The Case For Using Specialized Legal Billing Software In Your Practice

Law firms have billing needs that are unlike any other service industry. Law firm billing software meets these needs in ways general software can’t.

Software enhances nearly any business, and a law office is no exception. The right software allows you to work efficiently, stay organized and widen your profit margin. Solo and small law practices often run on very thin margins so benefit from law practice management software even more than large firms do. However the mistake some practices make is to try to adapt generic tools like spreadsheets or general home or business accounting packages, only to discover it is difficult or impossible to complete tasks which are unique to law offices. While these other tools can be valuable parts of a legal practice’s technology investment, attorneys need a dedicated law office billing program that can provide the following features.

Matter-Based Timekeeper Rates – Standard billing software may allow you to set different hourly rates for Attorney Andrea and Paralegal Peter, but even a small law office may need more flexibility than that. The rates for one timekeeper might change based on activity, so Attorney Andrea could charge differently for hours spent traveling versus hours spent in court. Older clients might be grandfathered in on old rate structures. New or important clients might be given discounts off standard rates. Not only do you need law firm billing software that can easily charge multiple rates for each timekeeper, but you should be able to set rates at the matter level so attorneys don’t have to struggle to remember this account is on the old rates, and that account gets a 20% discount.

Matter-Specific Invoicing – It goes without saying that you need professional-looking billing documents, but you also need clear and easy to understand invoices. Uncluttered billing is more likely to be paid and less likely to be questioned by confused clients. Ideally you also need the ability to use different formats for different clients. You might want to bill flat rate matters one way and hourly on retainer matters another. Big clients might demand certain billing standards and you don’t want to have to refuse. Matter-specific invoicing allows you to specify a default billing format but also to specify new formats for individual matters.

Reports By Matter Owner/Category – Multi-attorney firms need to be able to study the profitability of each lawyer, but even solo firms may practice multiple areas of law. You need to be able to analyze costs and profits by sector to see if you might want to get out of certain unprofitable specialties or seek out more business in certain areas. If your law office software can produce detailed financial reports, you can take active control of your firm’s financial future.

User Permissions: Activity Restrictions – A secretary or billing clerk needs access to the legal time and billing software, but shouldn’t have the same capabilities as a senior partner. An outside auditor should be able to see the books but shouldn’t have permission to change anything, and shouldn’t be able to see client contact information at all. Safeguarding information is not just good information but is required by your state bar association. Failure to do so could result in disciplinary action.

User Permissions: Timekeeper/Matter Restrictions – One attorney shouldn’t have access to another attorney’s cases unless they are working together on a matter. The same goes for members of that attorney’s team. This not only protects the information but keeps users from having to page through irrelevant billing data to find invoices for their own matters. This might be done by restricting access based on the matter owner, meaning the attorney in charge, or by timekeeper, meaning anyone such as attorneys, paralegals and law clerks who might be incurring charges on a matter.

Individual User Preferences – Billing software typically has standard settings such as a default timekeeper that is filled in automatically for each new matter. While that’s fine for single-user systems, when you have multiple users these preferences can actually create more work rather than save time as users have to change information every time. Individual preferences allow each user to override preferences for the firm, allowing for example each attorney’s paralegal to set that attorney as the default matter owner.

Activity Log – Your law practice will be audited. That is a given. However an auditor is interested not just in what information is in your books but when that information was entered or changed. An activity log automatically creates an audit trail for each user’s activities. Auditors can see that information was entered in a timely fashion and not frantically keyed in once word of the audit came down. Managers can track errors to their source, sometimes finding workers who need more training on how to use the software properly.

Billing software for attorneys is far more likely to have these features than non-specific solutions. Yes you might be able to fake some of these capabilities in other programs, but it is going to take you more time and be less secure than if the feature is already built in. Use only specialized legal billing software in your law practice.

“Must Have’s” For Law Firms

Tracking billable hours, a variety of fee arrangements, restrictions posed by state ethics rules, and clients who dispute bills can mire your firm in billing issues and affect your bottom line. It is nearly impossible to run an efficient law firm without legal billing software.

Fee Arrangements Vary

Most law firms provide a wide range of legal services and offer any number of fee arrangements. Depending on the client matter and fee structure, billing options for an invoice may include one or more of the following fee types:

  • Hourly
  • Retainer-based hourly
  • Fixed
  • Contingency

State Ethics Rules Pose Billing Restrictions

Retail businesses choose a standard mark-up, assess going market prices, and charge accordingly for their products and services. Law firms, on the other hand, face unique requirements. While they can set their own rates, state ethics rules regulate how hours are billed and how law firms do business. Very often lawyers are required to continue representing clients even if the client’s payments are delinquent.

Lost Billable Hours Impact Profitability

Time is a precious commodity, especially for law firms. Client work is billable; the hours spent on bookkeeping are not. The choice is yours. You can focus on client matters and let a smart system handle time and billing, or lose billable hours as you cope with cumbersome, manual systems. How you track and account for billable hours directly impacts your firm’s profitability.

Preparation for Billing Disputes & Audits

Ethics rules also mean that if a billing dispute arises, a law firm must be able to produce a detailed audit trail, showing who did what and when, as well as how and what the client was charged. Back-office and especially the billing department personnel know that any manual billing system is a nightmare in the event of a controversy or audit. Tech savvy law firms understand the challenges and use cutting edge tools to work proactively and prevent questionable billing practices and disputes.

Legal Billing Software to the Rescue

Legal time and billing software designed specifically for law firms can provide many advantages. Not only will you get a total financial view, you’ll have the ability to:

  • Track all billable time. It’s a simple money equation: if you lose track of billable time, then you won’t send an invoice and you won’t get paid. Cloud-based legal billing software lets you enter billable hours from anywhere so you don’t lose track.
  • Automate invoice generation and payment receipts
  • Monitor and manage inventory (unbilled legal services)
  • Keep an eye on clients who are not paying on time
  • Maintain compliance with state trust laws with integrated trust accounting software
  • Protect client data with off-site backups. Cloud-based software does the backups automatically so you don’t have to think about it.
  • And best of all – produce detailed statements and records in case of an audit or billing dispute.

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