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Why Your Law Firm Needs Legal Accounting Software

Noel Peel

Written by

Noel Peel


September 20, 2018


If you’re still handling your law firm’s accounting needs using paper systems or mismatched out-of-the-box non-legal attorney billing software, you could be putting your law firm at a productivity disadvantage. Using the best accounting software for lawyers will cut the time you spend on accounting tasks significantly and it will reduce the number of errors you and your staff make. Let’s take a closer look at why you should seek out an accounting software system specifically for the legal profession.

Time Tracking

The ability to easily and accurately track associate time spent on a matter is probably one of the most important reasons law firms need law office accounting software.  Using paper systems become cumbersome, especially after you’ve acquired more than a few clients and there’s always a chance you will inaccurately report time when you’re transferring the data to a billing spreadsheet.  Overcharging or undercharging for your associates’ time is always damaging to your law firm’s bottom-line and reputation (in the case of overcharging).  Accounting software for lawyers that takes advantage of legal time tracking software makes it easy to record time accurately because your time is tracked as completed tasks associated with a matter. For example, if you’re reading an email related to a specific matter, the best accounting software for lawyers will automatically record that time and attach it to the appropriate matter so that you can easily bill clients for the work you did.  And when using a legal practice management software like Smokeball, you can decide in what increments you will record the time, making it easy to capture all of the minutes you spend on a case. And if you’re wondering about the productivity of your associates, the best accounting software for small law firms will allow you to run reports showing how your associates spent their billable time.

Legal Specific Software

Not only is it important to have law office accounting software, that software should be specific to the legal industry and customizable so that you can adapt it to your practice area needs.  Customizable software ensures that as your law firm grows your software can adapt and expand with you.  The best accounting software for small law firms will offer opportunities to customize your system and invoices for the needs of your law firm but also for the specific needs of your practice area. Before you sign up for any legal bookkeeping software, make sure that their support team offers customization options even if you’re not ready for an expansion or change right away.

Track Fees and Expenses

The best accounting software for lawyers also allows you to pre-define activities, fixed fees, and expense types so that you can easily record the fees and expenses for a matter. A good system can also keep track of the types of expenses you have for tax purposes so that you are reporting expenses and fees correctly on your financial reports. This is especially important if you have a lot of matters that have many fees and expenses attached to them. Manually tracking that information on a paper system isn’t as productive and it puts you at risk of recording this critical information inaccurately. When you take advantage of case management software that includes features like calendaring software for law firms and legal task and workflows, you’re law firm billing and accounting process will run more efficiently than ever before.

Trust Accounting

Trust accounting is a great way to for law firms to ensure client payment but there are strict rules around how trust funds can be used by attorneys. Legal billing software that works well will make it easy for you to collect, track, and manage client funds placed in a trust account while ensuring that you’re in compliance with the rules. Software like Smokeball will allow you to reconcile your trust account as often as you wish and run comprehensive financial reports for your invoices and accounts. It also includes safeguards that prevent lawyers from drawing down funds before they’ve been earned or inadvertently overdrawing the account due to flawed accounting records.


Legal accounting software designed for your law firm will help you invoice clients easily and seamlessly. Using systems like Smokeball, you can customize your invoices to match your law practice’s branding and send out bulk invoices in just a few minutes.  The best accounting software for lawyers simplifies the billing process so that you can quickly send clients invoices that are detailed and accurate in just a few clicks. It also makes it easier to track who’s paid you and who still owes you money so that you can follow up with reminders without that collections process eating away at your billable time.

Full Integration

It’s important that law firms use legal accounting software that’s fully integrated into a comprehensive practice management system.  Lawyers should be able to track their time, work on client matters, and delegate work to colleagues all while tracking expenses and generating invoices for cases in one system. Being able to do this in a a single, fully integrated system is important for the productivity of your law firm.

Tracking Of Important Metrics

There are at least four important metrics the best accounting software for law firms should allow you to track or at least get law firm insights into:

  1. Law firm profitability
  2. Profitability by practice area
  3. Profitability by associates and partners
  4. Profitability by client

The best accounting software for lawyers will allow you to track the data necessary to get insight into these profitability points.  If you’re using a system like Smokeball, the automatic time tracking will let you see an overview of how much time you’ve invested into a client matter compared to how much income you’ve generated. It will also allow you to see how partners and associates spent their time. The reports you generate will answer the question, “How much time did associates and partners spend on a matter in this specific time period?” and “How well is this practice area performing over this specific period of time?”

When it comes to choosing the right system for your law firm, you really need to consider best accounting software for attorneys. You also need a system that can fit the needs of your firm while being flexible enough to change and grow as you and your team evolves. Don’t feel pressured to adopt just any system that fits the minimums, give it a test drive to make sure that it fully meets all of your critical requirements.

Not using Smokeball to manage and grow your business? Get a free demo and see why the most successful small law firms use Smokeball to manage and grow their business.

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