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Complete Practice Management

6 November 2008

Introduction - a revolutionary "one system" approach
In talking to different legal firms about their current internal systems and processes, it has become obvious to us that GhostPractice is quite revolutionary in its approach to practice management. While we can immediately identify the benefits of our "one system" approach, we must acknowledge the following:

  • Businesses in general do not readily accept change and law firms are no exception. For most firms GhostPractice represents a big change in the way things are done.
  • Most law firms are "happy" with their current systems, even though they might have serious inherent deficiencies in both the systems themselves and (more commonly) in the way they are applied. When we speak of deficiencies, we are not venturing that the systems do not work. We are referring here to absent functionality and the resulting manual duplication of effort to get simple things done as efficiently as possible.
  • Although most firms are "happy" operating as they do, they are suffering significant "opportunity losses" as a result of inefficiencies that have little to do with the quality of personnel they employ or indeed their management policies and strategies. These "opportunity losses" are purely a function of the systems (or lack thereof) that are currently employed.
How do practices generally operate?
To fully explain how GhostPractice can make a fundamental difference to law firms, we have to first explain how practices generally operate:
  • A typical firm will have an accounting system. Usually this is a "Legal Accounting System", capable of dealing with the peculiarities of "Trust Accounting" (representing the handling of client's money).
  • The accounting system is operated by a bookkeeper who may have a number of assistants.
  • In many cases, this bookkeeping department processes everything from day to day financial journals, reconciling the many bank accounts (trust and business), dealing with business creditors, correspondents and agents, and to posting fees and disbursements.
  • The professional and secretarial staff may have "enquiry" access to the accounts system.
  • Fee earners (professionals and secretaries) will have worked out a method of recording fees. They may:
    • Record fees on the cover of the matter file.
    • Write up fees in a hand written fee book.
    • Dictate the fees and have the secretary type up a "statement of account" and send the record of fees to accounts for posting.
    • The firm may (in some cases) use a separate fee debiting system which may or may not have a facility to upload the data to the accounts system.
  • In the case of specialized work (Conveyancing and Collections are examples), the firm will most likely have a separate system. This system is either not linked to the accounting system at all, or it may have a highly inefficient link where periodic downloads transfer transactions from one system to another.
  • As there is no directly linked fee management system installed on the professionals and secretaries computers, the bookkeeping system will quite naturally suffer from the following defects:

Work in progress
The majority of a firm's current value is tied up in what is happening in matters that are currently being worked on. The accounting system only shows what is invoiced and processed against a clients account, so the vast majority of information pertaining to matters is absent from the accounting system.

Time lag
In even the most efficient of practices, which operate under the conditions described above, the accounting system is always "behind". This "lag" is not good for client service and efficiency.

A continuous reconciliation exercise
In Conveyancing, there will be a continuous reconciliation exercise between the secretaries processing Conveyancing work and the bookkeepers who post the financial entries. It is possible to off-set this risk by implementing manual procedures, but this will mean a compromise of efficiency and it is no guarantee against mistakes. It may also result in an excessive staff compliment to deal with the administration.

Other problems
In Collections departments, the lag between information processed on the debtor account by the fee earners versus financial information processed by accounts (like a receipt) can cause problems - like suing a debtor that paid yesterday.

Centralized Bookkeeping - the "Illusion of Control"
An often mentioned "illusion" is that by having bookkeepers post everything on behalf of professionals and secretaries gives more control and that the secretaries cannot cause system problems. This is an "illusion" because the bookkeeping staff can only act on information supplied by the professional or secretary anyway. Bookkeeping staff have no relationship with the client, are not privy to what was discussed, agreed or accepted between the fee earner and the client. Any information they have is supplied by either the professional or the secretary or both.

The other assumption that is incorrect here, is that the fee earners will somehow be able to damage the system or make mistakes that the bookkeeper would not otherwise make. Again this has to be challenged on two fronts:
  1. These so-called mistakes would happen even if the bookkeeper was posting the transactions because said bookkeeper would be posting on the instruction of the secretary or professional.
  2. The fear of secretaries or professionals making mistakes when posting fees or disbursements is based on outdated systems with poor or no design consideration for fee earners to post fees and disbursements. If a system is correctly designed, with appropriate controls there can be no more danger in allowing fee earners to post transactions pertaining to servicing of clients than if they had instructed the accounts department to duplicate what they had already noted on the matter. On the contrary, there is less danger in terms of transcription and duplication errors.


