Tech Talk on Legal Billing Software, Trust Accounting Software, Divorce Financials Software, HUD Settlement Statement, Case Information Statement and Family Law Software

Top 10 Legal Billing Pitfalls – Mistake # 7 That You Can Avoid

Top 10 Legal Billing Pitfalls – Mistake # 7 That You Can Avoid

Pitfall # 7 – Missing Flexibility in Setting Billing Rates

In a typical law firm, there are a variety of professionals, from senior attorneys and associates to paralegals whose work is billed at different rates (also called Timekeepers). There may be times, when a professional’s rate may be different depending upon particular service rendered. For example, a lawyer may charge one rate for bankruptcy casework and another rate for family law matters. Any good legal billing software allows you to specify standard rates so that the person who enters timecards will not need to remember the different timekeepers’ rates.

While setting up standard rates is a good thing, it doesn’t solve 100% of the problem. A Timekeeper’s hourly rates are not concrete. In certain instances, the firm may discount rates. Matter A may have a 20% discounted rate, or Matter B, started five years ago, might be continued based on a 5-year old billing rate. At the time a matter is setup, you should be able to “locally specify” any billable personnel’s rate if it is different from their standard global rates for the matter. You need such flexibility to specify different timekeepers’ rates for different matters.

To see a detailed presentation on setting up flexible billing rates, register for Easy Soft’s interactive webinar, How to Avoid Legal Billing Pitfalls. Learn how to evaluate systems that can streamline your back office operation for legal billing, trust account management and collections, and in turn, tighten state regulation compliance and improve your firm’s financial picture.

Understanding the Positives of Legal Billing Software

Understanding the Positives of Legal Billing Software

In both business and in an individual’s personal life, quite possibly the biggest commodity today is time. Nowhere is this more obvious than in a law office. When time spent on clients is not accurately accounted for, both office efficiency, and even more importantly, the bottom line and financial health of the law office suffers. By using legal billing software, however, time can be managed in a much more efficient way.

The Purpose of Legal Billing Software

Legal billing software can help a law office in a variety of different areas. First and foremost, legal billing software can help track the time spent on different law office clients. This is important for not only the attorneys, but paralegals and other support staff. When time is tracked accurately, law office management can run reports to see how much time is spent on different clients and if anything is possibly being overlooked.

The accounting and billing staff can utilize the legal billing software to ensure bills are sent out on time and payment is received in a timely fashion. Legal billing software can also help mange late payments and collections, as well as remind clients when retainers are running low. This information is vital to understanding the overall financial heath of the law office.

An incredibly important part of utilizing legal billing software is having the opportunity to identify inefficiencies in various processes, which can help improve profits. By eliminating workplace inefficiency, all parties involved in the client support process can ensure they are working at their peak and providing the best possible service to their clients. Ultimately, when clients are happy, they will continue to have a long relationship with their law office.

Legal Billing Software and Client Attention

When an individual, family or business has a legal issue, they want to know they are getting the best possible legal advice, which will help them put their mind at ease. By utilizing legal billing software, they can be rest assured they are receiving the attention they require to resolve their issue and the law office can make sure nothing is being overlooked.

Top 10 Legal Billing Pitfalls – Mistakes You Can Avoid

Top 10 Legal Billing Pitfalls – Mistakes You Can Avoid

Pitfall # 8 – Not Handling Client Advances Properly

In today’s difficult economic climate, cash flow and profitability for most law firms depend on a roster of clients who pre-pay (also known as client advances or retainers). However, from an accounting/bookkeeping perspective, law firm client advances (retainers) need special treatment and must be handled very carefully. While most other businesses deposit client advances in their business account, lawyers cannot do so that easily.

For attorneys, improper handling of retainers can result in disciplinary action. Time and again, attorneys are admonished for failing to handle funds properly. Client advances may need to be deposited in a trust account or in the firm operating account, a decision that must be made carefully because state rules vary and change from practice to practice.

Since client advances are debited as legal fees are earned, your legal billing software must track the remaining retainer balances at all times and invoices must correctly reflect balances.

