{"id":5866,"date":"2016-07-20T09:23:43","date_gmt":"2016-07-20T08:23:43","guid":{"rendered":"https:\/\/www.clio.com\/uk\/?post_type=blog-post&p=5866"},"modified":"2022-12-19T18:13:01","modified_gmt":"2022-12-19T18:13:01","slug":"the-need-for-adequate-legal-accounting-skills","status":"publish","type":"post","link":"https:\/\/marketing.dev.clio.systems\/uk\/blog\/the-need-for-adequate-legal-accounting-skills\/","title":{"rendered":"The Need for Adequate Legal Accounting Skills"},"content":{"rendered":"

The Solicitors Disciplinary Tribunal (SDT), the independent statutory tribunal which considers complaints of misconduct against solicitors, has been keeping busy as of late with a sharp rise in the number of those appearing before the tribunal.<\/span> In 2021, the SDT <\/span>received<\/span><\/a> 136 applications for hearings involving practising solicitors, up from 114 in <\/span>2020<\/span><\/a>. What\u2019s more, <\/span>49<\/span><\/a> solicitors were struck off entirely.\u00a0<\/span><\/p>\n

Solicitors possess undeniable legal know-how. That said, it appears that many lack the accounting skills they (and their clients) require. The past year alone has seen countless examples of misconduct due to this issue alone.\u00a0<\/span><\/p>\n

An “exhausted” solicitor was recently <\/span>struck off<\/span><\/a> after overcharging clients by \u00a3474,108, admitting that he \u2018”struggled to control the management and volumes of work, and the increases in the costs of running a solicitors practice, particularly PII contributions, make it difficult to achieve the profitability required to remain a viable practice in the context of cash flow requirements.”\u00a0<\/span><\/p>\n

Unfortunately, that\u2019s not all. Another solicitor was recently <\/span>fined<\/span><\/a> \u00a315,000 after failing to properly manage their clients\u2019 financial affairs or protect their money or assets. <\/span><\/p>\n

1. Don\u2019t be scared to admit what you don\u2019t know<\/b><\/h3>\n

Solicitors are used to being the go-to experts. When clients are in a pinch, they turn to their solicitor for help. But lawyers aren\u2019t all-knowing\u2014they too have gaps in their expertise.\u00a0<\/span><\/p>\n

Nobody expects solicitors to be accountants. However, they do expect them to have the legal accounting skills required to run their firm properly.\u00a0<\/span><\/p>\n

Be honest with yourself. Are you muddling your way through your finances, hoping that no unexpected letters from HMRC arrive through the door? If so, take the time to read up on law firm accounting best practices: <\/span>client accounting<\/span><\/a>, <\/span>cash flow management<\/span><\/a>, and how to <\/span>generate consistent revenue<\/span><\/a>, among other topics.\u00a0\u00a0<\/span><\/p>\n

2. Create a robust legal accounting process<\/b><\/h3>\n

There\u2019s a saying that goes, \u201cIf you can\u2019t describe what you\u2019re doing as a process, you don\u2019t know what you\u2019re doing\u201d. This most definitely applies to law firm accounting. If firms can\u2019t map out their law firm accounting processes, this spells trouble.\u00a0<\/span><\/p>\n

Conversely, organisation, integrated workflows, and consistent task management should eliminate all anxiety related to your law-firm accounting and ensure that your time is structured and optimised.\u00a0<\/span><\/p>\n

So, what exactly makes an ideal legal accounting process?<\/span><\/p>\n

The \u201cperfect\u201d legal accounting system should include year-round expense reporting, accurate client accounting capabilities, and automated data entry. Most importantly, it should be purposefully designed around a law firm\u2019s needs\u2014not haphazardly thrown together in a last-ditch effort to avoid incurring the taxman\u2019s wrath.<\/span><\/p>\n

