. The fact that more women are finding other professional fields more available to them is a good thing; unfortunately, the result is a much smaller pool of qualified individuals to fill these administrative positions.
Today’s young professionals expect a positive work-life balance. It isn’t necessarily a bad thing – maybe they are onto something. They also have high expectations from their employer and what the employer will do for them and their career. If firms are to continue to exist into the future, they need to find ways to address these needs and expectations but still be financially viable.
When challenges arise in business, they can be looked upon as an opportunity for improvement and growth. The improvements you can make are endless – below are just a few.
Think of your job posting as a marketing opportunity. It should include more than just the expectations of the candidate – it should also include all or many of the reasons someone should want to work with your firm. (Take your pick from any of the ideas below!) The best places to post your attorney positions are with LinkedIn, your state bar association, area law schools. For administration and staff, you can also use indeed.com, paralegal associations, Facebook.
Good candidates want to work with sharp people. Your process should show your firm has its act together. Communicate with the candidate as to what the process will look like – they will likely meet first with an HR manager. That manager should then let them know what the next steps will look like so that they know what to expect and are not left in the dark wondering what, if anything, will happen next.
Allow firm stakeholders to interview candidates as appropriate. Allowing an associate to meet with a candidate they could be potentially working with does two things. It fosters your internal culture by showing your existing employees that what they think matters. It also shows the candidate that you value your employees enough to allow for this meeting. In addition, a happy employee’s attitude will add to the candidate’s desire to work with your firm. With the influx of Zoom and other video platforms, it is easy to make these meetings happen with little time commitment for either side.
Allowing the candidate to see that your firm cares enough to have core values in place is great. Showing them that you live by those core values through your authenticity and genuine caring throughout the interview process is even better.
Money alone is no longer enough to recruit and retain good employees. In addition to positive core values, think about what other benefits you can share. Some things you might consider:
With the potential hire pool so small, it can be tempting to hire someone who is “good enough” instead of waiting for someone who is a great fit. Bear in mind that if you settle, you will suffer lost productivity among your higher performers as they make up for the lack of performance in an underperformer. In addition, always remember that stellar employees want to work with stellar employees. If you lower your expectations, you stand to lose your high performers to a firm that will give them a high caliber of fellow team members.
One method you may want to consider in your hiring program is to use data analytics to determine what attributes are shared among your firm’s highest performers. You can then make objective hiring decisions based on those attributes.
With the smaller pool of administrative professionals and the challenges firms face with the desire for work-life balance among young attorneys, alternative arrangements can be a win-win. Some alternative arrangements to consider:
Your back office is an area that can benefit from outsourcing. Your firm may not need a highly paid administrator full-time, but you want someone with the experience and skill to oversee your firm to ensure its success. Outsourcing a qualified, experienced administrator can be a great resource for you, allowing you the resources of a highly experienced professional without the full-time salary and benefits that go along with it.
Allowing attorneys to work on a contract basis can be a win-win as well. You pay only for the hours they bill, and they work when they want to work.
Just as it is easier to keep a client than it is to find a new one, it is easier to keep a good employee than it is to find a replacement. In addition, turnover is expensive and extremely time-consuming.
When it comes to your attorneys, consider how your firm’s policies may impact your retention. For example, if your partnership has an origination-based financial system, it may hinder the incentive for senior partners to transition clients to up-and-coming attorneys. As a result, younger attorneys may leave out of frustration. You will lose good attorneys and have no clear succession plan in place to manage client relationships to keep them from leaving when a senior partner retires.
When it comes to non-lawyer employees, consider how they are treated in your firm. If they are made to feel they are second-class citizens because they are not an attorney, you will lose your top-notch professional staff to a firm that shows them the respect they deserve for what they bring to the table. The deep background and experience of your firm managers and staff is invaluable. Also bear in mind that clients will have a higher level of comfort with and loyalty to your firm if they are dealing with the same individuals year over year.
While the lack of potential candidates is a challenge we are all experiencing, there are many actions you can take to make your firm stand out above the rest. By doing so, you will find candidates choosing your firm over the others and staying put for the long haul.