Another issue which is worth considering when running a centralized system is the lack of management control. Too many firms are led by the accounts department. While bookkeeping departments do not have any "ownership" in the firm, it is not uncommon for such departments to lead the firm in terms of IT and system strategy. Clearly a case of the "tail wagging the dog", this situation only arose due to the complicated nature of legal practice systems and the centralized nature of systems prevalent in the market. The more centralized a system is, the less control management has for the following reasons:
  • As management seldom understand either the system or how it is applied, they tend to back off and are forced to trust the bookkeeper totally. It is therefore no surprise that the volume and extent of fraud in the legal market is quite high.
  • There is usually a lack of analytical reports which could give partners enough information to keep an eye on the business and accounts without having to know the "nitty gritty".
  • As the vast majority of activity exists in physical files or manually kept fee books, it is impossible for a manager to keep tabs on exactly what is happening between the firm's staff and clients. By the time a transaction is posted into the accounts system, it is past history and of no real use other than to give a monthly performance of actual financial transactions versus the firms performance for that month as a whole (which should include Work In Progress).

How can GhostPractice change this?
Overview

Given the above scenario (which by necessity is a generalization based on our experience), we would like to describe how GhostPractice can make things more efficient and effective:

Full spectrum
GhostPractice is a "Practice Management System" which includes the full spectrum of Legal Accounting. The difference is a highly differentiated decentralized management system which connects the fee earners (professionals and secretaries) with the bookkeepers on one database in real time.

Dashboard
The Fee Earner "dashboard" gives all information in a matter centric view. When looking at a matter you see everything on one screen (the client it is linked to; fee earner; recent matter history (including financials); contact details as well as numerous tools to help generate documents and emails or record fees).

Bookkeeper screen
The Bookkeeper screen presents different options appropriate to bookkeepers and will satisfy all the requirements of a Legal Accounting System.

Roles
GhostPractice uses "Roles" which are defined by the practice. These "Roles" define the permissions that must be allocated to the users in order for them to complete daily tasks efficiently, while still having sensible and appropriate controls in place. For example, here are some possible permissions you could implement:
a. Fee earners do not have access to the general ledger.
b. Only the partners have access to the practice management (analytical) reports.
c. Only designated fee earners can finalize fees and disbursements, whereas all fee earners can record fees and disbursements.

Real time recording
The fundamental driving concept inherent in the design of GhostPractice is to allow every person in the practice to capture what they do on a daily basis and have that information utilized without any duplication for whatever purpose necessary. As the following examples illustrate.

A secretary or a professional can raise a fee, produce a document/email, record a file note or manage documents. They do this with a set of intuitive software tools suited to the way they practice.

A Conveyancing secretary can (at the click of a button) transfer information from GhostConvey directly into the GhostPractice system (whether opening a bond; transfer; consent or development, or raising fees on registration). When accounts process receipts on Conveyancing matters, the secretary receives a system generated email immediately notifying her of the details.

A debt collection clerk can record a promise to pay; send automatic SMS reminders; produce legal documents (the system generates these, automatically merging data from the database) and debit fees. Any receipts processed by accounts display immediately without any updates having to run.

Any user can record a disbursement (if permissions allow). This is done very safely via a screen which merely asks the user to capture the details of the invoice from the business creditor (sheriff; advocate), while there is an even simpler interface to capture Revenue Stamps. The system takes care of all the postings to the ledgers automatically and always attaches an audit trail of the transactions to the matter.

A Holistic system
Instead of a centralized accounts system, the practice now has a more holistic system which services all the users in the practice according to their role. This "matter centric" system ensures that whenever you are looking at a matter you see everything there is which is connected to that matter.

Exensive reporting
Extensive management (analytical) reports give partners greater management control and keep them in touch with clients by using the following:

  • Client/Matter Summary;
  • Billing Summary;
  • Unbilled (Work in Progress) Fees and Disbursements Age Analysis as well as the traditional Age Analysis of Invoiced Fees and Disbursements (so you get the full picture);
  • Client matrix reports showing progress, performance and financials per client and matter;
  • Departmental reporting (cost centres, budgets, targets);
  • Audit friendly reports - giving the auditors greater access more easily;
  • Any report can be re-printed at a later time, for any financial period (monthly);

Other fee earner features
Additional fee earner features are available to make your practice more efficient and effective:

Legal Diary - Allows users to manage diary dates and deadlines for matters.

Legal Diary Manager - Allows those managers with subordinates to assign matters electronically and to monitor progress. There is also a "Bulk Assign" and "Recall" function which will assist managers when staff go on leave or are off sick.

Tasks - these can be assigned to specific users and allows users to have many different diary dates per matter.

Emails - either drafting emails using Microsoft Outlook, where the system will attach a copy of the mail to the matter or attaching incoming mails to the matter for reference.

