Can general accounting tools be used for law firms?

It is possible for a law firm to use general accounting tools to keep its business and trust accounts, but can take a considerable amount of customization to make a non-legal specific tool work properly.^[1] The following changes must occur in order for a law firm to use a general accounting program:

1. Customization of the chart of accounts^[2]
2. Set up to track A/R on a cash basis (if you are in the U.S.)

While the customizations above will allow your firm to use general accounting tools for legal bookkeeping, they may not be enough to ensure compliance with the applicable state and local bar rules regarding client trust accounts. For example, general accounting tools do not:

1. Automatically notify the user when a check written out of a client trust account will result in a negative balance (meaning that bookkeeping and legal staff could accidentally withdraw more money from the client’s trust account than the client actually has in trust).
2. Generate the three-way reconciliation for your trust accounts which may be required by your state and local bar association.
3. Report client trust balances on their invoices.

Finally, the time and cost for customization can be significant enough to make a general tool a less than optimal bookkeeping solution.^[3] So while your firm could use a general accounting tool, long-term it is better to use a specialized legal accounting tool.

References

1. Accounting Software
2. Setting up a Legal Chart of Accounts for your Firm
3. Attorneys Should Use Legal Specific Software Over General Accounting