According to the American Bar Association, as of 2016, there are 1,315,561 licensed lawyers in the United States (check out this interactive map to see the number breakdown by state). And with a 10% projected job growth (which is faster than the average for other occupations), it’s safe to say that the need to stay competitive has never been quite as pressing as it is today.
A few weeks ago, we discussed what you need to know in order to Make Technology Work for Your Firm in 2018. Beyond improving and streamlining processes, however, choosing the right software can actually give your firm the edge it needs to thrive in today’s legal industry. This is beneficial for both solo and small firms trying to compete with larger practices, as well as new firms attempting to break into the market and build a solid client base.
Regardless of size, though, the 5 pillars of law practice remain the same:
- Legal Time & Billing
- Business Accounting
- Trust Accounting (IOLTA)
- Event & Task Management
- Document & Email
Here, we’re outlining 7 common obstacles law firms face within these areas, and how a legal-specific solution can help.
Obstacle #1: IT Complexities
Especially if you’re in a small or solo office, dealing with hard drives and wires can quickly turn into a part-time job.
Cloud applications are the ibuprofen for your IT headache. Utilizing practice management solutions in the cloud is the only way to make sure your firm keeps everything up to date as it happens: log client appointments while meeting them on the road; set your next due date while leaving the courthouse. Only cloud access gives you the freedom required to practice law in the 21st-century.
Obstacle #2: Matter-Centric Recordkeeping
We’ve said it before and we’ll say it again: in order to stay compliant, it is critical that all records are linked to the specific legal matter with which they are associated. But we get it, such meticulous recordkeeping is time-consuming.
With a legal-specific software solution, all matter activities are kept in one place. Not only does this save you time (gone are the days of sifting through endless stacks of paper to find a missing document), but it also serves as an additional layer of protection in the event of a malpractice claim or an audit.
Obstacle #3: Manual or Delayed Time/Expense Tracking
Whether working from home or meeting a client on the road, tracking time and expenses can become an afterthought. Unfortunately, even with the best intentions (and the neatest of handwritten napkin notes), this can result in delayed entry and unbilled hours.
You need an in-the-moment legal time recording system that allows you to enter time and expenses in real time, and automatically links these items to the appropriate matter.
Obstacle #4: Weak Collection Efforts
Staying solvent should be a priority of any trusted law firm. A weak and undefined collection process, however, can spell trouble.
Accurate and timely billing lead to a more efficient collection process and reduces “leakage,” a term used to describe lost funds that are never recognized because meetings, tasks, and events were not properly billed. Collection can be especially difficult when clients are going through financial difficulty, so it is critical to ensure your firm’s process is clear and streamlined.
Obstacle #5: Isolated Billing & Accounting
In many practices, billing and accounting are treated as separate entities. While this approach may work for companies in other industries, it just doesn’t cut it in a law firm due to strict legal regulations.
Regulators heavily scrutinize the way invoice payments are allocated, how client costs are handled, and the management of retainers; an error in any of these areas could very well be the end of a firm. While it’s possible to modify a general business accounting program, a legal-specific solution that is built to handle the specific needs of law firms is the best way to protect both yourself and the firm. Remember, at the end of the day, the attorney – not the accountant – is held responsible for the firm’s books.
Obstacle #6: Maintaining IOLTA Compliance
While all business must have proper back office accounting practices in place, trust accounting (often referred to as IOLTA) is unique to the legal industry. Proper trust management is admittedly a complex issue, but attorneys must take the additional steps necessary to understand it. Failure to stay current and compliant can result in ethics violations and possibly even disbarment.
Each state maintains their own trust accounting guidelines, but a legal-specific software solution that has safeguards in place to prevent the commingling of funds and overdrafts at the matter or ledger level is a good place to start.
Obstacle #7: Disconnected Events, Tasks, Docs & Emails
Scouring through endless files on your computer to locate a missing document, or searching through emails to find out when you’re supposed to meet with a client isn’t just a waste of your valuable time, it could be a step toward noncompliance.
A fully integrated system that not only organizes events and tasks but also allows them to move directly into your billing workflow ensures the firm is able to collect payment for all the work that gets done. Additionally, this promotes efficient collaboration between multiple team members, as calendar events and tasks should be shareable across the organization. Here, cloud access is again important, as it is the only way to make sure your firm keeps everything up-to-date, as it happens.
Keeping a law firm up and running is in itself a big responsibility, and with the pressure to stay competitive in today’s market, it may feel like the list of priorities is just getting longer. This is where a legal-specific software solution can help, not only to take some of the work off your plate but also to set your practice up for success. For even more information, join our upcoming webinar Become a More Competitive Law Firm in 2018 or start a trial of CosmoLex today.