Trust Accounting: The Beginner’s Guide

June 25, 2024 By Carole Poster Leave a Comment

Trust accounting is a large part of everyday life for lawyers and businesses. Think estate planning, banking, real estate, and other groups that manage large amounts of money. So, as a lawyer, how do you use trust accounting at your law firm?

Imagine this:

You’ve won over a prospective client! A major new client has just signed on the dotted line. You’ve received a sizable retainer with the promise of more work if the initial project goes well. Your clients trust you enough to sign on the dotted line, but their trust isn’t where it should be. Not yet. A single mistake can end the client relationship before it begins. The good news is you’re an experienced pro. If you’re like most A-player firms, you take client ethics seriously. You use trust accounting to maintain appropriate financial boundaries.

What Is Trust Accounting?

A trust account is simply a special bank account an attorney must maintain. Attorneys receive money from their clients, which are then held in this special bank account.

In the past, attorneys kept track of client trust funds using ledger cards, with the vague hope that their records were both accurate and current. Thankfully, we’ve software that can help manage these kinds of accounts and more accurately track the cash flow.

Why should your law firm use a trust account? Here’s what makes a trust account significant.

The money in this account belongs to the client, not the attorney.
Attorneys have to earn this money.
Attorneys are required to follow the rules and regulations laid out by the state bar and local government.

Wait a minute. Why would attorneys need trust accounts in the first place?

As you know, attorneys take on the role of fiduciary. When you represent your clients, you’re acting on behalf of your clients for their interests and you’re expected, by law, to provide the highest standard of care.

If you’re an established attorney you’re probably aware of the ins and outs of a trust account. Your clients, on the other hand, might not be familiar or understand it. This article is a helpful primer you can share with them.

It’s a big deal for clients. It means there’s built-in protection, assurances that are in place to ensure they’re treated fairly and their firm behaves ethically.

Trust Accounting Rules and Regulations

The American Bar Association sets specific rules outlining the dos and don’ts of trust accounts. Believe it or not, these rules are helpful conversion boosters. They’re marketing details you can use to gain client confidence.

If your firm operates above board, going above and beyond other firms you have an advantage. Teach clients your firm’s processes and how you do things, show them the benefits of doing things the right way. Help your clients truly understand how things work, what protections are in place for their benefit, and how your firm follows those closely.

Let’s take a look at the rules.

1. No Commingling or Mixing Funds

You can’t mix personal/professional funds with trust accounts. If you’re short on payroll, you can’t dip into trust accounts to borrow what you need, so you can replenish it later.

At no time should your funds be stored together or mixed with trust accounts.

You may have one trust account with your bank but you should have multiple sub-accounts for each client. Your accounting software should enable you to create the appropriate sub-accounts for each client.

2. Maintain a Separate Ledger

Attorneys must maintain a separate ledger for each client with money in the trust accounts. Clients should be allowed to see their specific ledger at any time, inconvenient as that may be.

Your client ledger should show all relevant transactions (funds coming in or going out). Clients, at the absolute bare minimum, should receive their client ledger at least once per year.

3. Verify Trust Accounts Regularly

You’ll want to complete a three-way reconciliation of your trust account each month. Check the actual bank balance against the balance you show in your accounting records.

If there are any deposits made after the statement cutoff date, add that to the balance shown on the statement. Any withdrawals after the statement cutoff date, subtract that from the balance shown on the statement.

4. If You Haven’t Earned It, Don’t Touch It

The funds in your trust accounts shouldn’t be listed as an asset of the firm on your financial statement. It should be listed as an “other current liability.” If your clients demand a refund from this trust account, you should be able to issue that refund immediately.

Create deposit and withdrawal protocols into your trust account procedures. Funds in this account should never move without a paper trail and an appropriate reason.

5. Don’t Rob Peter to Pay Paul

You’re acting as a fiduciary so you’ll need to be able to provide the right kind of data to your clients. Save everything – the date, amount and purpose of each and every deposit. Save the same data for withdrawals/disbursements.

Make sure the appropriate client’s name is on every trust account check. Doing this dramatically reduces the odds that you’ll overspend in one account while acting on behalf of another client.

6. Create Checks and Balances

The staff members responsible for deposits should not be responsible for disbursements and so on. Both employees/teams should be responsible for balancing the accounts at the end of the month.

Never sign checks or issue approvals without the records for said transactions. Doing this reduces your ability to catch and prevent questionable purchases. Last thing: Make sure you’re an engaged part of the account reconciliation process.

7. Follow State Bar and Government Regulations

The state bar sets, manages and enforces the rules and regulations for trust accounts. The state bar or other governmental body may randomly audit a group of lawyers/firms and their trust accounts. These random audits keep attorneys honest.

8. No Collecting Interest

Attorneys aren’t allowed to earn interest on trust accounts. All interest earned by trust accounts is paid to the appropriate IOLTA program. This non-profit program funds legal services for the indigent and other programs that support other legal causes.

