www.cosmolex.com Law Firm Accounting The Basics What all Law Firms Need to Know To Maintain Your Books
Aug 16, 2015
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Law Firm AccountingThe Basics
What all Law Firms Need to KnowTo Maintain Your Books
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Disclaimer
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Warning: Deep Waters
▪ We will be taking a deep dive into Law Firm Accounting▪ Not for the faint of heart
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▪ Law Firm Accounting requires both Legal Accounting and Business Accounting
▪ What is the difference?
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A Tale of Two Firms: An Accounting Perspective
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▪ Client Trust Funds (Liability)
▪ Client General Retainer - Trust (Liability)
▪ Client General Retainer - Operating (Liability)
▪ Advanced Client Costs (Asset)
▪ Reimbursed Client Expenses (Direct) (Income)
▪ Inhouse Reimbursed Expenses (Indirect)
(Income)
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▪ Fee Income (Income)
▪ Discount (Income)
▪ Reimbursable Client Costs (Expense)
▪ Non-Reimbursable Client Costs (Expense)
▪ Unrecovered Client Expenses (Expense)
Legal Specific General Ledger Accts Examples
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▪ Active use of Income and Expense Accounts▪ Generate revenue by providing service to clients▪ Disburse payment associated with matters ▪ Collect compensation for “overhead” or “in house” expenses▪ Pay expenses for firm’s activities
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Law Firm Accounting
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▪ Active use of Balance Sheet Accounts▪ Bank and Credit Card Accounts
▪ Trust Activities *
▪ Advanced Client Costs *
▪ Partner Draws and Equity
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Law Firm Accounting
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Managing Matter Financials
▪ Booking Matter Costs – Options▪ Advanced Client Costs
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Managing Matter Financials
▪ Booking Matter Costs – Options▪ Reimbursable Client Costs
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▪ Booking reimbursement of Matter Costs▪ Advanced Client Costs▪ Reimbursable Client Costs – Hard/Direct Costs▪ Reimbursable Client Costs – Soft/Indirect (In-house) Costs
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Managing Matter Financials
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▪ Allocation of Payments from Clients▪ Sales Tax payables▪ ACC▪ RCC – hard costs▪ RCC – soft costs▪ Finance charges and late fees▪ Fee Income
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Managing Matter Financials
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▪ Operating Retainers ▪ Balance sheet account -- liability of the firm▪ Revenue not yet earned
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Managing Matter Financials
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▪ Trust Accounts▪ Balance sheet account -- liability of the firm▪ Monies held on behalf of clients▪ Revenue not yet earned▪ Funds for the benefit of clients, e.g. real estate escrow, estate
probate funds
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Managing Matter Financials
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▪ Other Management Reports ▪ Statement of Cash Flows
▪ Collection Reports
▪ Revenue by Timekeeper Report
Business Accounting
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▪ Separate bank accounts
▪ Other Costs▪ Merchant credit card fees
▪ ACH, Wire transfer fees
▪ Check printing
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Tidbits of Extras
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▪ All transactions have impact on financial position of firm▪ Legal obligations are met within one General Ledger
system▪ “Unique” nature of law firm activities are recognized and
managed▪ Mitigate issues relevant to firm’s bottom line
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Integrated Law Practice Management, Billing AND Accounting System
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For Today’s Attendees Only
▪ Only 10 Appointments Available With Our Consultant
▪ Email Request to [email protected]
▪ Include Specific Date & Time
Free 1:1 Analysis of Your Setup
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Rick Kabra, Ph.D.CEO, CosmoLex Cloud, LLC
Erica BirstlerManager of Customer Success,
CosmoLex Cloud, [email protected]
Thank you for Joining us!Try CosmoLex Free For The First Month
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