Financial Systems (i.e., Accounting Systems) for law firms are good at what they were built to do...manage finances and the ever-fun maze of law firm billing. What they do not do well, however (and should not be used for), is to manage the enterprise business processes of law firms.
We see law firms misusing their finance systems in several ways, which end up costing them time and money on an ongoing basis. Let's look at a couple of key misuses and the negative impacts they produce.
First, let's talk about the mess that is made of law firm accounting systems when they are used for 'workflow' and reporting purposes. Oh, the joy of custom fields...NOT! Custom fields for black/trigger list indicators for clients that have gone bad. Custom fields for marketing purposes for 'reports' - which rarely actually get produced and used. Custom fields for additional information about matters, which end up acting like a catch-all field for 'other stuff'. Custom fields, custom fields, custom fields....
Next thing you know, you've got more custom fields than you bargained for - and you actually start forgetting why on earth they were created in the first place. Oh, and on top of that, the data in those fields is suspect - not properly maintained, or 'blank' half the time. What a mess.
And here's the thing - now it's time for a major upgrade of your finance system. Finance system upgrades are hard enough without having to worry about 'migrating' all those customizations you've made over the years to try to 'manage' your law firm business using a system meant to manage your firm's finances. The costs of the upgrades go up, or you avoid them all together because they are just 'too hard' and you get farther and farther behind on the maintenance of your central business system - the one that manages your firm's money. Bottom-line - ask yourself: "Are we adding this field because it directly relates to management of our finances and billing?" I can pretty much guarantee you - the answer is going to be "NO" more than it is going to be "YES". So what are you actually trying to accomplish with those fields? BUSINESS PROCESS MANAGEMENT. The problem is, you are using the wrong tool for the job.
Another key mistake we see is law firms using the functionality of their finance systems as the delimiter for how they are managing their firm's business. Let's look at an example...
Let's say you want to better manage your Billing Rate Exceptions (see our previous blog regarding this topic), but your finance system 'reflection' of these exceptions is somewhat stilted. Does that mean your management of these exceptions (in terms of oversight) has to be stilted too? No!!! Yet over and over again we see firms get stuck because they make the mistake of allowing the limitations of their finance system to limit their ability to manage their business. The finance system, obviously, has to hold the end result of your rate exceptions for billing purposes, but it does *not* have to hold all the information about how those exceptions get requested or approved.FREE YOUR LAW FIRM MANAGEMENT STRATEGY FROM THE CHAINS OF YOUR FINANCE SYSTEM! Whether you've got a law firm accounting system or your firm has entered the realm of ERP (Enterprise Resource Planning), the answer is the same. Abstract the dynamic business process from your back-end financial systems. Use those systems for their strengths and don't let their limitations limit your ability to manage your law firm strategically.