For those of you who have been following this series of blog posts on surviving a legal audit minefield, thank you and I hope you have found it to be helpful. For those of you who haven’t been able to read the three previous posts you can do so at the links below:
- Legal Accounting Audit Flags
- The Tools Needed To Successfully Avoid or Survive an Audit
- Accurate Legal Accounting Reports
In the final post of this series we’ll focus on a law practice management software that will meet on all of your firm’s needs when it comes to remaining compliant, surviving, and even avoiding a legal accounting audit on your firm.
Legal Accounting Audit Red Flags
In the first post of this series we identified 8 red flags that could trigger a legal accounting audit on your firm. Those 8 flags are:
- Commingling of Client Funds
- Trust Funds Overdrafts
- Failure to Perform 3 Way Trust Reconciliation
- Incorrect Posting of Client Funds
- Uncleared Checks & Deposits & Uncollected Funds
- Improper Accounting of Matter Costs
- Irregular Allocation of Invoice Payments
- Incomplete Data and Reports
While all of these red flags are things your firm absolutely needs to avoid to remain compliant and survive a legal accounting audit. General purpose business accounting software will not go far in helping your organization avoid these major pitfalls.
Data Accuracy Across Legal Billing and Accounting Software
In the second post we highlighted the need for not just for legal accounting software but also legal billing software too. Legal accounting software will consider client funds, trust accounting needs, and liabilities that are unique needs law firms have. Legal billing software takes payments from retainers and trust account balances into account that general purpose billing software doesn’t.
While these two legal specific systems are necessary for your firm to remain compliant, a challenge still lies in keeping the two systems synched. Data needs to be entered twice, and must be accurate in both systems. Data inaccuracies could bring on compliance issues, billing inaccuracies, and lost revenue.
What Is The Right Solution When it Comes To Law Practice Management & Compliance?
Compliance around legal accounting is far from simple. Accountants aren’t lawyers and lawyers aren’t accountants. This creates an area that calls for both lawyers and accountants to call on expertise they simply don’t have. The question becomes, how do you take the extremely complicated area of compliant legal accounting and simplify it. The answer is an all inclusive law practice management system like CosmoLex. CosmoLex brings legal time and billing, legal accounting, and law practice management all under one umbrella. This means data only has to be entered once and the appropriate reports can be accurately created pulling data from both your legal billing and legal accounting systems. And because CosmoLex is a legal industry focused solution trust fund accounting safeguards safeguards protect against overdrafts and check fraud. Your trust accounts will always be current, compliant, and “audit-ready”.