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Should Your Law Firm Hire a Law Specific Bookkeeper or a Non-Legal One?

In the legal world, where every detail counts, the role of a bookkeeper transcends traditional number crunching.

Whether you’re scaling the heights towards your first million or are already in the 7 or 8 figure league, the expertise of a bookkeeper is a necessity.

But the question is: should your law firm opt for industry-specific expertise or look for the diverse insights of a non-legal financial professional?

This is what today’s article is going to be about. Let’s understand the pros and cons in detail.

Benefits of Hiring a Law Firm Bookkeeper

Industry Expertise

A law firm bookkeeper not only crunches numbers but understands the ins and outs of law firm bookkeeping like the back of their hand.

Besides managing client trust accounts and adhering to IOLTA guidelines, law firm bookkeepers breathe and live the nuances of legal billing and retainer agreements.

You will not have to teach them anything about your practice since law firm bookkeepers have experience working with clients and firms of such a nature.

Regulatory Compliance

Keeping up with state bar regulations and compliance issues is a full-time job on its own. A legal bookkeeper shines here, and can significantly reduce the risk of ethical violations related to financial management.

They’re like your personal guardian against compliance slip-ups, ensuring your firm’s legal bookkeeping practices are up to snuff.

Efficiency

The transition period when bringing in new staff can be a drag on productivity. But with a law firm bookkeeper, that’s hardly a concern.

Their expertise in law firm accounting means they can hit the ground running, leading to immediate efficiency gains in your firm’s financial operations.

Comfort With High Revenue

Not all legal bookkeepers are created equal. Some bookkeepers have cut their teeth on the financial nuances of small law firms or solo practices, places where revenues might not yet touch the seven-figure mark.

But what if your law firm is around the $600,000, $700,000, or $800,000 revenue mark, and will soon cross the $1,000,000 threshold? You need to look for a law firm bookkeeper who is comfortable with high revenue management.

Why, you ask? Because when your firm’s revenue starts to climb to that 7-figure range, the game changes—dramatically. The financial insights and advice you need when you’re playing in the league of $200,000 to $300,000 revenues won’t cut it anymore.

A bookkeeper seasoned in law firm accounting for high-revenue firms will engage you in active discussions about managing your expenses and deploying strategies for growth that are tailored to the big leagues.

They bring to the table a wealth of experience from working with 7 and 8 figure law firm owners, offering you not just numbers, but strategies that worked, and financial foresight that only comes with having been there and done that.

Drawbacks of Hiring a Law Firm Bookkeeper

Cost

Quality comes with a price. Specialists in law firm bookkeeping may command higher salaries due to their niche expertise. For smaller firms or those watching their bottom line closely, this could be a crucial consideration.

But then again, isn’t peace of mind worth it?

Limited Perspective

Sometimes, being too specialized can be a double-edged sword. Bookkeepers with experience exclusively in the legal field might lack exposure to the broad spectrum of accounting practices.

This means potentially missing out on innovative solutions that legal bookkeeping services from other industries might bring to the table.

Now, let’s look at some advantages and disadvantages of hiring a non-legal bookkeeper.

Benefits of Hiring a Bookkeeper from Another Sector

Fresh Perspective

A skilled legal accountant from another industry could work wonders for your firm’s finances. They could bring in fresh insights and practices that might better optimize your law firm’s accounting management, introducing efficiencies and innovations not commonly seen in the legal sector.

Adaptability and Learning

Bookkeeping professionals who have successfully transitioned between industries can be a valuable asset for your law firm. Their adaptability and eagerness to learn and apply new concepts can be precisely what your firm needs to stay ahead of the curve.

Drawbacks of Hiring a Bookkeeper from Another Sector

Learning Curve

Bringing in a law accountant from a different industry means there’s bound to be a significant learning curve. They’ll need to get up to speed with the specific requirements and practices of the legal industry, which could initially introduce some inefficiencies or necessitate additional training.

Risk of Non-Compliance

Without the foundational knowledge of legal bookkeeping services, there’s an increased risk of overlooking critical compliance requirements. For a law firm, this could spell trouble, highlighting the importance of having a law firm accountant well-versed in the intricacies of law firm accounting.

Conclusion

At the end of the day, the necessity of having a law firm bookkeeper who’s not just familiar with, but also experienced in managing the finances of law firms at your revenue level cannot be overstated.

It’s an absolute must.

If a bookkeeper lacks this specific combination of law firm experience and familiarity with the revenue scale you’re operating at, then it’s wise to continue your search.

After all, the growth of your law firm isn’t solely dependent on the area of law you specialize in, be it immigration, family, business law, trademarks, or any other practice area.

What truly matters is partnering with a law firm bookkeeper who grasps the critical role of providing timely, and accurate financial data.