A Buyer’s Guide To Legal Time & Billing Software
Originally published in LegalInk Practice Management, Technology: http://legalinkmagazine.com.
If you’ve shopped for legal billing software you have found that there are many options out there. How do you figure out which solution is the right legal billing program for your firm? This software buyer’s guide will offer advice on how to make that decision for your practice. Rather than comparing titles to one another and deciding which one is “best”, we give you the tools to make your own decision by looking at the minimum features needed in billing software for lawyers, listing the more advanced features to look for, and finally discussing whether cloud technology is something you should consider for your billing needs.
What Is Legal Time And Billing Software?
The obvious definition is that legal time and billing software is billing software specifically tailored to the needs of the legal industry. Of course, anyone could call their product a legal billing program, but here is a list of the minimum features you should look for:
Time Tracking – Nearly all firms use the billable hours for at least some matters. Built-in time tracking allows anyone from senior attorneys to paralegals to file clerks to log their hours on a matter.
Expense Tracking – Billable hours are only part of the fee your firm will charge. Expenses such as travel and witness fees should be included on the invoice to create comprehensive billing statements for your clients.
Professional Invoicing – It’s no good to track your fees if you can’t generate a bill! Law firm billing software should generate clean, uncluttered invoices that are easy to read and give your firm the professional image it deserves.
Payment Processing – Payments from clients might have to be spread among multiple matters so the software should allow you to apply a single payment to several outstanding invoices.
Retainer Management – Many law firms insist on an advanced payment that will be deposited in a trust. Integrated attorney trust accounting software allows payments to be drawn from client funds so the monies can be transferred to the operating account.
Aging Account – Not everyone pays on time, and it is essential to remain in contact with overdue clients. Easy generate of reminder messages will increase collections and improve cash flow.
Reports – Financial reports give you a clearer picture of the profitability and liquidity of your firm, as well as providing necessary information in case of an audit or billing dispute.
What Do You Need From Your Billing Software?
You may want to know the name of the best law office management software, but the fact is “best” is a tricky word. The best software for you may not be the same as the best software for the firm down the street. You are the ideal judge of what your practice needs and how the different billing products satisfy those needs.
Don’t make the mistake of shopping by feature lists. Rather than looking at what the software can do, first figure out what you need it to do. What’s the point of buying software with sophisticated check printing features if you haven’t issued a paper check in five years?
Although you need to figure out your own priorities, here are the top 10 billing features most firms want. Use this list as inspiration for creating your own list of must-haves.
1) User-Friendly – This is an overused term but it is an important one. Some billing software titles have steep learning curves and are difficult to install and use. They might have great features, but nobody can figure out how to use them so what good are they? You end up spending money on high-priced consultants to set up your software, and that is more money out the door.
Every company claims their product is user friendly, so you should try it for yourself. Download an evaluation version of the software and use it with cases from your own practice. You should be able to enter fees and generate your first invoice within a few minutes. If not, then this is not user-friendly software.
2) Billing Software For Attorneys – Yes we’ve emphasized this already, but we’ll say it again: law practices simply can’t function under the limitations of generic billing software. Features such as matter-based billing, integrated trust account management, and specialized reporting aren’t found outside of the realm of legal billing software.
3) Multiple Billing Rates – Hours billed by a paralegal are not going to be the same rate as hours billed by a senior attorney. Even a single person often won’t bill the same amount. An attorney might bill different rates for different activities. Certain clients might be given discounts, such as clients who have been grandfathered in on an old rate structure.
4) Custom Invoices – You want to send out professional-looking invoices, but that doesn’t mean you want generic forms that look like every other bill they get. Customization allows you to put your firm’s stamp on it, even if it’s something as simple as your logo in the corner. It also gives you control over what is shown and where it is displayed. Customization should be easily done and not require outside help.
5) Overdue Notices – Don’t ignore overdue accounts, assuming people will pay when they get around to it. Numerous studies show that reminder letters greatly increase collection on delinquent matters. A single display should show all unbilled and unpaid matters so you can see your practice’s financial health at a glance. The software should be able to generate all reminders in a single batch rather than forcing you to laboriously generate them one at a time. The program should have an internal email function so you don’t have to use an additional program to send the reminders.
6) Multi-User Access – Large firms can’t afford to have employees sitting around waiting for the billing system to become available. Everyone should be able to log in when needed. Even solo practitioners often need to give access to part-time help or to outside bookkeepers.
7) Access Permissions – Not all users should have the same privileges. A clerk whose job is to generate and send invoices each month probably shouldn’t be able to enter new charges or delete information. This is especially important for trust fund software functions, which should be carried out only by a few people in the firm.
8) Integrated Trust Account Management – Nearly all law practices handle trust accounts in one way or another. Mismanaged trusts are one of the leading sources of ethics complaints. Although you could use another program to handle trust accounting, trying to track transactions in two separate places will inevitably lead to costly mistakes. The separation of trust accounts and operating accounts protects your clients, as well as you and your practice. Basic activities such as disbursement check printing, three-way reconciliation report generation and paying invoices from retainer funds are absolutely necessary. Trust software also prevents common trust errors such as overdrafts.
9) Dispute Resolution – Sometimes you make a mistake. Sometimes clients are simply unreasonable. In either case, if a client files a complaint against you then you need to be prepared to defend yourself. This can be a problem if the complaint is filed years after the fact. However legal billing software puts all the protective documentation you need at your fingertips.
10) Data Protection – Have you backed up your computer today? The perversity of the universe guarantees that your computer will die at the most inconvenient time, so you need to conduct regular backups. Outside backup utilities are useful but it’s also helpful if the software itself has an integrated backup function so you can make copies of your billing every time you use the program.
Are You Ready For The Cloud?
By now you’ve surely heard about cloud-based software, but if you haven’t here are the basics. Unlike a traditional desktop program that is located on the computer in your office, a cloud-based program is installed on the software company’s own servers. You access your information across encrypted internet connections.
Most law firms should seriously consider a cloud-based rather than desktop-based billing solution for these reasons:
Device Independence – Windows, Mac, iPad, Android, smartphone, your coffee machine, whatever. If it has internet, you can use it to access your billing. (OK, probably not your coffee machine.)
Mobility – You are no longer chained to your desk. Instead, you can update your billing or generate invoices from home, the courthouse, a mediation site or anywhere else you have internet access.
No IT Expertise Needed – The software is installed and maintained by the software developer so you don’t have to deal with technical issues.
Data Protection – Automatic backups every few hours protect your data from everything from hard drive failure to natural disasters.
Better Security – Everyone thinks the cloud is unsafe, but professionally-managed servers are actually more secure than your office desktop.
To be fair, there are a couple of disadvantages to using cloud-based software:
Internet Required – Although the internet is nearly everywhere, if you tend access your billing records in areas that don’t have reliable internet then you might be better with a desktop- or laptop-based solution.
Monthly Fee – Desktop software requires a one-time licensing fee while cloud-based software will incur a small charge every month. Over a long period of time, cloud software will cost more. However desktop software often requires a periodic fee if you want to continue receiving technical support, so it might not be as cheap as you think.
When it comes to shopping for software, don’t listen to your friends, software reviewers, or the sales rep who is on commission. Analyze your needs and make your own decision. Based on this information you should be in a position to shop for the best law firm billing software for your practice.
About the Author
Dr. Rick Kabra is CEO of CosmoLex and has over 10 years of experience in the legal software industry catering to the specialized technology needs of small to mid-sized law firms. Rick has given numerous seminars and published articles on legal technologies such as law practice technology management, cloud computing, and legal billing & trust accounting compliance.