Managing your trust accounting manually isn’t only enough to make you dread doing it – it’s downright risky. Doing trust accounting the right way requires accuracy, attention to detail, and avoiding mistakes and mishandling, all of which can take a big chunk of time out of the workday. Through the use of technology, lawyers have the opportunity to make their trust accounting more efficient and compliant, scoring a win-win for their firm.
Benefits of a Tech-focused Law Firm
Technology is able to handle a large number of administrative tasks normally managed by lawyers and their office staff. Even though the technology is an investment, as those that are truly helpful typically have a cost associated with them, the result is actually a cost savings when you’re not paying someone wages to do it all. Over the years technology for law firms has expanded, with legal-specific tools paving the way for solo and small firms to operate with the same efficiency as larger firms.
For example, let’s say you’re paying someone to manually handle your payroll and it takes them six hours a month. That same task could likely be done in under an hour a month with the right tools, depending on your staff size. The newly freed up time can allow you to let your staff focus on either billable items or taking more responsibilities that will contribute directly to firm growth.
This very same technology can help law firms maintain compliance as well. With the creation of software meant specifically for the legal industry, there are often features in place meant to keep lawyers compliant in their day-to-day practice.
Efficiency in Trust Accounting
Trust accounting can quickly eat up your time, especially when you want to make sure you’re doing it correctly. With legal-specific accounting programs, especially those that come as part of an integrated billing and practice management system, you’ll be able to cut down on how long is spent recording and tracking entries and matching them to matters.
You’ll also be able to quickly generate the reports you need to stay compliant, including three-way reconciliations. Even generic programs don’t necessarily have all of the reports you need to be included since they’re built for general industries. With the right tool, you can turn creating these required reports from hours into minutes, helping you stay audit-ready.
Compliant Trust Accounting
Law firms can be busy places, and with a lot of fast-moving parts and cases, it can be easy to make a trust accounting mistake. Using legal-specific programs will help you prevent these errors with features designed to block them.
Let’s say you were going to issue a check that would have overdrafted a client ledger. Certain legal-specific accounting programs won’t let you do it, whereas general accounting programs tend to look at how much money is in the pooled trust account. If you were to go ahead and send off the check, then you’d find yourself in violation of your trust accounting responsibilities.
Tying entries to matters, retainer management, and reconciliations can also present issues for law firms who aren’t using technology in their trust accounting. However, turning to tech can mean less worry about making sure your firm is in compliance.
Technology for Lawyers
Technology is quickly becoming a differentiator for law firms, with those who use it best gaining an advantage over their competitors. When it comes to trust accounting though, the biggest advantage for your firm is to save time and significantly reduce the risk of a compliance violation – and reduce the worry that comes along with an audit. With legal-specific tech, law firms are able to make their trust accounting less resource-consuming and easier to handle.
Check out the full e-book, Trust Accounting: Using Tech to Increase Efficiency and Compliance to learn more!