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Legal Billing Software Is Critical To Your Bottom Line

By Author: Ryan Sparrow
Total Articles: 22

As an experienced lawyer you know that cash flow is critical to the success of any business. How many times have you had to deal with a client whose business has failed simply as a result of lack of cash flow? Lack of sales is one thing, but simply not collecting the money that is owed to you in reasonable time is quite another.
While some businesses are set up to pay their suppliers promptly, there are many others who see delaying payment for as long as possible as a way of earning profits. Some of them – often very big businesses who think that they can wield a big stick over their suppliers - are quite blatant about it.
Unfortunately, the legal profession is not immune to clients like this. If you have a case which is ongoing for many months then your client will doubtless keep up payments on time. However, there are many other situations where the matter is completed and there is no incentive for the client to pay. Legal billing software can help you to overcome these problems.
The legal industry is unique as regards some aspects of billing. What works for a car repair business, a scaffolding company, or an electrician is not going to work for you.
First you have matter based billing. If you are working for a client on the case against him for damaging his neighbour’s property and at the same time recovering a debt owed by one of his customers, they are two separate matters. You have to keep them completely separate on your books. If you recover the money he is owed, you can’t simply offset it against the case against him. There is generic software available such as Quickbooks, for example, but it is not designed to handle situations such as these.
Different Types Of Billing
Then there are the different types of billing. Most firms have a number of different billing models for different cases. For something fairly straightforward such as bankruptcy, estate transactions, or traffic violations you might operate on a simple flat fee.
For other cases such as accident claims you may operate on a contingency basis – no win, no fee. If you win the case then you take the agreed amount plus your expenses, but if it goes the other way you take no fee at all.
Of course, much of the work of a lawyer is done on an hourly billing basis. You obviously have to track the hours spent on the case together with any expenses such as court fees. You then bill the client on an ongoing basis, usually monthly.
You may also work on a retainer basis of hourly billing. This is where the client pays you a fee in advance and you take payments from this retainer as you go. However, the money is not yours until you have carried out the work, so it has to go into a clients’ account until you bill the hours. You need to be able to bill the client for a further retainer as the case progresses when the funds become low. At the end of the case you obviously return any unused funds. You need specialist accounting software to track every penny that you have spent so that you can show that you have handled all of the clients’ funds ethically.
Of course, you may still use paper ledgers, but these take up a lot of time and are prone to error. If you don’t mind going home at night and poring over your bookkeeping that’s up to you.
You could try to set up a system using Excel, but that doesn’t help you with generating bills, interfacing with your bank account, and handling your clients’ money in the client account.
There are, of course, generic solutions such as Quickbooks, which we have mentioned, but again you don’t have features such as matter based billing and managing a client account.
The short and simple answer is that this is the 21st century and you really do need specialist legal billing software that has been designed to handle the invoicing and cash handling problems that are unique to the legal profession. 
Resource Box: DPS Software provides a complete range of software for the legal profession including legal billing software which works from the time record. The fee earner records time which is automatically added to the correct claim form and the claim form then automatically posts bills to the account. The software also covers retainers, client accounts, flat fee billing, and contingency cases.  

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