That’s a lot to cover, isn’t it?

But we still haven’t covered when you’d actually use trust accounting. So let’s take a look.

Real estate transactions. As any real estate attorney knows, funds related to a real estate transaction will flow through their trust account. Escrow payments, appraisal and title fees, loan payoffs, real estate agent commissions and homeowners insurance are all common examples. The protocols, policies and procedures we’ve discussed above are crucial to maintaining a stable firm.
Legal settlements. A personal-injury payout, payouts from a class action lawsuit, or a workers’ comp award are all examples of settlements passing through a trust account. The lawyer receives settlement fees into a trust account. They’re able to distribute the funds as needed once the money is available as appropriate.
Retainers. Attorneys typically charge a retainer at the beginning of the relationship. This retainer doesn’t belong to the attorney. Not yet at least. This retainer is simply a security deposit that’s used to pay for future billings/services.

When an attorney issues an invoice to their client, they’re able to draw against the funds in the trust accounts to settle their client’s account. If the attorney uses the funds in a trust account there should obviously be an agreement or engagement later stating that fact.

You may be surprised at the amount of lawyers and firms that aren’t managing their trust accounts properly. These attorneys are rolling the dice with their careers, their firm, and their clients’ financials.

If you’ve read this far, there’s a good chance you’re conscientious. Someone who’s orderly or industrious, willing to do what’s best for their firm.

How to Use Trust Accounting at Law Firms

Trustworthy firms use trust accounting software.

It’s good for clients. It’s great for attorneys.

Go above and beyond other firms by using a trust accounting software that makes it easy to manage trust accounts for your law firm. Teach prospective clients about the value you provide. Show them, in an appealing way, how you do things. It’s one more way to extend your firm’s success.

How to Increase Leads Without Free Legal Consultations

June 22, 2024 By Dan Bowman Leave a Comment

Free legal consultations can be a double-edged sword. Many attorneys focus on results and prefer not to spend non-billable hours on prospects who may not commit. This is why many attorneys grow frustrated or find it hard to balance the benefits of free consultations within their practice.

Some law firms find free legal consultations as a lucrative business move to generate more leads, while others find it a blow to their bottom line. Fortunately, free consultations aren’t a necessity — here are alternatives that will still drive clients to your door.

Profitable Alternatives to Free Legal Consultations

Attracting and converting clients is one of the most difficult parts of running a successful law firm. Law school often overlooks effective marketing strategies, leaving many attorneys to figure it out on their own. This gap presents a valuable opportunity for growth.

If your law firm isn’t in a position to offer free legal consultations, here are four alternative steps you can take to generate an avalanche of leads. While they may require some upfront work, the results continue paying off over time.

Step #1: Know Your Ideal Client

These are your best, most profitable clients. They’re the clients you’d fight to keep. If you attract ideal clients at the very start, you have a very good chance of converting them into advocates for your firm.

A client advocate displays specific behavioral and outcome markers.

Behavioral markers: Your ideal client may display significantly higher engagement levels, a positive relationship, and even admiration for your firm. Ideal clients have the character traits your firm is looking for.
Outcome markers: These are the results of desirable character traits. When clients trust, respect, and admire your firm, they’re less likely to haggle or complain. They eagerly pay higher fees, value your work, and regularly spend (e.g., monthly, quarterly, or annually).

Firms with an intimate understanding of these client advocates win in the long term. Why? You attract what you have. Client advocates attract and refer more ideal clients, creating a cycle that fills your firm with client advocates.

Now, let’s look at the types of clients you might encounter. Here are the three basic types of clients:

Advocates: Clients that display the behavioral and outcome markers you need. They’re enthusiastic, loyal, and profitable. They consistently request more work, and they repeatedly promote your firm.
Apathetics: Clients who are discount shoppers who are more than willing to jump ship for a better deal. They’re indifferent to you, your firm, or your contributions to their well-being.
Skeptics: These clients have had negative experiences with other firms and are wary. You shouldn’t shy away from these clients, but they may require more 1:1 time to build trust in you and your services.

How do you find the client advocates you need for your law firm?

Start with your core values. Identify the traits you want in your best clients. Here are some markers to consider:

A Positive Relationship: Clients who are a pleasure to work with, pay on time, and don’t haggle over fees.
High Engagement: Clients who respond promptly, ask questions, and request help often.
Admiration for Your Firm: Clients who chose you because they believe in your expertise and view you as an authority in your field.

Define your “ideal client” carefully. Avoid descriptions that are too broad or too narrow. Focus on two or three key traits that matter most to you. Consider the traits you value and those you dislike in clients. Then, create a balanced outline that guides you in identifying the right clients.

Next, find a client or prospect that meets your criteria. Choose the best candidates who are willing and able to pay for your services, and then conduct interviews with these clients. You’re looking for a list of their:

Desires
Goals
Fears
Frustrations
Problems

Get to know these clients thoroughly. Make this an in-depth request; you’ll be using the information they give you in your marketing later. Do this for each practice area, if needed.

