In this instructional video, the speaker guides legal bookkeepers on the unique accounting challenges of personal injury (contingency) law firms. He emphasizes the importance of understanding cash‑flow dynamics because firms front large case expenses that are only recouped if a settlement is reached. Bookkeepers must first master jurisdiction‑specific trust‑accounting rules, then track advanced client costs such as medical bills, expert fees, court fees, and investigator expenses. The speaker recommends a workflow that layers Hubdoc into QuickBooks and LeanLaw (or similar practice‑management tools) to capture receipts, tag transactions, and generate billable reports, while noting that some firms use Filevine or Casepeer, which often lack seamless QuickBooks integration. Monthly reconciliation of the advanced client‑cost account and thorough audit of settlement sheets are presented as critical steps to avoid lingering unrecoverable expenses. He also advocates using Dext for receipt capture, assigning individual logins to attorneys, and establishing disciplined habits to keep trust accounting clean. Throughout, the speaker positions the bookkeeper as a strategic advisor who can help the firm manage cash flow, avoid feast‑or‑famine cycles, and ensure every penny is accounted for.
Chapters
This week we're going to talk about personal injury attorneys and some of the nuances behind working with personal injury attorneys. So the temptation, as maybe a new bookkeeper, getting a client that's a personal injury attorney is it's a little bit easier to handle the trust accounting because the trust accounting is done after the fact. And when I mean that, I mean the trust part is done after the fact. There's a lot of case costs that are going to come in. You're going to have to handle that advanced client cost side of all the money that the law firm is spending up front. I think one of the places, if you're getting this kind of a client, you're tackling this kind of a client, you really want to understand cash flow because these firms tend to have— they struggle with it because these cases go on for many, many years. And when the cases last that long, they're upfronting a lot of money, and if they don't win, now that became the law firm's expense. So it's good to have that understanding, that clear understanding. You can really step into that advisor role and help your client manage their cash flow so they can afford to pay their staff. And these are areas that I think these attorneys really need help with. So obviously, if you've got your first personal injury attorney, First thing first, with every type of law firm that you pick up, make sure you familiarize yourself with the legal accounting rules and regulations for the jurisdiction that they're working in. So if they're working in the state of New York, you wanna know the rules in New York, and you maybe even some states like Oregon, you want to know not only the state rules, but then maybe the local county rules. So you really wanna make sure you understand that. And I'll provide a link in the article that can tag you back to each state so you can find those places that you need to find where you can learn about trust accounting in that particular jurisdiction. These rules sometimes will include trust requirements which are really stringent in our industry. So when you work with lawyers, you really need to know this. It's important. So with the trust accounting side, which I mentioned earlier, the funds are handled after the fact. So the client comes in, The attorney takes the case, the flood of transactions start to come in. So they're all expenses. There's just a large expense side to this. So you're going to see maybe medical bills or maybe they had to hire an investigator to look into the case or matter because they needed to hire a professional. There could be multiple reasons depending on the personal injury case. These are pretty interesting cases. But the attorney doesn't win any money or get any money for this for the most part. Some law firms work differently. So you really wanna have that conversation with the attorney and then get those upfront documents that the client, the attorney's client would sign. So you wanna get those so you understand what agreement is happening before they take on a client. So you want to know that as well and know that these expenses are happening. The law firm's paying for them, and then when the case settles, they recoup that money. So they become advanced client costs. And this is a practice area where you'll often hear me say, well, you don't need software for this one. Software, external software like a Clio or a LeanLaw is not necessary. I like the idea of maybe using LeanLaw with it. It's not made for contingent matter contingency attorneys, but that system I call look ma, no hands, where you can layer a Hubdoc pushing the details into QuickBooks, which are now read by LeanLaw. Now you've got a beautiful system where it's tracked. But if you don't have that software, you can check the billable box in QuickBooks and then quickly be able to pull that up as well with the expenses coming in. I just like the system with using LeanLaw because you're tracking it and you're also— with using Hubdoc, you're getting that image added to the transaction. So Some jurisdictions you might need to provide