Collaboration - the system will manage multiple fee earners debiting fees on one matter by managing the different fee rates (each fee earner has four hourly/page and folio rates and each matter can have a high/normal/low/subsidized setting). All notes and fees recorded against the matter are recorded with the fee earner reference. You also have the option of debiting at the tariff or tariff + a surcharge.

On Demand Invoicing - fee earners can invoice at any time of the month and do not need the bookkeeping department to be involved. They are also able to customize the layout of the invoice in many different ways and can produce Pro-Forma Fee Notes as well as Tax Invoices.

System Generated Invoices - this can also be set to Monthly or Daily. Additional settings can ensure that an Invoice will ONLY be produced if there is available Trust Money on the matter.

Statements
- each client can receive their statements on a specified date and these can be automatically emailed where possible.

Contact Management - GhostPractice includes a central contact management database which allows contacts to be attached to the matter.

Transaction History - not only can every user see everything on a matter via this tool, they can also filter the selection and store common selections under their own title, for ease of use.

Powerful Search - Just enter some key words (much like you would on Google) and the system not only fetches the results but organizes them into categories and then asks you what you want to do with the results - do you want to look at the matter details; debit a fee or requisition a payment?

Find - where appropriate the search is customized on certain fields to find information in a fraction of a second (if you need to fill in a Client number and don't know it - just enter part of the client name and the system will find it in a flash).

Innovative accounting
Despite the fact that accounting is an established science where there is not as much room for innovation, we have found ways to make this aspect of the system easy to use whilst refusing to compromise on the necessary controls. GhostPractice has taken all regulations into account in terms of the Law Society, Fidelity Fund and SARS.

Here are some features which will make things easier from a bookkeeping perspective.

Automations
- fees and disbursements as well as invoices and credit notes can all be done by the fee earners. The system has been painstakingly designed to allow these users to process these items without having to know a debit from a credit. The system automates the postings and controls these postings through control accounts between the different ledgers. The result is an end to the bookkeeper posting transactions which have already been recorded by the fee earner.

  • Note that the system allows manual posting of all of these entries if this is still required for any reason.
  • It should also be noted that any fees posted by fee earners are not finalized until an invoice is produced. The same is true of disbursements posted by fee earners. They are classified as "Pending Disbursements" until an invoice is produced.
  • In Conveyancing certain disbursements are merely paid for directly out of trust. This would be done exactly the same way in GhostPractice as in any other accounting system.

Batch Postings - you can work on multiple batches simultaneously and can save any incomplete batches for finalization/posting at a later stage.

Faster posting -where possible we only require the user to enter the one side of a transaction. For example if the credit side of a transaction can be predicted, the user only needs to fill in the debit side and vice versa. This just speeds up the posting process.

Bank Recons
- GhostPractice allows you to import the bank statement and to do an auto recon of exact matches - only asking the user to reconcile non matched items. This saves valuable time.

Correspondents - the system allows for a variable percentage fee arrangement with the correspondent. GhostPractice then allows you to capture the correspondents invoice and takes care of all the ledger entries automatically.

Trust Transfers - can be done as often as you like and do not have to be done per client. A report will print showing the transfer broken down per matter and you also have the option to print any transfer listing by date or by fee earner.

Trust Investments - You just choose what you want to do with the Trust Investment (are you processing bank charges, interest or just moving the money to or from general trust) and GhostPractice automates the process (including opening a trust investment account for the matter if it is not already linked to such an account) only asking the user for a bare minimum of data.

Business Creditors - GhostPractice has a separate Business Creditors Ledger allowing you to keep better control of business creditors - improving cash flow whilst ensuring they are paid timeously.

Real time connection to the fee earners. At all times, matters can be checked; fees finalized or reports run which accurately reflect the total position of the business.

All standard transactions - Fees, Disbursements, Journals, Transfers - can be posted in the traditional way in addition to the various automations that exist between the ledgers in the practice.

Day ends and Month ends - are managed by the system with zero downtime. You can even have different month end dates for the Client/Matter Month End and the General Ledger Month End, while the system will keep all users operating in the correct period.

The last word in sophistication
All in all, GhostPractice is the last word in sophistication. This does not mean, however, that the system is designed only for the larger practice. It is a fact that smaller practices will benefit from the efficiency that GhostPractice brings to the table, to an even greater degree than larger practices. In smaller practices, employing another person to absorb increased administration is far more expensive and less effective than buying GhostPractice for the whole firm. With GhostPractice, that extra person is not necessary. If you have any questions, please feel free to contact the writer at: matthews@korbitec.com, or click on the advert below.





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