Most specialized and general accounting programs are able to allocate partial payments between cost advances and fees shown on the invoice. Some state ethical rules, however, require law firms to allocate partial payments to reimbursed cost advances first and attorney fees second. General accounting programs like Quickbooks® automatically allocate partial payments proportionally between each line item shown on an invoice, and that automatic allocation cannot be changed. If your state requires partial payments to be allocated to reimbursement of cost advances first, then using Quickbooks will cause your law firm to be in violation of your state’s ethical requirements. Specialized legal billing and bookkeeping programs are set up to automatically allocate payments to costs first.
So, while you can use general accounting programs to generate legal bills and track payments on those bills, if your state requires you to allocate partial payments to cost advances first, then using a generalized program could cause your firm to violate the ethical rules.
1. New Resources for Accounting for Law Firms
2. How can I enter a partial payment on an invoice but mark the lines that were paid so I know what is still open on that invoice?
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