Step #2: Create Content That Addresses Client Concerns

Now it’s time to create urgency for prospective clients who are just like the ideal clients you’ve identified. Highlighting genuine problems they face will provide them with the spark of motivation they need to contact you.

How do you do this? You abandon selling in favor of enhancing your value proposition. Do this by:

Educating them about their expectations
Addressing their fears and associated risks
Discussing outcomes of poor decisions and available options
Positioning yourself as a thought leader

Aim for high standards in your free content, making it more valuable than most legal content available online. Amazing, high-quality content is easy to understand and simple to create. We know it when we see it because we’re intuitively aware that it depends on a formula. Let’s go through each part of this formula:

Data: Content backed by scientific research, statistics, metrics, or original data. It should be thorough, credible, and supported by reliable, peer-reviewed sources.
Drama: Content that evokes strong emotional responses. The delivery method is secondary to the strength of the story or the emotion generated. It’s compelling because it taps into emotional and psychological triggers.
Degree: A large volume of quality content produced consistently. Whether random or scheduled, the sheer amount of quality content sets a high standard.
Depth: Detailed content that provides comprehensive coverage of a topic from various angles. It answers readers’ questions and addresses their objections thoroughly.
Design: Visually appealing content that’s enjoyable to consume. It’s attractive to look at and engaging to read.

Content that meets any of these criteria is compelling and hard to compete with. Meeting two or more criteria makes your content exceptional. Achieving three or more can make your content legendary, especially with proper promotion.

Applying the Content Formula

You can apply these formulas to various types of content:

Reviews and Testimonials
Articles, Emails, and Guest Posts
Visual Content (e.g., Infographics, Slide Decks)
Books, eBooks, and Guides
Audio, Video, and Presentations
Seminars, Workshops, Podcasts, and Events
Advertisements and Copywriting Pieces
Social Media Content and Status Updates
Print Collateral (e.g., Brochures, Booklets)
Software and Tools

Generating Content Ideas

How do you come up with a steady stream of ideas? To maintain a steady flow of content inspiration, consider these steps:

Head over to a large site or a major competitor’s website.
Create a list of their most popular articles, but don’t read them.
Pick a headline, then outline your article.
Use data, drama, degree, depth, or design to create a high-quality version of that article.

Next, you can work on advertising and marketing your content.

Step #3: Create Successful Law Firm Advertising Campaigns

Many law firms invest heavily in advertising, but without proper training or understanding, these efforts can become costly. To make the most of advertising platforms, consider using the 60/30/10 method:

10% of your ad budget on Cold traffic: Target groups who haven’t heard of you. Offer value with a tool, quiz, download, or content without requiring an opt-in. Even if you lose money here, the insights gained will benefit your overall strategy.
30% of your ad budget on Warm traffic: These are prospects familiar with your firm. They’ve heard of you, show interest in your offer, and are willing to engage. Warm traffic is more likely to convert.
60% of your ad budget on Hot traffic: These prospects have engaged with your content, such as subscribers to your email lists, social media followers, or those who have downloaded information or requested a paid consultation. They have shown a clear interest in your services and are eager to hear from you.

With this method, you spend a significant amount of money on prospects who actually want to hear from you. With free legal consultations, you may spend more time and money on people who, while targeted, may not be interested in your services.

For example, if you have $500 per month budgeted for LinkedIn ads, you’d spend:

$50 on cold traffic
$150 on warm traffic
$300 on hot traffic

You can apply this method to your total ad budget across multiple platforms. For example, with a $2,500 monthly budget, you could use the 60/30/10 model for advertising on places like Yelp, Nolo, Avvo, and LinkedIn.

Step #4: Reach Out to Known Publications

Now that you have more content, it’s time to get it out. Here is where you’ll rely on partners or larger publications to circulate your content. If this sounds intimidating, these tips can help simplify the process:

1. Create a List of Publications

You’ll want to create a list of blogs, magazines, media companies, etc., with an audience of potential customers. If you’re a small business attorney, publications like Entrepreneur Magazine, Forbes, or Business Insider are great lead-generation sources to cultivate.

2. Categorize These Publications

Divide your list into three categories:

Traffic: These are high profile sites with a large readership, a significant amount of daily visitors, and lots of prospects who are part of your target audience.
Authority: These sites are authoritative, prestigious, and very credible. They may or may not receive a significant amount of traffic. That’s okay because sharing your content with them boosts your credibility, status, and authority. You’re able to use the “as featured on” tag to boost your trustworthiness.
Partnerships: These sources serve the same clients you do in a complementary way. They’re grateful for the value you can provide, and they’re open to partnering with you in a variety of ways. You’ll want to create a relationship by providing a significant amount of value.

Once you’ve sorted your list into these three categories, you’re ready to pitch the sites in your inventory. Here are a few sites you can use to get started.

