Do you feel like your law firm is hemorrhaging money? Maybe it is and you don’t even realize it. Take the time to evaluate how your firm operates and identify how you can help stop the bleed.
Top three ways to save:
1) Don’t duplicate effort or function.
Many law firms pay top dollar for accounting software that is meant to have all the functionality necessary to reconcile their IOLTA, operating, or other business accounts. The problem is, most lawyers may find these functions too complicated to use. This routinely requires law firms to pay not only an accountant, but often a bookkeeper as well.
Paying two professionals to perform overlapping functions that a firm is paying software to perform, simply doesn’t make fiscal sense. Not to mention that means paying for THREE users, minimum – owner, bookkeeper, AND accountant – which could range from $25 – $150 per user. If you have more than one equity partner, just keep adding dollar signs. That amounts to paying six different fees to have one function performed.
The purpose of software is to demystify accounting and bookkeeping, but if the software is too complicated for attorneys to use, it is a waste of money to pay for it! Check out no-cost solutions, such as Nota by M&T Bank for cloud-based IOLTA management.
Duplication of effort and function is equally wasteful when applied to the use of firm associates. Firms often treat associates as interchangeable and will send any associate on any case. Lack of case ownership can not only be discouraging for staff; it is also a huge time and money waster! You cannot bill clients for the time it will take for each new associate to familiarize themselves with each case. Nor can you retrieve those lost hours, which could have been billed on someone else’s case. Detailed note taking and file maintenance from an associate should leave more than adequate information in the case of attrition, and the file is likely to be left in much better shape.
2) Billable hours and working all-day are two very different things.
Once you start your own private practice, you’ll begin to realize the true cost of inefficiency. Associates in law firms may soon find that putting in 8 hours of work is not the same as creating 8 billable hours.
Clients don’t pay for your lunch hour. They don’t pay for the time it takes you to come up the learning curve while you contact other colleagues for samples or while you learn a new area of law. Clients don’t pay for the administrative time it takes for you to enter your hours, or the time that you need to take a personal phone call or address a text message. And clients definitely don’t pay for all the time it takes you to sort out your IOLTA accounting.
That last point is an important one — Unfortunately, IOLTA complexity is frequently correlated with the busier times for firm business — when your firm is busiest attending to client matters is when your process for IOLTA management needs to perform at its best. Make sure you have a process in place that minimizes your time so you can continue to focus on your clients and billable hours.
Whomever coined the expression, “Time is money,” must’ve been a lawyer. Any attorney will tell you how easily 5 p.m. can arrive, and only 4 or 5 hours have been billed. Save time in every possible way you can, so that your attention is devoted to billing hours of substantive work.
3) You need to spend money to make money – but do it wisely.
Smart spending means paying only for things that will return to you the value of that investment. Advertising for example, is only worth it if it pays for itself in new clients every month. Advertising that isn’t paying for itself isn’t worth it. Firms should try to avoid this sink hole expense by working closely with advertising firms to monitor performance. If the performance isn’t there, you may want to consider terminating the relationship with that advertising firm.
Similarly, don’t pay for things that you can get for no cost. If you must pay, make sure it’s best in class. It may be time to take a fresh look at your accounting software. Are you getting what you pay for? Is it specially tailored to the needs of law firms?
So what does this all mean?
Invest in the right relationships, tools and processes that support efficiency, accountability and oversight. Who you work with today, may not be the best fit for your firm tomorrow. Choose wisely and ask yourself the tough questions. The answers may require some changes, but it will pay off for you and your firm in the long run.
The best ways to help save money are:
- Cutting down on duplication of efforts
- Putting processes in place to help maximize your billable hours (Don’t forget to find the right bank with tools to help simplify and create oversight into your accounts with little to no cost.)
- Knowing that what you are paying for is best in class – do your research!
About Nota by M&T Bank
Trust accounting can be time-consuming. Every minute an attorney spends managing an IOLTA account is a minute they can’t spend practicing law. At the same time, the protection and proper management of client funds is incredibly important. Mismanagement of client funds is a common reason why legal professionals face disciplinary action, potentially including disbarment.
At Nota, we’re helping attorneys manage their IOLTA accounts by closing the loop between their bank account and client ledger. Our mission is to help attorneys feel more organized and at peace with trust accounting. The process is complex, but it doesn’t have to be.
Book a no-obligation demo today and see how Nota can help you spend more time practicing law and less time managing your IOLTA account. Visit www.trustnota.com to learn more.
Paul Garibian is the President of Nota. With over eighteen years of experience in financial services and technology, Paul’s goal is to create a digital bank for attorneys, solving their IOLTA management challenges and more. Paul can be reached at firstname.lastname@example.org.
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References to “IOLTA” or “Interest on Lawyers Trust Account” shall be interpreted to include “IOLA,” or “Interest on Lawyer Account,” and “IOTA,” or “Interest on Trust Account,” as applicable in a particular state.
Nota is a product offered by M&T Bank. It is available to attorneys whose offices are located in and who are practicing law in NY, NJ, MD, PA, DE, CT, VA, DC, FL, and WV and to whom the rules and regulations for IOLTA accounts are applicable. The advertised product and its features and availability are subject to change at any time and without notice. Use of the product is subject to and governed by certain terms, conditions, and agreements required by M&T Bank.
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