Law business accounting is unique. In addition to basic accounting responsibilities, law firms must also maintain and reconcile Interest on Lawyers Trust Accounts (IOLTA), track and bill time spent on client work and produce easy-to-understand invoices. This is why it often makes sense for small law firms to choose accounting software specifically designed for law businesses.
Here are our top recommendations for accounting software options, plus tips on how to decide.
Best affordable law firm accounting software
With a 100% five-star review rating on the QuickBooks Online App Store, LeanLaw is quickly becoming a favorite among accountants and bookkeepers who work with law firms, as well as law firms themselves. LeanLaw was built specifically with QuickBooks integration in mind. In fact, there is no “sync” between the two software programs — the integration is so deep, it happens automatically. This means your law firm’s accounting is always up to date and accurate. No more wondering if your reports were produced before or after a data sync.
LeanLaw is first and foremost a billing software. It boasts a flexible time tracking feature, which allows you to either run a timer or manually enter your time on whatever device you choose. From there, you can create your invoices in as few as four clicks, meaning you will no longer have to “find time” to bill your clients.
The best feature of LeanLaw, though, is its ability to keep your trust accounts updated and reconciled automatically. If you’ve ever dealt with an out-of-balance IOLTA, you know what a nightmare it can be to locate and resolve the discrepancy. LeanLaw fixes this problem once and for all.
LeanLaw’s pricing is $28 per user per month when paid annually, or $35 per user per month when paid monthly, making it one of the most cost-effective options on our list.
Best scalable law firm accounting software
Clio is a complete practice management software option for law firms of all sizes. It comes highly recommended by more than 50 bar associations across the U.S., and law societies around the world love it, too.
In addition to billing, Clio also handles client intake, scheduling, document management, client relationship management and many other functions your growing law firm needs. Multiple pricing options give you the ability to scale as your firm grows, meaning you won’t pay for features until you actually need them.
Clio integrates with a number of external accounting programs, including QuickBooks Online and Xero. It also has an Accounting Export feature, which allows users to export time entries to other accounting software programs.
Clio’s pricing varies based on the features you need. Clio Manage — Clio’s most popular solution — runs between $39 and $99 per user per month when paid annually, with most law firms choosing the $59 per user per month option. Other options include Clio Grow, which is priced at $49 per user per month when paid annually, and Clio Suite, which starts at $89 per user per month.
Best all-in-one law firm accounting software
Those who are looking for an all-in-one solution — including a general ledger package — for their law firm need look no further than PCLaw by LexisNexus. This powerful software does it all… or, rather, almost all. The one feature PCLaw lacks is payroll processing, though they do partner with ADP for payroll processing. This partnership allows PCLaw to provide a complete law firm accounting and management solution, without the need for third-party software integrations.
Like Clio, PCLaw is a complete practice management solution as well. Because it is part of the LexisNexus suite of products, there are numerous ways to integrate PCLaw with other vital practice management applications. This allows you to customize the solution that works best for your firm.
If you choose to use PCLaw for your law firm accounting software, you will want to partner with an accountant or bookkeeper who is well-versed in the system. PCLaw’s certified partner program can help with this, or you can choose to have a member of your team become a PCLaw Power User.
PCLaw’s pricing starts at $39 per user per month, but the fine print states this is based on a five-user firm over a three-year period. To get accurate pricing for your firm, you will need to complete PCLaw’s web form and schedule a demo and consultation.
Best software for sole practitioners
Sole practitioner attorneys also need to be able to track billable hours, easily bill clients and keep their IOLTA accounts reconciled. If you are using — or your accountant or bookkeeper is using — QuickBooks Online, then LeanLaw will be a good fit for you.
If you are a Xero user, you will also find a number of application integrations to help you manage your law firm’s accounting. In particular, most of these applications will help you manage your time tracking. IOLTA reconciliations will still need to be managed, and this is something your accountant or bookkeeper can help you do.
FreshBooks software produces beautiful invoices for sole practitioner law offices, and it can also manage time tracking, expense capture and other accounting functions. As with any other general ledger package, if you choose to use FreshBooks for your small law office accounting software, you will need to pay close attention to your IOLTA records and reconcile them often.
How to select a general ledger package
Many of the software options designed for law firms handle scheduling, time tracking and billing. These are all critical functions for the administration of your law firm. However, your law firm also needs to have a general ledger package in order to maintain an accurate and complete set of books.
Don’t be alarmed — general ledger packages abound on the market, and they carry names you already know. QuickBooks, Xero and Sage products are all general ledger packages you can use for your law firm’s accounting software needs. There are numerous articles available online detailing exactly how to use each of these products for your law firm’s accounting, including tips for managing IOLTA.
Even more importantly, all of these general ledger packages allow integrations with software specifically designed to help you manage your law firm.
Choose software designed for law firms
Although you could get by with using just a general ledger package software for your law firm, you will most likely want another software designed specifically for legal practices. An industry-specific software option will help you manage your firm more effectively and efficiently. This, in turn, will make you more profitable and free your time to do the work you love to do, rather than spend hours overseeing and managing your firm’s administrative functions.
This is where things can get tricky. Of the dozens of options available, you want to choose the one that combines the powerful features you need, at a reasonable price — and that is easy for you and your staff to use. You also want to make sure the law firm accounting software you choose is one that integrates with the general ledger package your accountant or bookkeeper uses. This will save hours of data entry time as well as eliminate the possibility of errors.
A version of this article was first published on Fundera, a subsidiary of WealthyUpdates