Transcription
PresentersHon. Donald G. Alexander, JusticeMaine Supreme Judicial Court, Portland-------Emily Belanger, ParalegalLargay Law Offices, P.A., Bangor-------Jared D. Correia, Esq.Red Cave Law Firm Consulting, Boston-------Aria Eee, Esq.Maine Board of Overseers of the Bar, Augusta-------Christopher Largay, Esq.Largay Law Offices, PA, Bangor-------Clifford H. Ruprecht, Esq.Roach, Hewitt, Ruprecht, Sanchez & Bischoff, PC, ANCIAL MANAGEMENT ANDACCOUNTING FOR THE LAW ----A Matter of Law Firm Financial Practice & Trust 1-1
Law Firm Payment ProcessingFundsReceiv edHas money beenearned?YesNo100% PaymentFees and/or CostReimbursementBusiness AccountRetainerClient Feesand/orCosts(Adv anced)Client Costs(Only)3rd Party EscrowSettlement FundsIOLTA - Client Funds Trust AccountYesFees Earned?Costs Reimbursed?YesExpenses Paid toOthers3rd Parties,Vendors, etc.SettlementAccountingUnspent Costs?ClientNoRefund to ClientNoFees Ow ---1-2 Financial Management and Accounting for the Law Firm
Source of PaymentClientRepresentationAgreementClient Family/FriendAdverse identialityRelease andAuthorization3rd PartiesInsurance Companies(W-9 to be provided)Receipts andConfirmationManner of PaymentTelephonic w/ Credit CardMailIn OfficeA) Via Email LinkP.O. Boxvs. OfficeAddressReceipt/LogElectronicB) Via WebsiteReceipt/LogSortingA/R & A/PReceipt/LogBookkeeperMethod of PaymentCashCheckReceipt/LogCredit Card(In Person)Virtual PaymentProcessingEmails w/ links(Receipt andAmount Provided)Receipt in Hand orElectronic ReceiptThird Party Sites(e.g. Law-Pay)Firm Receipt to Book ------A Matter of Law Firm Financial Practice & Trust 1-3
1-4 Financial Management and Accounting for the Law Firm
A Matter of Law Firm Financial Practice & Trust 1-5
1-6 Financial Management and Accounting for the Law Firm
A Matter of Law Firm Financial Practice & Trust 1-7
1A Matter of Law Firm Financial Practice & Trust:Everything You Wanted to Know About Trust Accounting But Were Afraid to AskFinancial Management & Accounting for the Law FirmChristopher R. Largay, Esq.Largay Law Offices, P.A.InstructorChristopher R. LargayPresident / Managing Partnerof Largay Law Offices, ----1-8 Financial Management and Accounting for the Law Firm
2Financial Management & Accounting Overview – Trust AccountingGeneral Trust Accounting QuestionsAccounts Receivable ManagementLaw Firm Payment Processing - FlowchartAccounting - Bookkeeping & Reporting–––––––Proper Accounting PracticesReconciliationBank Balance & Checking Account TransactionsTrust Balance SummaryStatement of OperationsGeneral Bookkeeping TipsAccounting Software Safeguarding from Embezzlement (Protecting your firm)Overview – Trust Accounting Each client should have their own ledger account (i.e. 20 trustclients, 20 ledgers accounts). Under no circumstances should you ever use one client’s funds topay for another client’s or your own expenses (this ismisappropriation of funds). DO NOT spend what you don’t have. There should never be a negative balance:– In client trust accounting there are three scenarios: A positive balance A zero balance A BIG problem (a negative balance) Address any small, inactive balances as soon as ---------A Matter of Law Firm Financial Practice & Trust 1-9
3General Trust Account Questions What is a trust account? What types of firms must have a trust account? Should I delegate trust account management to one lawyer inthe firm? Does each attorney need their own separate trustaccount? Is there ever a need to establish a separate trust account for oneclient or a single transaction? Can a non-attorney staff member manage the trust? Can I “link” my trust and operating (business) accounts? How often must I provide an accounting to my client? How do I close an account that has a remaining balance?Accounts Receivable ----------1-10 Financial Management and Accounting for the Law Firm
4Payment Processing FlowchartProper Accounting PracticesProper Accounting Reports that should be a partof every practice:1. Income Statement2. Balance Sheet3. Statement of Cash Flows1. Displays change of cash amount over a specifictime period2. Pulls info. from Balance & Income -----A Matter of Law Firm Financial Practice & Trust 1-11
53-Step ReconciliationThere are three components tothe reconciliation process: thegeneral trust ledger, individualclient ledgers and the trustbank statement.Step 1Confirm current trust bankbalance by:Step 2Step 3Compare the calculated currentbalance to the general trustledger:Take the reconciliation process astep further to ensure balancesfrom client ledgers match thegeneral trust ledger (and therebythe calculated current bankbalance.)-Pray they balance perfectly.- 2nd Person Proof-Subtracting any outstandingchecks from the balance shownon your monthly bankstatement- Adding all deposits that havenot yet cleared the bankBank Balance & Check Account ------------1-12 Financial Management and Accounting for the Law Firm
6Client Trust Balances SummaryComparative Statement of ----------A Matter of Law Firm Financial Practice & Trust 1-13
7General Bookkeeping Tips Always track:– Records of receipts– Bank Statements– General Ledger– Client Ledger– Monthly/Quarterly Reconciliations– Any other records as required by lawAccounting SoftwareFully Integrated, Legal Specific Accounting SoftwarePC LawAbacus AccountingAmicus AccountingJurisSmall Business, Non-Legal Specific (but still popular)QuickBooks & Quickbooks ProQuickenTime MattersBilling -------1-14 Financial Management and Accounting for the Law Firm
8Steps for Safeguarding Your Firm Prevent embezzlement by closely and consistently monitoringand maintaining the following: Deposit slips (date, source, client/matter)Cash Receipts bookDisbursement Records (cancelled/voided checks, e-checks)Ledger (client & matter entries, transfers, receipts, balances, etc.)Bank statementsReconciliationsAnnual or Bi-Annual AuditCPA Outside Review & Tax Filing ----------------------A Matter of Law Firm Financial Practice & Trust 1-15
9Thank You!Christopher ----1-16 Financial Management and Accounting for the Law Firm
-----A Matter of Law Firm Financial Practice & Trust 1-17
-----1-18 Financial Management and Accounting for the Law Firm
A Matter of Law Firm Financial Practice & Trust: Everything You Wanted to Know About Trust Accounting But Were Afraid to Ask Christopher R. Largay, Esq. Largay Law Offices, P.A. Financial Management & Accounting for the Law Firm Instructor Christopher R. Largay President / Managing Partner of Largay Law Offices, P.A.