The varied nature of client advances, an initial deposit to trust and/or operating account, and reducing balances as fees are earned can significantly complicate your back office operation if not handled systematically. Due to the uniqueness of client advances and the consequences of mishandling them, choose your legal billing software with this fundamental requirement in forefront rather than as an afterthought and you can avoid Pitfall # 8.

To see a more detailed presentation and learn how easy it is to account for advances if your billing system is set up properly, register for Easy Soft’s interactive webinar, How to Avoid Legal Billing Pitfalls. Learn how to evaluate systems that can streamline your back office operation for legal billing, trust account management and collections, and in turn, tighten state regulation compliance and improve your firm’s financial picture.

What’s The Best Way to Start Building a New Conflict Checker Database?

What’s The Best Way to Start Building a New Conflict Checker Database?

In my earlier post Reduce Professional Liability Risk, I outlined how an effective conflict checker mitigates professional liability risk and how modern computer programs automate this tedious, but very necessary task.

Since then, I received many enquires about how to actually get a conflict checking system in place. Most first time users of Easy TimeBill program face the same “how to” dilemma.

The core of a reliable conflict checking system is your database of names; names of clients, key witnesses, adversary (the spouse in a divorce case), opposing counsel, etc. To build a database, you will need to integrate your current client information and contacts from closed cases. Just how should you go about adding all the pertinent details from your inactive case files?

One obvious choice is to add prior client information as individual clients. It would seem to make sense that if ALL past and current clients are in the database, you would have a reliable means to check for conflicts of interest. However, I do not like this approach because it clutters your current client database with closed case files.

A better method to inventory inactive case related contacts is to:
1. Create one “fictitious client,” e.g. your own law firm.
2. Enter all prior clients and their related contacts in the address book as a type of “friend.”
3. Go back to the fictitious client and assign all the newly created “friends,” designating the relationship type as “former client.”

Using the above method allows you to add former client case related names and details to your new conflict checker database, without commingling old and current cases. You will see only current clients as active clients, yet you will have a robust conflict of interest checking system because your database will contain current and prior client contacts.

Conclusion

The prevailing common law doctrine holds that if one lawyer in a law firm is disqualified from representing a client because of the former client conflict of interest principle, every lawyer in that firm is also disqualified. Describing the varying practices of firms' conflict-checking procedures, and confirming that most firms rely on some computerized systems. Lawyers and Paralegals should use a conflict checking system to screen for conflicts. Developing “bulletproof” conflicts checking systems is a necessary function of good law firm management. Hopefully this article has given everyone some ideas on how to design or improve current conflict checking system. While this may seem to be trivial, one cannot overstate the possible negative consequences of learning that one has a direct conflict at a critical stage in the representation of the client.

Top 10 Legal Billing Pitfalls - Mistakes You Can Avoid

Top 10 Legal Billing Pitfalls - Mistakes You Can Avoid

Pitfall # 9 – Billing Systems Unable to Handle Varied Fee Arrangements

Most law firms handle a variety cases and use an assortment client billing arrangements, such as hourly, retainer based hourly, fixed and contingency. Even if you predominantly practice one type of law and bill hourly, you are likely to have cases where you want a client to advance funds (retainer) or prefer a fixed fee or a contingency basis arrangement.

Your legal billing software must be able to handle all types of billing arrangements and the intricacies that arise. For example, when it comes to client retainers, states generally have strict accounting rules that require depositing unbilled/unearned client funds in trust accounts. Thus, it is important that your billing system can identify client funds vs. firm operating funds and process them correctly to meet trust accounting requirements.

You do not want to run into a situation where your legal billing system cannot process a fee arrangement properly. For a complete and uniform legal billing solution and to avoid Pitfall # 9, choose a system that can handle every type of billing arrangement your firm uses or may use in the future. Stay tuned for Pitfall # 8.

Register for Easy Soft’s interactive webinar, How to Avoid Legal Billing Pitfalls. Learn how to evaluate systems that can streamline your back office operation for legal billing, trust account management and collections, and in turn, tighten state regulation compliance and improve your firm’s financial picture.