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Can-I-use-a-general-accounting-program-to-support-my-firm?

Question of the Week: Can I use a general accounting program like QuickBooks® to support my firm?

General accounting programs, like QuickBooks®, weren’t created with law firms in mind but that doesn’t mean they can’t be used by lawyers. The biggest concern when using generic software is whether or not they can handle the unique needs of the legal industry and its complex compliance requirements. Lawyers can create workarounds within the program to address many of their needs, but these challenging customizations and the lack of built-in measures to prevent errors mean firms should give careful consideration before choosing to use a generic accounting program.

Billing

Lawyers can create bills that list their clients, time applied, and total cost with the majority of accounting programs, but tying these to matter records can be complicated when using a separate practice management program. There are also a number of legal-specific billing tasks generic software isn’t equipped to handle, such as trust accounting reporting on invoices and allocating partial payments. The workarounds to addressing these issues often require considerable time that could be better spent on billable activities as well as the increased likelihood of mistakes due to manual entry and adjustments.

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Timekeeping

You can track time and add them to invoices with most general accounting programs. But when a client calls and wants to discuss all their matter details, you’re likely going to need to log into two programs to try to tie the pieces together.

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Tracking Reimbursable Costs

Most generic accounting programs aren’t designed out of the box to address the two types of reimbursable costs law firms utilize – hard costs and soft costs. Even if they do have an option included to deal with these costs, the programs often aren’t set up to allocate them to the appropriate chart of accounts. Setting this up properly should be discussed with an experienced bookkeeper and staff should be trained on how to record these costs.

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Applying Complex Rate Structures

While you can apply which attorney is tied to a certain rate level, general accounting programs don’t support complex rate structures or non-traditional fee arrangements. This requires a lot of manual entry as to the correct rate application and heightens the risk of the incorrect amount being charged to the client.

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Using General Programs

As seen above, there are certain ways in which generic accounting software like QuickBooks can be used, but doing so can increase the likelihood of errors and take up valuable time. Law firms should carefully consider how their practice is going to be using the program in addition to their rate structure before committing to a general program. To cut down on time spent, ensure accuracy and be able to apply a complex or non-traditional fee agreement, lawyers should consider using a legal-specific accounting tool.

Notebook

Erica Birstler

Erica Birstler is the Director of Strategic Communications at CosmoLex -- developers of a fully-integrated, cloud-based legal practice management, billing & trust accounting system specifically designed for solo and small law firms. Erica's degree is in Business Administration and she has over 6 years of experience in the legal software industry, catering to the specialized technology needs of small to mid-sized law firms. Erica has given numerous presentations across the country on legal technologies such as law practice technology management, cloud computing, and legal billing & trust accounting compliance.