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February 13, 2024 Best of ABA Sections

Shopping for an Accounting System

Catherine Sanders Reach

For many lawyers, looking for an accounting system may be as enjoyable as a root canal. Recent circumstances have pushed firms into looking for a new accounting product, and looking for a new product can be intimidating and frustrating. The good news/bad news is there are a lot of options for law firms but few shortcuts for due diligence when considering a new product.

What Is Accounting?

Many firms use a timekeeping and billing system. Time and billing systems help attorneys and timekeepers track and record time, track expenses related to a matter, record trust balances, generate invoices, and track collections. Most of these products allow for some trust account tracking by showing trust balances and allowing trust monies to be applied to a bill. Accounting is rarely included in practice management applications. Accounting features include general ledger, bank integration and reconciliation, check writing, accounts receivable, accounts payable, expenses, chart of accounts, and more to help with both the firm’s business and client business.

Bookkeepers record financial transactions and keep the accounts balanced, whereas accountants analyze, interpret, and summarize financial data. The systems you have in place can help both the bookkeepers and accountants to collect, store, and export the information needed to do their jobs successfully. Get their input when choosing accounting software.

Should I Stay or Should I Go?

If your firm moves to a different accounting product, migrations are not simple. Often, the fields do not match up, so a conversion script needs to be written, and you will need to verify that data has transferred from one system to another. You will want to keep your old accounting product running and backed up while you test the new system. Make sure the data has been transferred appropriately. If the old software was customized, the migration may be even more difficult. Try to extract data into spreadsheets, print invoices and reports to PDF, and keep screenshots of important information. You will want to establish a cutoff date when you start using the new accounting package. While you should keep the old system running, make sure no one in the firm is doing any new work with it.

Shopping Guidance

To be a savvy shopper, first look at the tools you use and who uses them. When you consider pricing, sometimes the price per user may be lower for bookkeepers and accountants, or sometimes even free. You still have options, including on-premises (server) software and SaaS (software as a service). Software pricing tends to be a perpetual license based with maintenance and support fees annually. Licenses may be for named users or capped at the number of users who can be logged in at the same time. It is also common for premises-based software to offer subscription plans that cover per-user licensing, support, and maintenance. Most SaaS licenses include maintenance, support, and upgrades along with user fees.

To do an apples-to-apples price comparison, firms should look at total cost of ownership and return on investment. Total cost of ownership requires that a firm look at what is needed to support a program. Track all the costs, with a five-year expected spend, to get a sense of the true cost to a firm. When looking at the return on investment, consider if the product will help reduce administrative efforts, increase efficiency, provide insights and data to make better business decisions, and more.

The Marketplace

Many products can help law firms with accounting. The following list is not exhaustive and is focused on solos and small firms.

Tabs3 Financials

Tabs3, a ProfitSolv company, has a suite of products that include Tabs3 time and billing, PracticeMaster practice management, and Tabs3 Financials. Financials has modules including trust accounting, accounts payable, and general ledger. This suite of products is on-premises for Windows only. Pricing is quoted per user per month, or you can pay a traditional license fee. A new SaaS product, Tabs3 Cloud, will integrate financials, time, billing, and trust accounting, and it offers a client portal.

Soluno

Soluno is a cloud-based product that has banking, trust and general ledger, invoicing, and accounts payable. The pricing is per user, per month, with a pricing discount for “occasional” users. Soluno integrates with many legal practice management products, Microsoft 365, and payment processors. It was recently acquired by Actionstep.

TrustBooks

TrustBooks is primarily designed to help manage compliance with trust accounting. There are three pricing tiers available for this SaaS product, with tiers two and three offering additional accounting features such as operating account management, balance sheets, profit-and-loss reports, tax reports, and client funds. Tier three adds additional user roles and reconciliation and reviews by a certified accountant. TrustBooks integrates with Clio, LawPay, and PracticePanther.

CosmoLex

CosmoLex provides practice management, time and billing, and legal-specific accounting, including trust management. It includes built-in payment processing. The product has tiered pricing for firms with more than ten users.

CARET Legal

CARET Legal is self-described as focusing on the midsize or larger firms. This SaaS product includes practice management features, customer relationship management (CRM), time tracking, billing, accounting, and payments. It provides reporting and analytics, three-way trust reconciliation, settlement allocations, and more.

AbacusLaw

AbacusLaw was acquired by CARET Legal. It includes “full” accounting functionality and payment processing, as well as practice management features, document assembly, and customizations for many practice areas. It can be self-hosted (on-premises server) or hosted in the AbacusLaw private cloud as a desktop solution.

Centerbase

A sophisticated SaaS practice management application, Centerbase builds in firm accounting, online banking, trust accounting, and advanced reporting, as well as document management, project management, workflows, matter management, time tracking, billing, and CRM features.

Actionstep

Actionstep is a SaaS product that, with the Practice Pro + Accounting plan, has general ledger accounting, banking, accounts receivable and accounts payable (AR/AP), and financial reporting built in. The product also has client intake/CRM, matter and case management, workflow automation, and document management.

Brief Accounting

Brief Accounting started as a Mac billing product but is now available for Windows as well. Time entry, prebills, invoicing, accounts receivable, trust and office accounting, check writing, reporting, and more can be purchased as stand-alone modules or as an integrated bundle.

Remember, if your firm plans on taking trust money via credit card, you must have a way to keep operating and trust accounts separate, including any fees or charge-backs. Many of the payment processors that are not specifically designed for legal professionals should only be used for earned fees, if at all.

ABA LAW PRACTICE DIVISION

This article is an abridged and edited version of one that originally appeared in Law Practice, November/December 2023 (49:6).

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Catherine Sanders Reach

North Carolina Bar Association

Catherine Sanders Reach is Director of the Center for Practice Management at the North Carolina Bar Association. Formerly, she was Director of Law Practice Management and Technology for the Chicago Bar Association and Director of the American Bar Association’s Legal Technology Resource Center. She served on the ABA TECHSHOW Board from 2007–2009 and 2014–2016, was co–vice chair in 2019, and was co-chair in 2020.