The Need for Adequate Business Skills

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The Solicitors Disciplinary Tribunal (SDT), the independent statutory tribunal which considers complaints of misconduct against solicitors, has been keeping busy as of late with a sharp rise in the number of those appearing before the tribunal. In 2015, the SDT received 123 applications for hearings involving practising solicitors, up from 106 in 2014 and just 78 in 2013. There was also a noticeable increase in the numbers of lawyers being struck off, 56 in 2015, up from 48 the previous year.

One of the worrying themes to emerge from the Annual Report was that many solicitors “do not have the rounded set of skills to run a business.” This theme is definitely apparent in the seemingly endless reports of misconduct across the UK including the “chaotic situation” at a London conveyancing firm, a solicitor who “buried his head in the sand” when several allegations were made against him, a sole practitioner with “woeful ignorance” of accounts rules, and another who had struggled to keep any records of accounts.

All of these cases point to a worrying trend that many solicitors are beginning to forget that a law firm is a commercial enterprise of which the practice of law is one element and that in all commercial enterprises a firm grasp of the basic rules of accountancy is essential. Most of the aforementioned cases concern incidents where lawyers either confused, or ignored their accounting obligations. To ensure you don’t meet the same fate here are three simple ways to create a seamless accounting system.

1. Identify, prioritise, and integrate tasks into your practice
Organisation, integrated workflows, and consistent task management should eliminate all anxiety related to your law-firm accounting and ensure that your time is structured and optimized. The “perfect” legal accounting system should include year-round expense reporting, accurate client accounting capabilities, and automated data entry.

2. Use technology to build a strong infrastructure
Many of the cumbersome, time-consuming elements of legal accounting can be done simply by integrating the right tools into your practice. Legal-specific accounting tools such as Xero are easy to use, mobile, and can easily be integrated into your legal practice management software to track clients and invoices.

3. Don’t do it alone
Bring in a professional, preferably one with an understanding of legal accounting who is familiar with your legal practice management system and accounting software. Try to avoid relying on unqualified spouses, or partners to assist with your bookkeeping as they will not be able to provide you with the necessary business insight required. By doing this you can eliminate any anxiety which may occur around tax season.

The SDT gives a warning that UK solicitors should take heed of: “Frequently small problems escalate. Such solicitors would do well to remember that an admission of wrongdoing, a request for help, and an attempt to put things right may save a professional career.”

These issues and more were discussed in greater detail in a recent Clio webinar – Money Matters for Lawyers is now available to view on demand.

Categorized in: Business, Legal Accounting