The Future of Legal Accounts – developing back office solutions
The last decade has seen seismic changes within the legal profession and how legal practises are run. Plans to streamline the SRA accounts rules even further mean the next ten years could see changes that make the previous ten seem positively pedestrian.
This article looks at ways to develop your legal cashier’s role to provide back office solutions to benefit your firm.
Outcome focused regulation changed the dynamic of compliance and put the focus firmly on how the company operated. Robust systems and key processes became watchwords for accounts departments. However the new rules, which are due out later this year, appear to shift the ground again. Although yet to be agreed, the rules look as if they are to be streamlined even further.
When you factor in GDPR which comes into force on 25th May 2018, and the constant battle against cyber-crime, you start to realise that going forward the role of legal accounts and administration or the legal back office faces significant challenges.
Another major change is automation or artificial intelligence (AI) which will entirely re-define how legal accounts develop in the future.
The signs are already there. The number of cheques that law firms pay in or indeed issue has decreased dramatically in the last few years. All banks operate interactive online platforms, in fact it is nearly impossible to run any business without using them. The ease with which credit cards can be used to make payments, and the increased presence of online payment systems such as PayPal has significantly increased the capacity to move money around.
A number of general accounts packages are now providing automatic streaming of bank data which will begin to recognise transactions and process them automatically. Not all firms will be happy with this type of automation and the SRA will need to be satisfied with the process before it becomes acceptable within a solicitors accounts package; but make no mistake it is on its way.
Solicitors need to re-evaluate what they require from their accounts department. This is where the Back Office Role becomes more apparent. The role of the cashier will need to be expanded to cover a number of different aspects of accounts and administration, some of which I have expanded on below:
Compliance
This might be conceived as an area where accounts has always had a significant influence. However as already mentioned, the new rules will be streamlined to the point where law firms will be required to put their own interpretations on them. Streamlining does not mean that you pay less attention to the SAR it means that you must pay more. Those phrases, robust systems and key processes will become more prevalent, once the new rules come into being. This should be construed as a positive thing. With advent of GDPR and the revised Anti Money Laundering rules, Solicitors’ practises are having to deal with a whole new raft of rules and regulations, and it makes sense that this should be co-ordinated in one place – the Back Office.
Finance
The potential reduction in standard accounts processing and reconciliation work allows the Law Firm to look at other aspects of finance:
Reporting – The capacity of the software systems being used today and the significant switch towards storing information on the cloud, means the amount of data that can be analysed is huge. A good back office team should be able to strip out the information which is meaningful and present it to the senior management team in a format which makes it not just easy to understand but more importantly can form the basis of necessary policy changes within the practise.
Billing – The legal cashier should be put in charge of all billing functions, from taking off time recording, preparing bills for checking by fee earners, analysing disbursements for those which are billed and unbilled to include in the bill. This may already be done by many firms but often now the bills are sent by the accounts department rather than the fee earners, to keep distance between the work and the bill. This ensures the personal relationship with the client is not tainted by money. The fee earner must always check the bill before dispatch however and sign it off.
Debt chasing – The cashier can again be used to assist with debt chasing being in possession of the necessary reports to see outstanding fees. Their contact details can be included in the Client Care Letter and they can liaise with the fee earners where any bills are queried.
Legal cashiers are a valuable tool which should be used fully and with the advent of automation, Solicitors should be looking now at extending their role to assist with the administration of the business.
The Law Factory LLP are outsourced legal cashiers working with solicitors countrywide. We provide all the services mentioned to our clients and offer a free no obligation visit to any firm interested in our services.
