When it comes to software solutions that law firms can use to meet their accounting needs, there are a seemingly endless number of options. The issue, though, is that not all of these solutions are designed to meet the unique needs of those in the legal field.

While you can use a hodgepodge of industry-agnostic accounting tools to get the job done at your law firm, consider whether you would benefit from a more appropriate solution.

What is legal-specific accounting software? 

Legal-specific accounting software is accounting software that’s designed for law firms and attorneys. It includes legal billing and payments, trust accounting, and general business accounting. Unlike popular general accounting software like QuickBooks®, legal-specific accounting software is based on legal industry requirements, reducing the risk of compliance violations.  

While some legal-specific accounting software options act as a standalone product, others provide a fully integrated solution, meaning that they are combined with practice management software. Integrated legal software benefits law firms enormously by streamlining processes, reducing the need for manual data entry, and enhancing their ability to scale their business.   

Four signs you might need legal accounting software 

We know it can be hard to part with software that you’ve invested time and money in, but sticking with solutions that aren’t serving your best interests is a risky long-term strategy. Not sure if you should consider other options? Here are four signs that your law firm needs legal-specific accounting software.

1. You rely on trust accounting 

If your law firms maintain client funds in trusts, then you’re likely no stranger to the complexities and regulations that come with trust accounting.  

With industry-agnostic accounting software, you might be opening yourself up to risks that could have severe consequences for your firm. Even a simple mistake with trust accounting could lead to audits, fines, or legal liability. 

How legal-specific accounting helps 

If your firm relies on trust accounting, it’s worth investing in legal-specific accounting software that facilitates compliance with baked-in safeguards. 

The best software solution will provide you with tools that: 

• Help manage individual client ledgers 
• Allow you to process online payments for individual or bulk invoices using trust funds 
• Allow for automatic trust-to-general transfer 
• Prevent trust accounting mistakes like commingling or ledger overdrafts. 
• Generate three-way reconciliation reports in one click 
• Create comprehensive trust recordkeeping reports 
• Track and disburse third-party lien claims

2. You accept credit card payments 

When paying for legal services, most clients expect to be able to pay in the way that’s most convenient for them. These days, that often means paying with a credit card. If your firm is accepting credit card payments, you face some challenges that you’ll need to address to stay compliant. 

For example, firms that use separate systems for billing and accounting can run into problems because credit card companies usually deposit payments into operating accounts in a batch, and it can be difficult to track online payments when there’s no memo attached to these transactions. 

How legal-specific accounting helps 

By leveraging a software solution that makes it easy to accept online payments and tracks them to ensure they’re properly managed in billing and accounting to keep client trust ledgers and books accurate, you’ll make things convenient for your clients and easy for your firm.   

3. You’re swamped with data entry 

If your law firm is using separate systems for billing and accounting, your team will need to enter financial information twice. This cumbersome data entry process not only eats into valuable time you could be spending on other tasks, but it also opens you up to costly mistakes caused by human error. 

How legal-specific accounting helps 

By utilizing a legal-specific accounting solution, you can minimize the risk of human error and create more efficient accounting processes by letting the software do the heavy lifting for you.  

The best accounting software will help you by: 

• Providing validation and error checking to prevent common data entry mistakes, with real-time alerts for potential errors 
• Streamlining your data entry workflows with autofill and data import options that reduce the need for manual entry and prevent human error 
• Automating data reconciliation across bank accounts, client ledgers, and trust accounts 
• Providing real-time visibility and reporting to identify and correct mistakes in data entry 
• Allowing you to trace errors back to their source with audit trail and data tracking tools 

4. Your accounting workflows are bottlenecked 

If your firm is experiencing bottlenecked workflows, it could be because you’re using industry-agnostic software solutions that aren’t designed to meet the specific needs of legal professionals. 

All too often, generic software creates problems because of inefficient integration with legal systems, limited compliance support, and analytics and reporting capabilities that are severely lacking. 

How legal-specific accounting helps 

When you use a legal-specific software solution, your firm can reduce the chances of bottlenecks slowing you down, streamline your workflows, and increase efficiency, which is critical to growing and scaling your firm.  

The right legal accounting software will help you eliminate bottlenecks with features like: 

• Process automation for tasks like bank reconciliations, expense tracking, and the generation of financial reports reduces the time your team has to spend on these processes. 
• Workflow optimization allows you to customize your workflows, create task dependencies, assign projects to collaborators, and establish approval processes, making it easy to manage and track all your projects. 
• Real-time collaboration enables easy communication and status updates between every team member involved with a project, removing the need for back-and-forth exchanges or delays caused by waiting for updates.  
• Centralized data management consolidates critical information like client data, billing records, trust accounts, and general ledgers all in one place, eliminating the need to search for information across multiple systems. 
• Reporting and analytics tools that generate customizable reports to provide you with precise insights into your firm’s financial performance. These reports can help you identify bottlenecks, find areas for improvement, and make data-driven decisions to optimize your workflows. 

Give your firm tools that were designed for the legal profession with CosmoLex’s legal-specific accounting software 

If your law firm is still using multiple tools that weren’t designed to meet the specific demands of the legal industry, you could end up losing time and money trying to force them to work in concert with each other to get the job done. 

If you want to optimize your processes, streamline your workflows, and minimize the risk of mistakes caused by human error, CosmoLex has all the solutions you need.  

From trust accounting solutions with built-in compliance safeguards that protect your firm to tools that automate repetitive tasks and reduce data input errors, we’ve got you covered.   

Ready to give your firm tools designed specifically for the legal field? Make the switch to CosmoLex today. Take the first step by signing up for a demo or a free 10-day trial.