These are just legal websites. There are even more opportunities available if you focus your attention on or around the areas relevant to your practice areas. If your firm is local or regional, choose local or regional publications and partners. Approach sources in your metropolitan areas to generate results.

Free Legal Consultations Aren’t a Necessity

They have their place in your practice, but it’s important to weigh your options and explore alternatives that benefit your firm. With the right approach, you can attract more clients — the kind of clients who are eager, able, and willing to pay for your services.

To manage your growing client base, consider using Bill4Time, a comprehensive legal practice management platform. With Bill4Time, you can efficiently track time, manage billing, and ensure every billable hour is accounted for. Start your free trial of Bill4Time today to experience the benefits firsthand!

6 Legal Time and Expense Reports Every Firm Needs

June 13, 2024 By Carole Poster Leave a Comment

The secret to a successful law firm is keeping a close eye on its performance. Law firms that consistently track their key performance metrics can determine where to scale for growth and identify other areas for improvement. Whether it’s daily, monthly, or quarterly, keeping a pulse on key business metrics with the use of legal time and expense reports can help law firms make proactive decisions to remain profitable and mitigate potential risks.

Rather than keeping metrics in a spreadsheet or paper, law firms can use law practice management software to quickly generate reports. It’s important to know what to track first — continue reading to learn the type of legal time and expense reports firms should pull and best practices.

What Are Legal Time and Expense Reports?

Time and expense reports can reveal whether a law firm is profitable or simply breaking even. Typically, time and expense reports may include:

Time entry reports, which cover the time entries by client or matter
Time summary reports, which include weekly and monthly time entry totals by the client, matter, and staff member

These two reports can offer insights into how current hours are divided between clients and matters. This can show which ones are taking too long to complete or where time can be better managed, either by the firm or by the staff members.

What Information Is Captured on Legal Time and Expense Reports?

1. Billable Performance/Revenue Report

This report provides in-depth knowledge of the actual revenue vs. the target revenue of the law firm. It features performance metrics like collection, utilization, and actualization rates. When a law firm has these metrics at hand, they can determine where things are working and what can be done to improve the numbers, as well as the individual performance of staff members.

Time tracking software streamlines the timekeeping process by accurately and quickly tracking time with a timer on a phone, tablet, or desktop. Billable and non-billable time can be tracked separately for keener insights. Best of all, law firms can review and track daily or weekly time summaries to keep up with the productivity and financial status of the organization.

2. Statement of Cash Flow

A statement of cash flow helps law firms track and manage revenue generation. This should include the net income, cash from operating activities, adjustments on net income, and depreciation. This report can indicate whether the firm may need more cash or when it’s safe to commit some funds to savings.

With the support of legal management software, firms can generate time and expense reports to get a comprehensive view of their finances. This report should reflect payment history, summary reports, expenses, or any overdue balances.

3. Accounts Receivable Report

The accounts receivable report shows the money owed to the law firm. This report is essential for tracking the status of invoice payments and if any are unpaid. Law firms should monitor accounts receivable on a firm-wide basis and per-client basis.

If client invoices have a tendency to be delayed, it may be beneficial for law firms to streamline the process with online payment options. The paper billing process is slowly phasing out in the legal industry with advancements in legal technology.

Using Bill4Time, for instance, can greatly improve the billing process. Bill4Time offers Bill4Time Payments, a native payment processor built into the platform. This feature allows for convenient and secure online payments, making it easier to collect payments quickly. Additionally, Bill4Time Payments provides exclusive reporting to track payments, refunds, overdue balances, and more, ensuring comprehensive financial oversight for law firms.

4. Monthly Revenue Report

The monthly revenue report is important for law firms to appreciate the capital flowing in and out. This report considers the time billed and current collection, and it can be narrowed to reflect daily, weekly, monthly, quarterly, or yearly revenue.

Bill4Time comes with custom features including detailed revenue reports and report customizations that allow for in-depth views of different performance metrics. The combinations are virtually limitless to help firms reach their goals.

5. Balance Sheet Report

A balance sheet covers the assets and liabilities of the firm, including accounts payable and current capital. This helps law firms gauge the firm health and make adjustments to ensure that things are on track for success in the short and long term.

With time tracking software, law firms can generate balance sheets with granular firm data like balances for individual clients or trust payments for IOLTA compliance.

6. Profit and Loss Statement

The income statement is a report that firms can use to track earned revenue and expenses paid, including overhead, marketing costs, insurance costs, and other expenses. This statement shows the most recent figures for the entire year, rather than periods of highs and lows, to evaluate the firm’s health on an annual basis.

Each profit and loss statement tracks the full previous year, working backward to plan for future performance. Firms can also customize these reports to account for seasonal performance or periods of change that may have impacted the numbers.

