“Follow the money. Always follow the money.”
When Deep Throat said this to Woodward in All the President’s Men, he may not have been referring to legal practice, but the rule still applies. Whether you’re trying to uncover a scandal or grow your income, tracking financials is key. But, with so many moving parts to a law practice, where should you start?
After over a decade of working with attorneys, the experts at CosmoLex have identified five key areas that are closely intertwined to the financial success of each law practice. To maintain and grow a truly successful law practice, all of these areas must be properly monitored on a regular basis.
- Legal Time & Billing
- Business Accounting
- Trust Accounting (IOLTA)
- Event & Task Management
- Document & Email
Modern tools have greatly improved the ease and ability of tracking these areas, but law practices are now often tasked with learning and managing multiple systems all in the name of “productivity and prioritizing”. While this can be a lot to manage for any business, it can be even more detrimental to a law practice that must adhere to strict billing and accounting regulations. This is why CosmoLex recommends using a fully integrated and legal-specific solution to manage and set priorities for your law firm.
One benefit of using a legal-specific, fully integrated tool, such as CosmoLex, to manage your practice is that you can utilize a function known as class-based accounting or class-based reporting. Class-based accounting can benefit your firm in three main areas:
Tracking Profit Centers — Focus on the areas of your office that are actually making money. Report by type of case or practice area specialty that contributes the most to your bottom line.
Recognizing Rainmakers — Identifying the people, partners, departments, and/or freelancers who are bringing in business to equitably allocate compensation.
Targeting What’s Important Today… and tomorrow. It won’t take long to pinpoint what pays the bills and what’s costing your firm the most money. Once this information is in hand, it will be easy to prioritize your tasks and begin profiting.
Implementing a legal-specific accounting solution means that you will be able to track profitability in a variety of ways, allowing your firm to set its priorities based on hard data:
- By Revenue or Profit — How much are you getting paid and how much of that is being allocated to expenses
- By Customized Criteria — Focus on the areas that are important to your firm
- Office location or Department
- Practice Area or Type
- Attorneys, Referral Partners, and Associates
- The limit is your imagination!
This financial data gives your law firm the ability to make strategic decisions and compete with the competition the highest level.
Utilizing the proper tools to set priorities for your practice is the first step toward success. If your firm is not currently utilizing a legal-specific accounting solution, it’s time to consider making a switch. it may seem like quite the time investment to upgrade your accounting system, and to be honest, it’s not always an easy task. That’s why CosmoLex has a professional team available to answer your questions.To learn more about legal accounting and setting priorities for your practice, watch our webinar, Setting Practice Priorities: Using CosmoLex to Track Financials & More.