Hiring Legal Accounting Staff for a Small Law Firm

By Tyler Chapman


Hiring Traditional vs Non-Traditional Legal Background

When looking for new accounting staff at your law firm, we know that prior experience with your current firm management software would be the best skill to have. Prior experience enables your new employee to focus on learning the firm’s workflows over the system’s workflows and thus onboard faster. If you are not lucky enough to find someone with your software experience, prior law firm experience can be enough but is not always necessary.


You should weigh law firm experience, accounting experience, and other experience to determine which skills make sense. Most legal software packages do a great job of hiding the accounting aspects of transactions from users and route the accounting transactions through system configurations. Perhaps at your firm, recording payments, generating bills, and issuing checks are not very complicated or frequent. Therefore, you would rather have an employee who knows about day-to-day law firm operations over one who has an in-depth knowledge of debits, credits, and other accounting work.


If your employee search has not turned up any traditional candidates with law firm experience, it may be time to think outside the box on skill sets. Project managers can make great legal employees as cases share many attributes with projects. They both deal with a client requesting services and paying you in pre-arranged increments. They are also accustomed to rebilling for expenses and generating periodic invoices for goods and services. Yes, there are nuances to legal around trust accounts and terminology, but firms can easily teach these. Additionally, these new employees can bring fresh ideas to the firm that might lead to other cost savings.


If your firm is growing or you are looking to elevate skills from in house bookkeeping to in house accounting, you can always hire someone with no legal experience but lots of accounting experience. Beware though that their expertise is almost certainly with accrual basis and not cash basis accounting. Hiring an employee with this skill set will require some retraining. Nearly all college courses in accounting focus on GAAP/IFRS methods of accrual accounting with cursory attention paid to the cash basis. Make sure you ask about their cash basis knowledge during interviews and provide time to come up to speed if you hire them. Accounting firms will know how to handle your cash basis business and might be an excellent resource in finding the right employee. You can check to see if your firm offers advisory services in addition to accounting and tax services to which you are accustomed.


Onboarding your new hire

After the new paperwork has been finished and the office intros made, make sure you explain your firm’s terminology to the new hire. Even within the legal space, certain words can have multiple meanings. The legal term that comes to mind is “retainer” as it is widely used in the legal profession but can have many different meanings between and within firms. Does your firm consider a retainer any monies paid upfront regardless of being in an IOLTA/Trust account or general account? Or is it a flat fee recurring monthly invoice for services rendered? I know in the US that firms can receive funds into their Operating Account before generating an invoice under certain conditions, but does your firm explicitly prohibit this, nonetheless?


Time is money for your firm, and your billing cycle is the conversion process. Make sure you walk through the details of your firm’s process early on. Who manages getting time entries finalized? What are the consequences of missing that deadline, and who enforces it? What are your turnaround expectations from Prebill generation to Invoices Sent? Hiring someone with legal or project experience allows you to move through this process faster. Someone who has focused on accounting might take more time to come up to speed. Additionally, take a critical look at your process and determine how rigid or loose it is. If you hire someone and explain the importance of getting the bills out the door but do not adhere to your own described billing cycle, you send mixed signals on what is and is not essential.


What happens after your bills are out of the door? Some firms do their bank recs, run a few reports, and call it a day. Others have a much more robust reporting package that includes Income Statements, then a series of Management Reports. As with the billing cycle, make sure you set expectations for when these actions/reports are due as it relates to days after billing is finished. Make sure while hiring you layout any PTO blackout days. Many people from the accounting world are accustomed to not taking time off or having limited options on time off during the first two weeks of the month. In smaller law firms, taking off the first week or so is not possible if no one else can generate, edit and send bills.


Summary

When you have a vacancy in your firm, through attrition or growth, review the current skills at the firm and see if any are missing or redundant and hire accordingly.Previous legal experience may not be what is needed for your firm, and by taking the time to look outside the regular talent pool you might find employees with the skills you did not know you wanted.

Join the discussion and connect with us on LinkedIn

Join the discussion and connect with us on LinkedIn

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