Choosing the Right Legal Tech Software

Hi there. Linda Artesani, Artesani Accounting. Today we're going to dive into pretty much accounting software and accounting software with legal tech. Why you really want to consider legal tech even if you're a small firm, a solo attorney, a solo plus one, a micro firm. Sometimes attorneys think that that's not important, that they don't really need it. They try to cut costs. And I'm going to demonstrate why you don't want to cut costs there. So one of the reasons I wanted to make this video is because We've had multiple attorneys come to us that say, well, I'm a personal injury attorney. What do I need the software for? Or I really don't want to spend money, and I'm doing it on my spreadsheet, and that's probably really— I don't really want to spend money on that. So now if I do it in QuickBooks, can't I just do it in QuickBooks? Why do I need the software? So I'm going to demonstrate why you need the software and explain the steps to do it without the software and the steps to do it with it so you can see the differences. And I'm going to take the most Simplest transaction, just attorney receiving a retainer. I'm not even getting into the nitty-gritty of when you do the work, when you apply the trust funds. That's even more steps that can be saved. But I just wanted to show you a simple transaction and why you really want to consider adding software to your repertoire of tools in the toolbox to make your life easier at billing time. So here we are in QuickBooks. I'm going to create a customer. And I'm going to create a sub-customer or matter. So you'll be able to have that billing level of seeing the names as such. Now this is a temporary file. It's one of my test files. So I'm just going to go under clients here so you can see how the clients are set up. I'll try to pick up a number that looks similar. It looks like I number the client and I also number the— sometimes number the or just name it. So this is probably one that I did manually. So let's go here. I'm going to create a new client. And I'm gonna say their name is John Kirkland, and I'm going to make a different one for when we do the test using the software Limo. So here's John Kirkland. He's my new contact. Obviously you're going to fill out all the details that, you know, if they have a company name, phone number, all of that. You're gonna put the billing address in. You're going to fill out all that stuff you need to fill it out for your customer, for your client. If they pay you by credit card, all that you got to put in. Client type is helpful if you want to track your clients by type. And then obviously you're not going to use this open imbalance. That's never used. So I'm going to hit save. And I'm going to create another client, but he's going to be sitting under John Kirkland. And let's just say that criminal matter on John Kirkland. So I'm going to create— I'm going to go back a level and I'm going to create another client. It's going to be the— I'm just going to use a company name here. I'm going to John Kirkland criminal matter. How's that sound? All right, so that's his, that's his criminal matter. So this is the matter name. So the client display name is going to be this. It's going to look just like this, and he's going to be a sub-client under John Kirkland. That's where the matter is going to sit. So the parent level will be John Kirkland. This is the customer side here. So John Kirkland. You don't need to have any other details. If you want to put numbers in, you can put numbers in. It's up to you. If you're doing this manually, you probably don't want to bother with numbering because it's hard to leave— know where you left off. So now I've got, as you can see, I've got the matter is John Kirkland, and obviously you're going to want to have his name be— actually, no, you want to go back. You want to have John Kirkland. I'm going to edit it and I'm going to switch the name around so it's backwards because you want to keep the names. Otherwise you'd have a million Johns in there. So now you've got If I pull this back, type in Kirkland, you're going to see that John Kirkland is here. Kirkland John, and then his matter criminal. So that's the steps to create the client name inside of QuickBooks. You're going to go in there and then you're going to create the sub-level sub-customers that matter. So now let's go over to LeanLaw and do the exact same thing. So I'm going to come over here, I'm going to add a client. Same exact thing. So I'm going to put in Phyllis and oops, I put that under company. I put it under here, Phyllis. And I'm going to give her the last name of Watkins. So that's Phyllis. And obviously same thing, you're going to fill in all the details. I'm going to create the client and then I'm going to give her a matter and I'm going to make her have a criminal matter too. I'll make it assault. And then obviously criminal— oops, criminal work. So I can put it right there. So I've tagged it, and it's already gonna create numbering for me. The beauty of doing it here is, and this is where it's gonna save a little time, you're gonna come over here. I'm gonna go over here to look at Phyllis. Actually, because we have the window open, let's do this. I just want to recycle it because it's sleeping. It's connected. So here's Phyllis and then here's her matter. So now you can see Phyllis is here. Watkins, Phyllis. It put it in the right order and it put her matter in here. Assault. So there you go. So that's kind of similar to create the 2. You know, you could do it all in one window in LeanLaw and it kind of encouraged you and added the number and all that for you. Whereas in QuickBooks, you had to go and add the customer that had the subcustomer and connect the 2. So a little bit of time savings there. Now both of these clients are going to need trust accounts, which means that both Phyllis and Kirkland are going to need trust, trust account matters. I'm going to show you how to do it for Kirkland. So this is a, that's a liability account, and you're going to make it mirror the customers. You're going to have Kirkland be the liability account and then