How Time and Billing Software Streamlines Expense Tracking

These legal time and expense reports are a great foundation for the type of metrics law firms should be tracking on at least a monthly basis. With legal management software like Bill4Time, law firms can leverage robust reporting functionalities and custom features to monitor firm health and performance. See how Bill4Time’s reporting features work for yourself with a free demo or free trial.

3 Strategies To Improve Data Security for Law Firms

June 7, 2024 By Dan Bowman Leave a Comment

It’s no secret that data security for law firms is of the upmost importance. News stories explain that hackers see law firms as wealthy targets, and the larger the client you land, the more of a target you become.

The ABA TechReport shows most attacks are directed at small and medium sized firms.

27% of attacks were directed at firms with 2 – 9 attorneys
35% of attacks were directed at firms with 10 – 49 attorneys
33% of attacks directed at firms with 50 – 99 attorneys

As far as cybercriminals are concerned, small law firms are the low hanging fruit. They’re easy pickings for criminal opportunists looking for an easy payday.

Law firms have a treasure trove of data. They have client, firm and customer data in the form of agreements, documents, contact details, insider information, and personal and financial documents.
Law firms have deep pockets. Cybercriminals assume law firms have a significant amount of cash on hand in the form of hourly billings or cash in a client’s trust account.
Law firms are exposed and vulnerable. The ABA report also shows that a little over a quarter of surveyed law firms have experienced a data breach.

Law firms act as indirect information brokers. They’re expected to safeguard their client’s business. Sure that’s not your core business. You’re focused on taking care of your client’s legal matters. But that doesn’t matter to these cybercriminals.

What Law Firms Can Do To Improve Data Security

As information brokers, law firms can take precautionary steps to ensure that the information in their possession — law firm and client data — stays in their possession.

A report from LogicForce had some surprising implications.

53% didn’t have a data breach response/recovery plan
77% of firms didn’t have cyber insurance
95% of respondents were noncompliant with their own cyber policies
100% were noncompliant with their client’s policies

The vast majority of law firms are vulnerable to a data breach. That’s obviously bad news for law firms. However, these vulnerabilities provide law firms with the clarity and direction they need. Let’s take a look at some of the steps law firms can take to secure their data.

1. Create a cybersecurity policy

A cybersecurity policy outlines the systems, procedures needed to guard your data against attacks. This policy provides firm-wide direction outlining:

Roles and Responsibilities: Outline who is responsible for various aspects of cybersecurity within the firm.
Access Controls: Specify who has access to which data and under what circumstances.
Data Protection Measures: Detail how your data will be protected, including encryption and other security measures.
Accountability: Assign clear responsibility for protecting the firm’s data.
Security Programs: List the necessary security software (e.g., antivirus, firewall, and anti-exploit software) that need to be installed and maintained.
Update and Patch Management: Describe the procedures for applying hardware and software updates to ensure all systems remain secure.
Data Backup Protocols: Outline the methods and schedules for backing up data, including the location of backups and the frequency of these backups.

2. Move to the cloud

Many small to medium law firms face challenges in preparing for potential data breaches. This isn’t due to any lack of effort or capability; it’s often about resources and costs.

Building a robust in-house IT department can be expensive. Here’s a glimpse of what you might need to spend on key roles:

Title/Role	Small	Medium	Enterprise
Network Operations Manager	$131,011	$146,434	$161,603
Network Administrator	$82,922	$91,686	$101,051
Help Desk Support Rep	$40,145	$49,506	$59,822
Installation and Maintenance Technician	$99,238	$118,461	$141,090
Total Cost for IT Staff	$353,316	$406,087	$463,566

These figures only cover salaries and don’t account for benefits, bonuses, or other perks. Additionally, they don’t include costs for:

Laptops, mobile devices, and other hardware
Software licenses and setup fees
Regular data backups, maintenance, and archiving
Internet and network services
24-hour support, including higher costs for on-call staff

These expenses make a compelling case for law firms to move their operations to the cloud. Cloud-based practice management software enables you to offload your network security to a trustworthy provider. Bill4Time, for example, maintains bank-grade security to keep law firm operations running smoothly and safely.

With cloud solutions, your provider handles security, data backups, and compliance requirements. They protect your firm from data breaches, unauthorized access, accidents, and human errors. Cloud-based providers are responsible for maintaining high levels of security and ensuring your data is backed up regularly, helping to shield your firm from various risks.

3. Create a disaster response and data recovery plan

The ABA Legal Technology Survey Report also highlights some concerning statistics as law firms face constant threats of cyber-attacks:

29% of firms have conducted a full security assessment by a third party to identify and address vulnerabilities.
43% of law firms use online backup solutions such as cloud-based services for storing their data securely.
34% of firms have an incident response plan, a concerning drop from previous years.

