How Much Is in the Till?

Published March 18, 2008

So you’ve raised your rates, you’ve stopped discounting—now all that’s left is to count the fees as they come rolling in. Keeping track of what’s in the till is fundamental to The Business of Law®, but if you’re a sole practitioner without an office manager it can be a daunting task—especially if, like many lawyers, you have minimal business background.

Fortunately, today’s financial information systems and software can and do produce extremely detailed assessments of law firm financial performance. The most practical approach to understanding your firm’s finances is to use software that makes the assessment process virtually automatic and points out major variances for attention. New tools from companies like Juris and Redwood Analytics can replace static financial information with a continuous flow of automatically collected current operating metrics.

These companies, among others, take the raw accounting information from individual firms and compile them with similar accounting information from other law firms. Then the information can be filtered into quartiles so that all law firms that participate can assess where they are relative to other firms. For example, using key metrics, a law firm can review PPP (profit per partner), billing turnover rates (how frequent is the accounts receivable turning,) and a host of other important financial measurement tools.

Financial software typically provides both accounting and disbursement modules (with the latter including firm expenses, client expenses, trust transactions, receipts from clients, and disbursement write-offs). It should also be able to compare actual performance to budget, changes from prior years, and reports on accounts receivable.

The most practical first step to assess what software is right for you is to go to the web sites of the main providers, www.juris.com.
Both offer product previews and interactive features that will help you decide which direction to go.

Categorized in:

Audience type: Administrators, Associates, Large Law Firms, Small Law Firms, Sole Practitioners