Kirkland be the sub-liability account. To do that, you're gonna move over to your chart of accounts. Go to New. I'm gonna create a liability account. I'm gonna nestle that under Funds Held in Trust here. As you can see, there's multiple liability accounts in this one, and then I'm going to make it be Kirkland John. And then, of course, save. And then another one, liability account. Nestle it under funds held in trust. But this time I'm going to nestle it under Kirkland. I want it to be under Kirkland because he's the, he's the parent level. So I'm going to type in Kirkland. For some reason he's not showing up. So it's a liability. Let's go to trust. Let's find him here. So he's not showing up. Let's see why. There he is. Let me go back to New. This happens with this new chart of accounts that they have. So I'm gonna do Funds Held in Trust, and then I'm gonna go ahead and look at it because I know that's where I put it. Still don't see it. Interesting. So it's not pulling it up, but if I come over here, it pulls it up. Let's see. It's Kirkland John, other, and it's a trust liability type. That's so strange that it's not showing. Um, and I can't do it from here. Let's go back here. It could be I've had this happen with QuickBooks before where it doesn't. So there he is. So I'm gonna do a new, new liability. I'm gonna try again. Kirkland. Yeah, it's not showing up. I've had this happen before with QuickBooks. You actually have to log out of QuickBooks and log back in. So let's go over to LeanLaw and just make, make Watkins, make it be an account. So I'm gonna do the liability accounts here, and then we'll go back and see if that helps it. Sometimes you actually have to log out of QuickBooks. It doesn't recognize a new account that you've added. I don't really know why. So here I'm going to hit Set Up Trust Accounting. I'm going to pick my trust account that I want to go in. If you have multiple, I know these 2 names don't exist because she's a brand new client and I'm going to do that. So now those 2 accounts are going to be inside of QuickBooks. If I come over here, even though it's there and you can see what can— Kirkland, it doesn't see it. So let's see if Watkins is in here now. So there's Phyllis, and she's got her accounts beautifully set up. Let's try to do Kirkland again now that I added another one, and hopefully I don't have to log out of this and go back. It's a liability account. Yes. See, now it sees it. And that's what happens sometimes. And I don't really know why that is, but that's a way— that's something of QuickBooks. So it's John Kirkland Criminal Matter. And then I'm gonna hit save. And now it's gonna nestle itself under John Kirkland. So we're all set there. So that's the second step of doing it under Kirkland. If we wanna see if he's here, there's John Kirkland. Now you can see John Kirkland's criminal matter. Next, we're going to— we, we were paid a retainer by John Kirkland. He's— he paid us. So now I want to show that payment. In order to do that in QuickBooks manually, we're going to have to create a sales receipt. But we're also going to have to show the money coming in the bank. So we're going to see the sales side of it. We're also going to have to show that. The only way that I can do this is I've actually created some products and services here. So I'm going to do retainer. I believe that's how I have it. So prepaid retainer is right here. Retainer applied, retainer receipt. I think I'm gonna use this one. So this is from me practicing. So remember, this is a demo file. So I'm going to show you the setup here. So you're gonna have to create a product. Or service, create it called Retainer Received. Make sure it goes in the trust liability account that you want. So you're gonna have to create multiple if you have multiple. So as you can see here, this one goes into my 2014 account, but I really want it to go in my funds held in trust for this guy. So I'm gonna change it to that. Now I need to create a sales receipt for Mr. Kirkland because he paid me $10,000. So here's John Kirkland. The customer side. Remember, this is the customer side. So I'm going to create a sales receipt because he handed me money when it came into my office. And now I'm going to create that using that funds— oops, retainer, retainer received. And I'm going to write that he gave me $10,000. And the class is— you can put the class as whatever, uh, attorney if you have a class. By attorney, you do that. So now this is showing that he paid me this $10,000. I'm gonna hit save. And now that went into my trust bank account. Let me go back to that. I'm gonna show you that I want this to go in a specific bank account. So there's my bank account it was connected to, and that's the one I want it to go into. I don't want it to go into this one. I want it to go in the regular bank account. So that's all set up. So I did have it set to do that. Now I want to receive $10,000 from Phyllis. I'm gonna come over here. I'm gonna hit this plus sign and I'm gonna say deposit to trust. I'm gonna make it be Phyllis. She paid me. I picked my payment method as check. She paid me a check. She paid me $10,000. And then over here I'm gonna put from initial retainer or whatever notes you want to put in here. And then I'm gonna record the deposit. So now if I go over to my bank account, now you're going to see that if I go to— let me actually go here. I don't, don't have that connected to a bank account. Uh, let me go into this trust account. Let's see, trust bank account. I'm going to view the register. And you're going to see John Kirkland and you're going to see, oh, he paid me $100,000. Um, you're going to pay— see that this should have been 10. My mistake. $10,000, not $100,000. There we go. So now you're gonna see that they each gave me $10,000. There's a little more notes in here, but that's all set. And I did that with a sales receipt. I also did it with a deposit. So the next step I need to show now is I want to show you here actually is So that's showing that the money hit the bank. I created a sales receipt. The customer side of this transaction has happened. But what about the liability? So