To safeguard client data and maintain the integrity of your firm, it’s imperative to implement a comprehensive disaster response and data recovery plan. Here’s an outline to get you started:

Incident Response Team: Identify key personnel responsible for handling cyber incidents.
Contact Lists: Maintain updated contact information for internal teams and external partners.
Backup Procedures: Outline how and when data backups will occur, including locations.
Data Restoration Steps: Specify the steps for restoring data from backups in an emergency.
Communication Plan: Establish protocols for informing clients and stakeholders about incidents.
Access Controls: Define procedures for managing and restricting access to sensitive data.
Testing Schedule: Regularly test your disaster recovery processes to ensure they are effective.
Legal and Compliance Guidelines: Ensure adherence to legal requirements and ethical standards for data protection.

Including these elements in your disaster response and data recovery plan will help you swiftly address and recover from any cyber incident, safeguarding your firm’s data integrity and client trust.

Good Data Security Makes Your Law Firm a Hard Target

It’s important to be proactive when it comes to data security for law firms. Breaches occur everyday, but with the right tools and processes in place, your firm doesn’t have to fall victim to the next cybersecurity attack.

3 Ways to Attract Loyal Clients to Your Law Firm

May 28, 2024 By Nina Lee Leave a Comment

Drawing loyal clients to your law firm involves more than offering top-notch legal services. It starts with understanding your clients’ needs and demonstrating how your expertise can help them. Whether you’re a corporate attorney, a family lawyer, or handle criminal cases, showing that you care about your clients’ broader needs makes a big difference. Building trust and providing clear, practical advice keeps clients coming back. Here are three effective ways to build strong, lasting relationships with your clients.

1. Reshape the conversation

Your first task is to assess your client’s needs and explain what you can do for them. Always outline the scope of work clearly, whether the news is good or bad. During this conversation, listen carefully to your client. You might find that they need more services than they initially thought.

Don’t sound like a salesperson when suggesting additional services. Explain why these services are beneficial and how your expertise can help. For example, you might tell a client setting up a new business about the importance of a compliance plan or asset protection. This way, you position yourself as a knowledgeable advisor.

Listening and suggesting related services that truly protect your client’s interests will strengthen your relationship. Always aim to add real value without pushing unnecessary services. Your clients will appreciate your honesty and feel more confident in your guidance.

2. Break your client’s matter down into digestible pieces

Legal jargon can confuse and frustrate clients, especially when explaining why they need additional services. Use simple examples to make things clear. Think of it like buying a car. When you buy a car, you also need to handle registration, insurance, taxes, maintenance, gas, tires, and repairs. Legal services can be similar.

For example, if you’re a corporate lawyer helping a client incorporate a new business, they might think forming the C corp or LLC is enough. They don’t realize they also need to be:

Registering a DBA
Applying for an EIN
Designating a registered agent
Setting up business bank accounts
Apply for LLC “pass-through” tax treatment
Create a compliance plan to maintain compliance
Obtaining the proper permits and licenses
Asset protection planning
Intellectual property applications
Drafting agreements (e.g., operating, partnership, manufacturing, service agreements)
Obtaining business financing
Choosing an accountant
Purchase insurance

This long list can overwhelm clients. Your job is to break it down into simple steps. Explain each part and why it’s needed. For example, say, “You need a registered agent to receive legal documents on behalf of your business. This keeps you compliant with state laws.”

By explaining things clearly, you help clients understand what needs to be done. This builds their trust in you. They see that you care about their needs and are guiding them through all the ins and outs they aren’t familiar with.

3. Integrity and revenue go hand in hand

If you push services your clients don’t need, they won’t trust you. Instead, listen to their needs and figure out the best steps to help them reach their goals. Educate them along the way.

For example, if a client seeks help with a real estate transaction, explain why title insurance is important. You can say something like, “Title insurance protects you from any legal disputes over property ownership. It’s a safeguard for your investment.” This approach shows you care about their well-being, not just your fees.

Taking the time to explain things clearly and honestly builds trust. Clients will appreciate your integrity and become more loyal. They’ll see you as a reliable advisor. In the long run, this honesty leads to more referrals and repeat business.

Remember, happy clients are your best advertisement. When you treat them well, they spread the word about your services. This approach may take more time, but it pays off with loyal clients and steady revenue for your firm.

Use these tips to attract loyal clients

As a lawyer, you’re a source of knowledge and a guide for often life-changing events. Client’s rely on you to protect their best interest while also educating them along the way. Strictly selling to your clients is a formula for low client retention and unpredictable revenue. By treating clients with respect, listening to their needs, and providing clear, honest advice, you build strong, lasting relationships.

At the end of the day, clients understand that you have a business to run. The difference in how you “sell” or manage your business comes down to your customer service skills and how you treat the client while helping them reach their goals.

Task Management for Law Firms: How to Use Workflows

May 25, 2024 By Dan Bowman

Task management for law firms is no easy feat. From managing attorneys, demanding clients, and the constant tracking of billable time; it’s easy for tasks to get lost in the shuffle.

If you don’t have standard practice in place, it’s easy for partners and associates to create their own way of completing tasks, even if it unknowingly causes more of a headache for the firm. This variation hammers your firm’s utilization and realization rates. As a result, managing partners spend a significant amount of their time on busywork, when they should be focused on growing the firm.

