Diminishing ROI of “Just Accounting”

Just Accounting

The power of words we use can be impactful beyond our imagination.

I recall hearing over the years, “just clean up…”, “just do…”, and quickly dismissed the understated intent behind the request.  However, I’ve now discovered the power that lies within the word “JUST”.

I speak with attorneys / business owners and hear them say, “I’m just a small or solo law firm”, or “I just need basic bookkeeping”, or “I just need help with my billing”. What they don’t seem to realize is that they’ve “just” committed a disservice to not only themselves, but to their business.

We all do this at some point. Minimizing any task, we are saying this simply isn’t important.  When I hear these “just” comments, I immediately interpret this to mean that the individual doesn’t really care about their firm or business.  Really?? Why so blunt?

Just Starting…

Yes, there can obviously be times when a business is starting when they may not need a full time employee meeting their accounting needs.  That’s fair.  When you only have a handful of transactions, and you are able to have a basic spreadsheet or checkbook, then you may not need a full system.

Just a small law firm…

I more often hear this from established attorneys and small law firm business owners. They not only need an accounting solution, they likely are bleeding cash they never knew about.  What’s worse for attorneys is they have some mental block to admit their Trust Accounting may be FUBAR.  Per the ABA:

“ledger records for all client trust accounts showing, for each separate trust client or beneficiary, the source of all funds deposited, the names of all persons for whom the funds are or were held, the amount of such funds, the descriptions and amounts of charges or withdrawals, and the names of all persons or entities to whom such funds were disbursed”

This sounds simple, right? Yet, we see this incorrectly accounted all the time.  Even when the firm is just starting, the multiple steps in and out of the IOLTA / IOLA Account to operating account for each client can and is often missed (even inadvertently).

Just automate…

Law firms and attorneys, have a false sense of security in the practice manager or case manager systems to fully and automatically solve their accounting.  Far too common, the marketing teams at software applications like Clio, Practice Panther, MyCase, QuickBooks, or Xero, overpromise technology.  Yes, there is automation, but that has to be overseen, monitored, and checked.  (Do you really believe Danny DeVito does his own books???)

Just delegate to a staff member…

The biggest misconception that we see every day is law firm owners being told by their staff that everything is entered into their systems.  Even the best intentions have human factors involved.  No one is perfect, and without a system of checks and balances in place to identify the possible IOLA / IOLTA Trust Accounting errors, attorneys are at a higher risk for disbarment.

We do know that there are amazing staff members, and we have found some that actually understand and pay attention to all of these details.  Acknowledging that the risk is to the attorney personally, means there is a potential for error.  Do you really know how to check and verify the data?

Just hire a CPA…

The time and money that a CPA invests into these credentials is massive.  Unfortunately, Law Firm accounting is not like any other type of business.  When we can speak with a CPA firm, who we are collaborating with, for a client’s benefit, a few quick conversations can quickly identify the subtle differences and unique scenarios.  The CPA has to deal with a ton of shoeboxes filled with crap and the tools needed for most businesses don’t apply to lawyers.

If you are a small law firm, solo attorney, or business builder looking for actual insight into your business, just reach out.  You owe it to yourself to not “JUST” diminish any aspect of our business, especially the financial livelihood.  Otherwise you might JUST become another former business.

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