3. Use technology to build a strong infrastructure<\/b><\/h3>\n

You need to look beyond manually plugging numbers into spreadsheets. In today\u2019s fast-changing world, this is a system doomed to fail. When solicitors have 101 tasks on their plate, it\u2019s easy to miss a decimal point, or to fail to account for large chunks of money coming into the firm.\u00a0<\/span><\/p>\n

Implement industry-leading accounting software to take control over your firm\u2019s finances. Better still, go one step further by selecting a tool that integrates directly with your practice management software. If you\u2019re a Clio user, that might <\/span>mean<\/span><\/a> opting for legal accounting software integrations, such Quickbooks, Xero, Klyant, or The Cashroom.\u00a0<\/span><\/p>\n

Picking one of these tools means all data will automatically pass from your accounting system to your practice management software. There will be no data silos, no missing information. You\u2019ll always know exactly how much you\u2019ve received (or are owed), from which cases\/clients, and when it\u2019s due.\u00a0<\/span><\/p>\n

Take the stress out of law firm accounting. Select a reputable tool, integrate it with your practice management software, and focus on what matters: your clients\u2019 cases. <\/span><\/p>\n

4. Don\u2019t do it alone<\/strong><\/h3>\n

Bring in a professional, preferably one with an understanding of legal accounting who is familiar with your legal practice management system and accounting software. Try to avoid relying on unqualified spouses or partners to assist with your bookkeeping as they will not be able to provide you with the necessary business insight required. By doing this you can eliminate any anxiety which may occur around tax season.<\/p>\n

The SDT gives a warning that UK solicitors should take heed of: \u201cFrequently small problems escalate. Such solicitors would do well to remember that an admission of wrongdoing, a request for help, and an attempt to put things right may save a professional career.\u201d<\/p>\n

5. Remember: it\u2019s an ongoing process<\/b><\/h3>\n

Accounting, like the law, is evolving rapidly. Every year brings new regulations to contend with\u2014and new tools promising to increase efficiency and eliminate errors. The takeaway is simple: law firm accounting isn\u2019t a \u2018set it and forget it\u2019-type activity.\u00a0<\/span><\/p>\n

Firms must continually keep their eyes and ears to the ground. Solicitors should always be on the lookout for ways to shore up their firm\u2019s accounting processes. For example, by <\/span>signing up for webinars discussing the outsized importance of outsourcing<\/span><\/a>.\u00a0<\/span><\/p>\n

Don\u2019t fall behind. It\u2019s far easier to stay up to date than it is to catch up after the fact. <\/span><\/p>\n

6. Don\u2019t let your firm (or your clients) down<\/b><\/h3>\n

Improper accounting practices ruin firms. Solicitors might be struck off, clients\u2019 cases are affected, and they may even bear the financial brunt of their lawyers\u2019 lack of know-how (for example, by overpaying for legal services).\u00a0<\/span><\/p>\n

The solution is simple: stay on top of your accounting duties. Check out the latest resources, stay up to date with new regulations, and don\u2019t be afraid to admit what you don\u2019t know. Take ownership over your accounting before it unravels beyond repair.<\/span><\/p>\n

Most importantly, give yourself the peace of mind to focus on your clients.<\/span><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

The Solicitors Disciplinary Tribunal (SDT), the independent statutory tribunal which considers complaints of misconduct against solicitors, has been keeping busy as of late with a sharp rise in the number of those appearing before the tribunal. In 2021, the SDT received 136 applications for hearings involving practising solicitors, up from 114 in 2020. What\u2019s more, […]<\/p>\n","protected":false},"author":24,"featured_media":5867,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[12,29],"tags":[21,22,23],"coauthors":[31],"class_list":["post-5866","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-accounting","tag-accounting","tag-business-skills","tag-solicitors-disciplinary-tribunal","content_category-firm-performance","content_category-regulation-compliance"],"acf":[],"yoast_head":"\nThe Need for Adequate Legal Accounting Skills | Clio<\/title>\n<meta name=\"description\" content=\"Many solicitors struggle to master the accounting skills they (and their clients) require. 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