How Do You Know When It’s Time to Invest in Legal Practice Management Software?

CosmoLex Team

How Do You Know When It’s Time to Invest
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If you’re running a law firm, you’re running a business. Any expenses your business takes on—such as using legal practice management software—need to more than earn back the cost. 

For many law firms, a modern legal practice management system does just that. Although you do have to pay for it, it can save your firm valuable billable hours in the long run. So, how do you know when a practice management system makes sense for your law firm? 

Your firm lacks matter-centric organization 

One of the key advantages supplied by a good practice management system is matter-centric organization. Every email, task, event, document, billable item, and transaction is tagged to the correct client matter. 

This makes it easy for your team to stay organized, whether they’re collaborating remotely, answering a client’s questions over the phone, looking up notes on a matter, or checking to make sure all billable work winds up on an invoice. 

You need to streamline conflict of interest checks 

Effective conflict of interest checks are an ethics requirement for law firms.[1] 

This means checking for conflicts with: 

  • Team members and their families 
  • Former and current clients and their families 
  • Companies you’ve represented, as well as their officers, alternate names, and subsidiaries 
  • Adverse parties 
  • Common client name variations (i.e. “Jen” vs “Jennifer”) 
  • Clients represented by a team member’s former firm

It’s a long list—and a lot easier to manage if you have a matter-centric client information system checking for you. 

Monthly billing takes all day or longer 

If you need to spend more than a couple hours a month on various billing tasks, it’s time to upgrade to a legal practice management system. A modern system can be especially effective at saving law firms time throughout their legal billing processes.  

If you track your time—and you should!—then when it comes time to draft an invoice, the system can do almost all the work for you, leaving you with an invoice that’s ready for review. This approach also encourages lawyers to use consistent language when describing billable tasks—which clients appreciate. 

Additionally, a practice management system should make it possible to send out bills in bulk with just a few clicks—without printing or mailing anything. And your clients will appreciate the convenience of paperless bills and electronic payment options.  

An added advantage of electronic billing is that once payments have been made, this information can update automatically in your system’s legal accounting. You can also see if clients have opened the email and seen the bill. 

Start to finish, your billing process should be measured in minutes, not days. 

You have overdue client invoices 

Although it’s always possible to have the bad luck of getting that one client who just won’t pay, if overdue invoices are a chronic issue for your firm, a good practice management system might help fix the issue. 

Not only does a practice management system streamline the billing process—making it easier to get bills out on a regular, monthly basis—but it also comes with the advantage of automated reminders. A billing reminder can help prompt clients to pay without demanding mental energy from you. 

A practice management system can also monitor Works-in-Progress (WIPs) for you. Just choose the threshold amount, and it will prompt the client for replenishment. One of the best ways to avoid an accounts aging situation is to maintain a healthy retainer balance. 

Staff collaborates remotely 

If your staff sometimes—or frequently—collaborates remotely, a native cloud practice management system can be a huge boon. 

Not only does using the cloud mean that your team is always looking at the most recent version of a matter file and notes, but it also allows you to set up workflows. As each step in a workflow is completed, the next task is triggered. 

Workflows improve consistency and make it easier to train new staff, but they’re also extremely helpful for a remote team where everyone is working on multiple cases at once. Workflows help eliminate time and energy spent on back-and-forth communications among staff members and make deadlines easier to meet. 

Some of your clients prefer remote collaboration 

Client expectations have shifted significantly in the last few years, and many clients now want the option to work with you remotely. 

Your law firm needs a way for these clients to securely sign and share documents. And no, an email attachment is not secure. Instead, you’ll either need to use an encrypted email service or a secure client portal. 

Practice management systems with cloud capabilities should support a client portal. With the portal, you can securely send documents to your clients, get signatures, and message with clients. 

“Three-way reconciliation” is a dreaded phrase 

Some state bars require law firms to run reconciliation and three-way reconciliation of client trust accounts every thirty to ninety days.[2] 

The requirement is in place for good reason. It helps give clients peace of mind about handing over their money to a lawyer. Likewise, if a law firm practices regular reconciliation, it’s easier to catch mistakes and fix them while they’re fresh. 

However, when this process needed to be conducted manually, it was often a lengthy and frustrating process for the lawyers involved. Fortunately, that’s no longer the case. 

A lot of the heavy lifting for reconciliation and three-way reconciliation can now be done by your practice management system. It saves you time and helps ensure you aren’t committing an ethics violation. 

Take advantage of the free trial 

If you’re curious about using a legal practice management system, you don’t need to shell out right away. Reputable systems—where the developers are proud of their product—should offer a free trial period. 

Do your homework and decide on the aspects of a practice management system that would be most helpful to your law firm, then test them out for free. 

Better yet, if you use a cloud system, you shouldn’t have to pay a hefty fee to get your firm up and running. Instead, you should be looking at a manageable monthly subscription fee. A big shift for the better doesn’t need to come at a big cost. 


References

1. How to Perform Quarterly Trust Reconciliation
2. Rule 1.15: Safekeeping Property

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