In the last two issues of GPSolo magazine, Parts 1 and 2 of this series explored the importance of information technology (IT) for practitioners looking to launch a solo or small law firm. As more jurisdictions adopt Comment 8 to ABA Model Rule of Professional Conduct 1.1 (Competence), technological competency has become not only a vital part of a solo or small firm’s success but also each lawyer’s ethical duty.
Part 1 of this series (GPSolo, May/June 2022, at 35) covered the essential hardware for launching a solo or small firm, primarily focusing on laptops but also examining docking stations, printers or all-in-ones, WiFi, and cell phones. Part 2 of this series (GPSolo, July/August 2022, at 44) focused on essential productivity software, which is software that is essential to practicing law (that is, doing legal work). This article, Part 3, wraps up the series by focusing on essential law firm management software, which is software that is necessary for running the business of a solo or small law firm.
Finally, as a reminder, the choices in this series are made with two guiding principles in mind: Each piece of technology should either perform an essential function for the firm’s productivity or help keep the firm and its information secure (and even better if it can do both). In addition, frugality informs a number of the choices below. Finally, this series explores essential technology for launching a firm. Thus, while litigating a complex civil case may be extraordinarily difficult without an e-discovery platform, such software is not essential outside of that context.
Law Firm Management Software
While a solo or small law firm may face unique challenges as a business, a critical factor in assembling essential technology is to remember that, at its core, a solo or small firm is still a business. Like other businesses in the service industry, a law firm needs to bill clients, collect revenue, pay bills, track financial activity, make payroll, submit tax payments, and perform dozens of similar business-related tasks. Fortunately, a few pieces of software can help facilitate both the law-firm-specific and the general-business tasks a solo or small law firm will face.
Practice Management Platforms
Practice management software serves as an all-in-one solution for the specific law-related business tasks, including billing and case management, that a solo or small firm needs to perform. These platforms offer great convenience, integrating dozens of tasks into a single program that can be accessed from nearly any device that uses a web browser.
First, practice management software streamlines the entirety of a law firm’s revenue cycle, from client intake, to tracking time, to generating and collecting invoices. On the intake and billing side, the software is highly adaptable, allowing the firm (or the client itself) to create a client profile (and individual matters). The firm can then choose what type of billing—hourly, flat fee, contingency, or mixed—and even set different billing rates across attorneys and matters. Each person at the firm who bills time, including paralegals and staff, can use his or her individual account to track time and expenses on a given matter. At the end of the billing cycle, invoices are generated for each client, and the software can even be configured to automatically send those invoices to each client. On the collections side, the platforms feature easy integration with a firm’s bank accounts via electronic payment systems. Finally, the software allows a firm to track money in its trust and operating accounts, including transfers from the former to the latter.
Second, practice management software offers powerful integration with accounting software such as QuickBooks, Xero, or Quicken. To be clear, practice management platforms are not—and do not represent themselves to be—an all-in-one solution for a firm’s accounting needs, which include tasks that are not tracked in the platform (e.g., payroll, withholding, rent, utilities, other non-client-related expenses, etc.). However, they can be a critical component of a firm’s overall accounting system. After using the platform to track time, generate invoices, and collect fees, a firm (or its bookkeeper) can transfer the entirety of its revenue records (and any expenses that have been recorded in the platform) directly into individual accounts and ledgers in its preferred accounting software. That division of labor can also help solo or small firms handle the piece of the accounting puzzle that they understand the best—client billing and collections—and leave the rest to their bookkeeper or accountant.
Third, practice management software contains powerful business metrics for both the front and back end of a firm’s revenue stream that can be incredibly helpful for solo and small firms. On the front end, most practice management platforms feature customer relationship management (CRM) tools that help a firm track prospective clients and a firm’s revenue pipeline. On the back end, these platforms allow a firm to analyze its billables and revenue from nearly every angle imaginable. For example, a small, general practice firm could use those metrics to analyze how the firm allocates most of its attorney hours—and seek an associate or a lateral hire who has experience in those areas. A civil litigation firm could use those metrics to analyze what types of litigation matters are the most profitable—and target its marketing to bring in more of that business. Outstanding invoices can be filtered by amount, days outstanding, matter type, responsible attorney, etc. The possibilities are numerous.
Fourth, practice management software can help a firm manage its workflow with case management features that include:
- Project management. Project management allows a firm to create a series of individual tasks assigned to specific employees due by specific deadlines. For example, a litigation firm might use this feature to ensure that all the tasks necessary to finalize and file a motion for summary judgment are completed according to best practices. Those features can be especially helpful for small firms that need to track the progress of projects that contain multiple steps that may be completed by different people within the firm, including young attorneys, paralegals, or staff.
- Document management. As discussed in Part 2 of this series, secure and redundant document management is a key component of a law firm’s information technology strategy. Depending on the platform, practice management software might feature its own cloud storage system or integrate seamlessly with a cloud-based service such Dropbox, or both. The software can even automate parts of the document management process, including the creation of client and matter folders within the cloud-based storage platform.
- Calendar management. These platforms also feature comprehensive calendar management, allowing a user to integrate popular calendaring software such as Microsoft Outlook with the platform, placing all of the firm’s dates in one location. Alongside the project manager and add-on features such as an appointment scheduler, the calendar manager can be a powerful, centralized resource for firm management.
There are a number of popular, well-regarded practice management platforms. Clio is arguably the New York Yankees of such platforms—it is widely popular, has a long history, and is unquestionably a leader in the legal technology space. However, there are a number of solid competitors with great platforms, including PracticePanther, MyCase, Rocket Matter, Smokeball, and the Abacus family of products, which include Zola Suite, Amicus Attorney, and AbacusLaw.
Choosing a practice management platform should be based on cost, a firm’s individual needs, the personal preferences of the firm’s manager(s), and the features a firm will use. Most of the platforms offer tiered pricing that is a fixed cost per user per month. For example, a number of platforms start with a basic package of features for around $40 per user per month, with more advanced features available at higher tiers that can run from $60 to more than $100 per user per month. While that cost is one of the largest monthly expenses discussed across the three articles in this series, keep in mind that a firm that utilizes a platform’s advanced features can realize efficiencies that pay for themselves. For example, a half hour that is not spent on administrative tasks now automated by the platform can instead be spent on billable work, easily making up the monthly cost of the platform. It is also worth remembering the myriad tasks that practice management software consolidates into a single platform; it would be inefficient and (more) expensive to re-create all of those processes with half a dozen programs performing those separate tasks. Secondary costs to consider are the transaction fee associated with using a platform’s electronic payment and collection software. (See below under “Bank Accounts, Credit Card Accounts, and Collections.”)
Finally, for a solo or small firm that plans on using a number of the features described above, it may be worth it to reach out to a number of the platform providers for a free demo of the platform. It may be that a particular user interface or feature seems more intuitive on one platform versus another. Firms should also consider (1) asking other law firms with similar characteristics (e.g., size, practice areas) what they use and whether they like it, and (2) discussing the advantages or drawbacks of a given platform with their bookkeeper or accountant.