It isn’t their fault. It’s one thing if the partners and associates knowingly refuse to follow the policies and procedures you’ve laid out. It’s another thing entirely if there aren’t any policies and procedures to follow.

What Are Workflows?

What specifically is the phrase “systems management” referring to?

A system is a procedure or method that ensures consistent, positive outcomes. For lasting success in your legal practice, implementing a series of reliable systems is essential. These systems can range from straightforward checklists for associates to sophisticated algorithms for case management.

So, we’re talking about a workflow then? A workflow is a series of steps that are required to complete a specific action (i.e., draft a pleading).

Workflows	Systems thinking
Created through systems thinking	Produces a collection of workflows within an organization
Consist of a sequence of steps or processes for specific tasks	Relies on understanding cause and effect (causality)
Depend on system mapping	Uses feedback loops to iterate and improve
Exist as part of a larger system	Creates harmony across multiple workflows

Systems management involves creating successful and efficient workflows. By considering the cause and effect relationships around your desired outcomes, you can develop a series of workflows that consistently produce favorable results.

Without workflows, there are no systems. Without systems, everyone in your organization operates independently, leading to inconsistency and inefficiency.

Why Does Your Law Firm Need Workflows?

Current research shows firms are losing time for various reasons that workflows can help with, including the following issues:

The average attorney is only paid for 2.5 hours of work per day. That’s a problem on its own until you realize the truth about employee labor. When attorneys bill 40 or 50 hours per week, they’re actually working 60 to 70+ hours per week. A wide gap between billable hours vs. actual hours can be quite frustrating.
Legal professionals lose a considerable amount of time unnecessarily. For example, an IDC whitepaper found knowledge workers wasted 11.2 hours a week sorting through document management (DMS) challenges. This whitepaper calculated the loss at $19,732 per knowledge worker, per year, or a 21.3% loss in the firm’s total productivity. This doesn’t include losses from other areas.
Firm utilization rates, a measure of firm productivity and billing efficiency, is stagnant or falling; attorneys are losing a tremendous amount of time due to non-billable administrative work, errors, business development demands and poor planning.
This has an inevitable and negative effect on law firm realization rates. The usual explanation suggests that realization rates are falling due to pricing and billing disputes, which is partially correct. But poor utilization means realization rates take a hit well before billing plays a role.

So how can workflows help fix these problems?

Proper records keeping. Workflows show you where to look to identify problems. They answer important questions — what needs to be done, who completed what, when it was completed, and where to find the records.
Increased productivity. With the right workflows, you’re able to increase productivity on demand. Incremental improvements to your workflows produce an exponential increase in productivity. And remember, this increased utilization means increase realization.
Precise resource allocation. Knowing the who, what, where, and when means you have a clear sense of the resources that need to be allocated to specific matters and projects.
Improved employee morale. Workflows give your employees the structure they need to exceed expectations. Your employees have a clear sense of the work that needs to be done. There’s no confusion about what needs to be done or how to do it. Employees have a sense of fulfillment and purpose.
Task prioritization. Workflows give you the data you need to achieve economies of scale. You’re able to identify work that should be outsourced to a freelancer, given to a junior associate or forwarded to a senior associate. Your team knows which tasks should be automated and which tasks should be sent to a virtual assistant. It’s clear, precise and efficient.

These workflows are the foundation. They run your law firm, eliminating the need for micromanagement. Workflows reward you for working on your business rather than in your business. The better you are at doing this, the easier it is for you to achieve high growth on demand. This is how high growth firms maintain their exceptional track record.

Examples of Law Firm Workflows

Don’t forget, you need these workflows, whether you’re an associate, partner or owner of your own firm. If you’re the owner of your law firm, you likely need them all.

Service workflows	Business development workflows
Practice management	Marketing and advertising
Project and task management	Content development (video, audio, speeches, etc.)
Time tracking	Sales funnels and lead nurturing
Service inventories	Digital and offline media plans
Client management	Firm reporting, business and marketing analytics
Document management tools and protocols	CRM tools and workflows
Proprietary methods and trade secrets

Security workflows	Financial workflows
Security policies	Billing and invoicing
Data, application and security plans	Payments (online and offline)
Cybersecurity insurance	Pricing and fee structures
Breach incident response plan	ePayments
Emergency and disaster recovery plans	Bookkeeping and accounting workflows
Physical and cybersecurity protocols	Payroll reporting and withholding
Data management (backups, storage, archiving, etc.)	Budgeting and forecasting
Internet, intranet and email management protocols	Securing and managing growth capital
User rights management

Client service workflows	Human resource workflows
Client response protocols (phone, email, text, etc.)	Hiring methodologies (i.e., Topgrading)
Client intake procedures	Recruitment and retention plans
Discount, write-down and write-off protocols	Talent pool (freelance, contract, employee)
Scheduling appointments and events	Employee training
	Benefits and payroll procedures

How do you go about creating these workflows and setting things up? It’s difficult to set things without a plan, but that’s exactly what you need right now.

