In this series of posts, we will explore various lessons that most law schools miss when training their aspiring attorneys. This is not to say that most of these institutions don’t do an amazing job preparing knowledgeable and capable professionals. However, there are just some lessons you don’t learn until you are out there on your own.
Lesson #1 – A Law Practice is also a Business
Law school is filled with in-depth lessons on legal theories, case interpretations and black letter law. While all of this information is valuable to the actual practice of law, it proves ineffective when it comes to making your practice a sustainable and successful business. Unfortunately, short of an optional semester course on law practice management, law schools largely drop the ball on important business aspects of running a law firm.
This lack of information causes many new attorneys to fall short in their entrepreneurial attempts and some even find themselves in trouble over poor business decisions or lack of adequate knowledge.
Basic Output vs. Input
The basic premise of any viable business is that earnings must outweigh expenditures in order to make a profit. This means that the money leaving the practice cannot be greater than the money coming into the practice. Sounds simple and we can all understand that premise. But a comprehensive understanding of expenditures requires accurate bookkeeping and some general accounting skills. Accounting can assist an attorney in the following tasks:
- Revenue tracking, including cash collections and potential billing income
- Expense tracking and control of overhead costs
- Management of accounts payable
- Oversight of accounts receivable
- Analysis of financial reports to identify strengths and weaknesses of the practice
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Effective Billing
The other major aspect of running your law firm like a business is the implementation of a billing system that is both ethical and accurate. Many lawyers hate the process of billing, so they put it off and create a situation where work is left uncompensated or bills reflect work that was not actually completed. Neither of these options is desirable and the success of your practice largely depends on a system that works with your entire practice to ensure accurate timekeeping and timely billing.
So this is where we come in! TimeSolv is a highly effective legal billing resource. With years of experience providing services to the legal community, we have created legal time keeping and billing software that is easy to use, accurate in its calculations and convenient for even the busiest attorney.
Protect your professional reputation and investments by taking the time to learn this important lesson that your law school missed. There are a variety of available accounting books and manuals that are specifically geared towards the practice of law. Keep your law firm viable and profitable by treating it like a business.