I'm going to come down to— come down into the section for, um, Kirkland and look, and he's got no, no transactions showing. So it doesn't show that that money went into trust. So where did it go? Well, if we go back to this product and service and look at the retainer received. I have that booking into— and this is the backside of the deposit— it went into the funds in trust. Why did I do that? Well, I did that because I'm gonna have to do this extra step of moving the journal entry, moving it into the right account, because you otherwise you'd be making trust account products and services for every client, and that would not be efficient. So I want to go down to the liability side, which is my funds held in trust. Fastest way to get there is by searching here. Search capability in QuickBooks is not working good. Here it is. So when I go to the register, I'm going to see both John and Phyllis. But if I dig deep into this account, And sales receipt's gonna show that it went here. But we know he doesn't have any money in his account. But then let's go looking inside of Phyllis's and see where her money went to. And her $10,000 is sitting in here. So what's the difference? The difference is the fact that I have a product service inside of QuickBooks that I used in the sales receipt that shows this money going into the bank. and then into the parent level for Kirkland. And then I'm gonna have to make a journal entry to move it out. Whereas Phyllis's went directly because it was just one click of receiving the retainer, went directly into the right bucket or the right account, into the liability account for Phyllis. So I'm gonna have to do this extra step. Hopefully I'm not losing you on this, but let me show you. So I'm gonna have to make a journal entry, funds held in trust. This is all part of the steps that you're gonna have to do to move this. So I increased the funds held in trust with a credit, which, because it's a liability. But now I'm gonna have to make this a— to move it. So to move to proper liability account for the client. And then I would do that under— I would put the Kirkland. So this is the extra step now, and I want it to go be showing that it was going to John Kirkland, and then whatever the— I forgot which one we picked. And then I'm going to pick Kirkland's account. So basically you're moving it from liability to liability account, but you want to show this. And then I'm going to hit Kirkland again and then hit his matter number, and then I'll put this attorney's name down. So now what does this look like? And I didn't want to make this too long of a video, but I want to at least demonstrate this. When you look into the balance sheet, they're both properly going to be stated, but the extra step was to move it out of this parent level. So I'm going to show you here. Here's the Trust Liability 2. Where's the Funds Held in Trust 1? All right, so here's the parent level. This is where I had to book this Account balance. So if I come in here, you'll see that money for Phyllis. I can find Phyllis here. I know what I didn't do here. Let me change the date. It's on last year. So let's just do this year. All dates. Like I said, this is a test file. So if we look in here, you're going to see— you'll see Phyllis is in here. She's down at the bottom somewhere. Here's Phyllis. So her money's sitting in her liability account separated under the header. And then now Kirkland's is because we made that journal entry. So if I go into John Kirkland's account and show you the matter, let me go over here and pull up his little register. You're going to see that the money is moved in here by that, that separate journal entry that I made. Where Phyllis's went directly in. So now the money is stated in the right way. It's stated in the trust bank account, and it's now stated you received the cash in, and the money went into the trust bank, and then the offsetting account was the individual client ledger. That's the time savings. So in LeanLaw, it was just click to add the client, click to add the— and this is a simplistic demonstration— deposit to trust. So you had to make a client, which made you make a matter, and then you deposit it to trust. So it's that easy, that simple. So I hope that is helpful so that it explains the time savings. So multiply that by however many matters and clients. Not only are you tracking trust in a very logical way, you've got a nice way to show the balances and check your balances here. But at the same time, you're going to be able to validate it all back and keep it balanced. Obviously, this is a demo account. It's not balanced, but you get the gist. So I hope that was helpful in really demonstrating that it's not so easy when you just have the accounting software. It's designed for all types of companies. So there's a lot of workarounds You have to dive into journal entries, which I know freaks some people out. Accountants and bookkeepers love to make journal entries if we have to. We try not to if we can, but in the manual workaround with QuickBooks, just QuickBooks and no software, you really have to use journal entries. We'd be creating a tremendous amount of products and items to be used in the transactions, so it wouldn't make much sense. It would be very time— it would be time-consuming to do that. And using software is going to help you with compliance. It's going to help you with keeping things neat orderly. As demonstrated, LeanLaw, really great software. It helps you to keep pure clarity in where your numbers are at. And as we know, as working with the legal industry, the importance of trust compliance is just so high. You have to make sure you track that money to the penny. It's, it's really, really an integral part of your workflow, and having the software and the tools to help you is important. So on that note, I hope this helps you make your decision in selecting the right accounting platform, the right software. You can't go wrong with QuickBooks, and if you add LeanLaw or Clio on top, you're going to have a really powerful one-two punch when it comes to tracking your finances and tracking and keeping your trust in compliance.