By Leap US, AAML NJ Silver Sponsor
Compliant and efficient trust accounting practices are essential for New Jersey matrimonial attorneys to ensure success and provide their clients with high-quality legal services. Whether a partner or a bookkeeper manages trust accounting processes, outdated practices can leave family law firms vulnerable to inefficiencies, malpractice, and disbarment risks. While this is a daunting prospect, the good news is that legal trust accounting software can eliminate these challenges and provide automated processes that are simple, scalable, and efficient.
Let’s take a closer look at everything New Jersey matrimonial attorneys need to know about trust accounting.
What 3 Common Law Firm Challenges Impact Trust Accounting Practices?
Often, family law firms have limited resources to dedicate to managing all the trusts they’re overseeing. This becomes especially true when there are no digital software solutions to eliminate challenges that prevent law firms from implementing streamlined and compliant trust accounting processes. The three most common challenges are:
While these challenges can seem overwhelming to solve, legal trust accounting software can eliminate these challenges for more streamlined operations.
The biggest challenge New Jersey family law firms face is having the time to dedicate to maintaining healthy trust accounting habits. Between court appearances, meeting with clients, preparing documents, and managing payroll, lawyers and their support staff have a minimal amount of time left in a day to put effort into manual trust accounting processes.
2. Poor Record Keeping
Receipt management and time recording often occur “after the fact,” which leads to inaccurate records of how much time was spent on client matters or expenses being missed for reimbursement when preparing client invoices. When attorneys have to go back and guess how much work they’ve done or the amount of money spent on a client, it limits how much time can be spent on other tasks.
3. Data Entry Errors
Data entry errors are bound to happen if law firms work across spreadsheets and multiple siloed software systems. Without a centralized database, attorneys and bookkeepers can accidentally type in the wrong information or post updates to the wrong trust because they are trying to consolidate information from multiple sources. As a result, these mistakes can lead to overdrawing a trust and malpractice.
What is Legal Trust Accounting Software?
Legal trust accounting software systems are a digital solution that enables attorneys and bookkeepers to manage, reconcile, and audit trust accounts automatically for their clients to meet bar and jurisdiction requirements. In addition, reporting should be available within the software to quickly review up-to-date reports on dormant matters with trust account balances, potential trust to receivables transfer, and retained trust accounts for an overview of all trust funds and to ensure that all money is handled compliantly.
It is important to keep in mind that legal trust accounting software is different from general accounting systems. For example, general accounting programs do not offer the tools and features needed to complete trust accounting-specific functions or label funds appropriately when reconciliations occur at the end of the month.
Legal Trust Accounting Software Benefits
There are several benefits that New Jersey family law firms experience when they implement legal trust accounting software.
- Save Time on Manual Work - Eliminate manual tasks that require attorneys, support staff, and bookkeepers to update spreadsheets, paper files, and siloed systems. When the right legal trust accounting technology is in place, there is no need for double data entry, so staff members can focus on completing more work in the same amount of time. Additionally, the right trust accounting software provides intuitive reporting for attorneys and bookkeepers to get an overview of current trust balances, outstanding next steps, and more.
- Improve Record Keeping - Trust accounting technology provides a digital trail of all changes in real time in a single database. Financial transactions are saved to the matter for approval on disbursements, invoices, and client transactions. This ensures that reconciliation becomes faster with fewer discrepancies and that all actions are compliant.
- Ensure Compliance - Software can provide peace of mind for attorneys that all transactions are IOLTA and state bar rule compliant. Trust accounting software can process large transactions at high volume while preventing trusts from being accidentally overdrawn, misused, or mingled with firm funds to prevent malpractice lawsuits.
The need for compliant and efficient trust accounting practices will only continue to increase as trust accounting regulations evolve. Manual processes waste valuable time and resources for New Jersey family law firms and leave them at risk for malpractice lawsuits and potential disbarment.
Firms that embrace legal trust accounting software for automation and reporting can eliminate redundant work, improve their records for smoother auditing and client updates, and mitigate compliance risks for their practice. The LEAP legal practice productivity solution provides New Jersey family law firms with everything they need to modernize their entire practice and centralize all data to automate and simplify trust accounting. To learn more about how LEAP could help your firm improve trust accounting practices, visit leap.us/new-jersey.