Because law firms regularly deal with individuals’ finances and personal information, they are subject to strict and complex legal compliance standards. While these standards are designed to protect clients, they can often create anxiety and stress for the attorneys. That’s because compliance violations can result in fines, suspensions, or even disbarment.
But the key to avoiding compliance violations—and their costly effects—is awareness, and streamlining processes using the right tools.
Technology designed for law teams can help you stay on top of shifting compliance standards and prevent you from inadvertently breaching legal compliance for your clients. Check out how legal technology can help you avoid these common legal compliance mistakes.
In 2020, the American Bar Association published their Model Rules of Professional Conduct, which sets forth the marketing and advertising standards for law firms. It states that firms must at all times avoid spreading false or misleading information to prospective clients and that firms may not target specific individuals when advertising. While most law firms perform marketing of some kind, attorneys aren’t always aware of the specific marketing tactics and strategies being implemented to gain new business.
How can firms avoid marketing compliance mistakes?
Lawyers are experts in the law, not marketing gurus. But with the right marketing software, they might as well be. Marketing automation tools powered by legal-specific CRM software can help firms deliver a consistent message to all prospective leads while remaining compliant with the current standards for marketing and advertising. CRM software, like CosmoLex, is specifically designed to support the legal profession, so all automated communications are regulated and guaranteed to be compliant.
Prompt Representation Rules
Due diligence requires lawyers to respond promptly to clients, appear for necessary meetings and court appearances, and stay up-to-date on all matters they’re managing. Unfortunately, most attorneys are handling such large caseloads that it can be challenging to meet every deadline without some tasks slipping through the cracks.
Law practice management software helps attorneys stay organized and on track with every case file. Matter-centric software allows you to customize accessible workflows for your team, so each new task is automatically allocated for completion. By integrating with calendars, email, and more, practice management software keeps attorneys on schedule and organized.
Data Security Regulations
Legal case files contain private, personal client information that should only be viewed by certain individuals. From cyberattacks to file-sharing mishaps to power outages, many scenarios can put client information in jeopardy of being lost or viewed by the wrong party. Although lawyers are typically not IT experts, they have a responsibility to ensure that clients’ personal information is protected appropriately.
One way law firms can boost data security is by keeping client files on a secure, cloud-based document management platform. Cloud-based software stores all information on the cloud rather than on a physical device like a laptop or an in-house server. For small firms without a dedicated IT team, cloud-based software can provide enhanced security while also offering lawyers the flexibility of constant access to client files and information.
Law firms should utilize software with advanced permissions controls so that document access is limited to specific parties. Additionally, firms would benefit from implementing software that provides a secure client portal and legal file-sharing capabilities, like LexShare, so all documents and communications sent between clients and their counsel are protected.
Lack of Documentation
Attorneys generally submit invoices to clients itemized by the tenth of the hour, or every six minutes. If attorneys are submitting invoices to clients, compliance regulations require attorneys to provide documentation to support their bills.
Attorneys are required to keep detailed client records, including invoice documentation, organized case files, and detailed notes about meetings and calls. Matter-centric practice management software ensures you can find every document by pairing every entry with the appropriate matter. Additionally, by integrating with your email and calendar provider, matter management software ensures documents and events are logged appropriately.
Trust Account Compliance
Trust accounts are regulated by complex rules to ensure the funds are handled appropriately. For example, funds in trust accounts cannot commingle with funds in other firm accounts, and no charges—even credit card processing fees—can be pulled from trust accounts until services are rendered. Staying in compliance with regulations for trust accounts can be a time-consuming, stressful process for many attorneys.
Legal-specific practice management software has safeguards in place to prevent compliance breaches with trust accounts. For example, CosmoLex’s built-in payment processor, CosmoLexPay, ensures that funds in trust accounts are never inadvertently charged for fees or services before they’re rendered. As a result, law firms get the flexibility they need to accept online payments from clients, even those with trust accounts.
General accounting software, like QuickBooks, doesn’t have built-in functionality to support law firms with trust account compliance. In contrast, legal-specific trust accounting software easily generates three-way reconciliation reports while preventing ledger overdrafts, fund commingling, and other compliance issues.
Comprehensive legal practice management software that includes legal accounting provides firms with a wealth of insights and data to make processes more streamlined and efficient.
CosmoLex Makes it Easy to Stay Compliant in the Ever-Changing Legal Landscape
CosmoLex’s fully integrated matter management system helps firms of all sizes avoid compliance breaches. By integrating with supportive technology like CosmoLex CRM software and LexShare, CosmoLex helps you spend less time triple-checking your case files for errors and more time practicing law. To see how CosmoLex can improve your business practices, schedule a demo or register for a free trial.