How To Create Stable Task Management for Law Firms With High-Performance Workflows

How do you go about creating workflows?

Set specific goals and objectives
Outline your available resources
List all of the tasks that need to be completed
Create a list of employees/roles accountable for each task/step
Create a workflow diagram or mind map
Train your employees in the new workflow
Deploy your new workflow
Analyze workflow performance
Iterate and improve

1. Set specific goals and objectives

Specificity and simplicity are key here when it comes to task management for law firms. You’ll want to avoid creating broad or vague goals and outcomes. You can refer to the table above for a list of the categories you can start with. For our example, let’s use the category “time tracking.” Time tracking is too broad so we need to simplify this a bit more.

Let’s simplify it even more: “filling out your timesheet.”

This outcome is simple, clear and concise. It’s also important because the title is the goal. This step is important because all subsequent steps depend on this one.

2. Outline your available resources

When you outline your available resources, you make sure your employees have what they need to achieve the desired outcomes. It’s no different with our “filling out your timesheet” example. Outlining your available resources begins with questions.

What do they need to produce this outcome?
What will prevent them from producing this outcome?

Here’s an example of the tools and resources your employees would need.

Cloud-based time tracking software
A pricing sheet for each employee type (i.e., $360 per hour for this attorney, $150 per hour for this paralegal)
The desired billing increments/units (i.e., 1/10 of an hour or 6-minute increments)
ABA/LEDES billing codes and formats

It’s a simple and straightforward step that’s necessary if you’re expecting consistent results from your employees.

3. List all of the tasks that need to be completed

This is exactly what it sounds like. Here’s an example of what you might include on a “fill out your timesheet” workflow:

Selecting the correct services
Setting the appropriate time tracking increments
Using the right service descriptions
Entering your time using the correct billing increments

This step is easy, but your approach must be thorough. A missed to-do item affects subsequent steps in your workflow.

4. Create a list of employees/roles accountable for each task/step

Next, you’ll want to assign owners to each task. You can assign tasks to specific people or specific roles. You’ll need to determine what’s best for your law firm.

Every task or step needs to be accounted for. There shouldn’t be any surprises. If you need to add more steps, someone should be responsible for them.

5. Create a workflow diagram or mind map

In this step, you’re simply visualizing the process as you have it, via a workflow diagram or mind map. Let’s say you’re outlining the workflow for the preparation of a will or other estate planning documents. What would that look like? Here’s an example from Precedent.

A workflow diagram or mind map visualizes the process, giving everyone a bird’s eye view of (a.) the work that needs to be done (b.) The specific steps it will take to achieve the desired outcome. Doing this means it’s easier for employees to produce results.

6. Train your employees in the new workflow

When you train your employees, you’re outlining the specifics and performance standards they’ll need to meet. Training ensures that you get exactly what you’re asking for, minimizing accidents, errors, or negligence. This upfront training decreases expenses due to discounting or rework.

7. Deploy your new workflow

Deploying your workflow establishes an important benchmark. You’re able to set an important starting point for your firm. It’s a good idea to roll things out slowly. Deploy workflows with a small team, or in a specific practice group before making firm-wide changes.

Doing so prevents any major disruptions that come from a poorly conceived rollout.

8. Analyze workflow performance

By documenting the steps in your workflow, you’re able to analyze performance, identify failure points and outline possible areas for improvement. Here are some questions you can ask to analyze your workflow.

Is your workflow working?
Where are the failure points in your workflow?
Are things going as expected?
Is it taking your employees less or more time to complete each task?
Is the quality of work greater or lower than expected?
How long does it take to complete a task or goal?
Where does your law firm’s performance fall relative to competitors?

Testing is an important step. A theoretical understanding of your workflow is a good start, but you’ll want real-world data on your firm’s performance as quickly as possible. This is why it’s important to test your workflows immediately and consistently.

9. Iterate and improve

Answers to these questions provide you with clear instructions. You’ll have the data you need to make immediate improvements, adjustments and changes to the workflows in your law firm.

The best part about these changes is the fact that you can iterate and improve or rollback changes. You can make firm-wide adjustments or specific tweaks in a small practice group.

Task Management for Law Firms Is Important

Are your partners and associates focused on doing things their own way? It may not be your employee’s fault. As we’ve seen, inconsistent performance isn’t always due to noncompliance. It’s a lack of systems management.

Using systems and workflows, your law firm can achieve specific, positive and repeatable results. If you’re looking to achieve long-term success in your law firm, this isn’t optional, it’s mandatory. Poor systems management is a disaster for many law firms.

With great utilization, comes great realization. Create the right workflows, apply them consistently. Do what’s necessary to create a high growth law firm, and you’ll find your competitors become irrelevant.