How Best To Maintain Law Office Financial Records
Record keeping is an important aspect of any attorney law office, and while you may be an expert in the field of law, you may not be quite so knowledgeable in areas of accounting and may not feel confident knowing how to accurately and efficiently maintain your law offices financial records.
Ensuring that you understand the basics of maintaining your financial records as an attorney, and using specialized accounting software or engaging with the services of an accounting firm, will help you to keep your practice safe, secure and legally compliant.
Accounting systems for law offices:
Strong internal controls to monitor revenues and expenses, are vital components of a good accounting system, and are applicable to most small businesses in general.
As an attorney with a law practice, your business must also have those tight internal controls within the accounting system, both fees billed and costs and expenses advanced for clients. Your fee is based upon the amount of time that you spend on your clients’ projects, whether bills are retainer specific, annual retainer, contingent fee or referral fee. So detailed records need to be maintained to accurately track the time spent on each case.
Manual or electronic systems can be used to track your time and any expenses that are chargeable. Accounting software enables you to record a single frequently recurring transaction, and for attorneys, the cash receipts journal in the software gives you a breakdown of fees received and expenses reimbursed, including an allocation between regular overhead expenses paid and the costs that a client has paid. How complicated the cash receipts journal
will be, depends upon the law firms size, but the most basic elements are the bank statement and check copies.
Other vital records for attorneys:
Most attorneys, in addition to the records mentioned above, maintain at least the following:
Appointment book: this contains records of appointments, and usually appears in the format of a calendar
Accounts receivable journal:this shows the receivables billed but not collected
Client ledgers: a description of services rendered, charges and credits, a summary of charges that are non-billable and final invoices
Case time records: each clients’ times are recorded
Cases-progress register: legal works that might still be in progress are summarized here and usually organized using the clients’ name.
Time summary reports: clients or attorneys can usually sort these and they’ll contain information such as, time, dates worked, billings and any other chargeable expenses.
Most attorneys, no matter what their specialty, will keep at least these basic books and records on file, and many lawyers will use accounting software and legal practice management software to best maintain their books and records in an electronic format.
If you are an attorney and need help maintaining your financial records, there are many bookkeeping and accounting firms out there who will specialize in your field, and will be able to give you accurate and up to date advice and guidance for your law firm.