copies of all the receipts, and the attorneys will know this, and they'll have their own methodology for tracking that. But either LeanLaw, Clio, you can use those practice management tools or the billing software to be able to kind of help make our job easier. It's not really for the attorney side. It's more for us. Now, there is software you might run into. Filevine is one that comes to, to mind. That one's used by a lot of firms. They have the ability to kind of track the case costs and they do a lot more. They're specifically designed for this type of law practice. Casepeer is another one that is used for this kind of practice. They're both very well-known products. They don't integrate very well with QuickBooks, so I don't really want to see that piece happening. You can try it. Maybe by the time this video airs, you can attach Filevine and it works well. But if it— if you find that it doesn't, you can just disconnect it because it's really for the attorneys to track their case expenses. But the case expenses can be court fees, expert witness fees, medical record retrieval. You just— they have to keep meticulous records, because any expense paid by the law firm that's not recouped becomes that expense for the law firm. We just don't want to see that. You're going to see it if they lose a matter, but most of them don't lose too many matters, but you will see it then, too, which is why it's pivotal that we track and reconcile monthly the advanced client cost account. So you don't want to have any lingering expenses up there that will never be recovered. You want to book them down as expenses to offset any revenue that they make. So these firms end up being like kind of feast and famine. So they— the cases can last 3 years, 5 years. So you're collecting all these expenses and all this negotiation is happening in the background with the law firm. And then they go to court and they win their judgment. The law firm gets paid whatever that piece is, 33 1/3% or whatever the percentage was in the documents. They win that piece and then they recoup their fees and then the client gets the remaining piece. So that's kind of how those matters work. It's very simplified as I described that, but that is how it works. So there's not usually time tracking, although some firms will track time because they want to track the time of the attorneys to kind of see how they were doing in the case or matter. If you do have that, then you would want that software. But most of them don't. You can track it and not make it billable. So it's just really used as a tool for tracking metrics. You might get a small retainer from a client. If you do, you're gonna book that in as well. We don't see that very often, but you might see that with personal injury. A lot of times they don't collect a retainer. You want to reconcile. So very important to reconcile these matters. You're gonna get a settlement sheet at the end of the whole transaction. They win the case, they have a settlement sheet. It's gonna break down the percentages. You're gonna have that as validation. We like to make a little side spreadsheet to kind of put all those calculations in. If there was outside counsel that was involved in the matter, you want to have that in there. That's all another expense to the, to the, the client. Basically, you want to be organized when you work on this kind of thing. You want to audit each time a matter settles. You want to audit that, that workflow, those matters. You want to audit it, make sure that every single thing is accounted for, every penny is accounted for. And then basically, once the money is divvied out, the matter is over, and then you can make it inactive and you're done with it. And that's pretty much how you keep a really clean trust accounting. Now you will see when you do a 3-way, they're very simple because there's usually not any money left over when it's done. So it's either money's in there that you're in the process of divvying out, or it's zero balance or a minimal amount because they're allowed to do that in their state. So know that when you work with these personal injury attorneys, it can be demanding. There's a lot to account for. It's— I think this is one of those areas, those practice areas where we are so vitally important because they're so busy doing what they're doing that we're able to help kind of manage all those expenses and case costs coming in, and they have to be booked in by matter. This is why we really recommend a Dext, D-E-X-T product, because the attorneys can each have their little login for it. They can upload all the receipts, so nothing's lost. Get them in the habit, in the workflow to start to do that for you, to help you manage all the expenses. It's just so important and critical that nothing's missed. So I hope that's helpful. I hope you win your first attorney-client. And if it's practice, if it's for a personal injury attorney, I think that's not a bad way to go for the first one. But it's definitely a place that you're gonna be able to help your client. Congratulations on getting your first attorney-client. And if it's for with a firm that's doing contingency-type work, personal injury, enjoy it and really find what methods work best for you. But remember, keeping those case costs at bay is critical. And we'll see you all next week. Bye now. Bye.
