For a law firm, tracking their income is much different than it is for any other business. The first thing they have to do is ensure that they allocate all of the funds that are paid to the firm appropriately.
Differentiating Between Legal & Other Business Income
Once that is done it is important to understand how to properly categorize or differentiate between different types of income. Now, many lawyers may be thinking they’re ahead of the game already in tracking their income by case type. This is a great practice when managing a firm and it can provide many benefits to your firm such as; understanding what case type generates the best return, understanding how to best spend your marketing, and even understanding what type of cases to avoid.
While this is a fantastic way to have great vision into your firm’s performance, it still leaves a piece of the income puzzle out.
Practicing law is most definitely the primary source of income for most firms, but it isn’t always the only source of income. If a firm wants to fully understand which activities generate the most money for the firm, they need to track any additional sources as well.
Other sources of income for law firms can include:
- Office Space Rental
- Consulting Fees
- Lead Generation or Case Referral Fees
- And more….
With these additional sources of income firms need to include these numbers in dashboards and profit and loss statements to provide a full snapshot of their business and best understand how they can continue to generate income from the most successful areas of the firm.
Many law firms struggle with bringing their income associated with legal work and their income associated with activities unrelated to casework together. It can be challenging. Some have tried to track their non-legal income in general accounting software, while they have their legal income tracked inside legal accounting software.
For firms finding themselves in this situation, the best thing they can do is ditch both sets of software, your legal accounting software, and your general business accounting software. Then find a legal accounting software solution that allows you to track both legal income and general business income in one system together!
CosmoLex can do just that. By allowing firms to track both of these very different sets of income, that are subject to very different rules and regulations in one place- CosmoLex ensures that your firm will remain compliant and still have a full snapshot of all the income your firm generates regardless of how it is being generated.
Bring all your income into one system by signing up for a free 30 day trial of CosmoLex today.