When we diagnose the finances of your firm, we perform a thorough analysis of your accounting system and financial records.  A typical diagnosis entails a review of your QuickBooks file and supporting ledgers and files.  We will ask you to pull records from client files and request information from vendors on a sample basis.  Our focus is to determine that:

  • You are capturing all your client case costs
  • Your IOLTA and Client Trust Liability are reconciled
  • You have the financial controls in place to prevent simple fraud situations

The desired outcome of the diagnosis is:

  • What are the real problems with your accounting and finances? Not just anecdotally what we think is wrong. Most firms have the same problems, but all situations are unique.
  • Arrive at a real-world cost-effective solution to solve your problems.
  • Prepare a roadmap of specifically what must be done to fix past problems and to insure you stay on the right path going forward.
  • We will present a proposal to help you implement the roadmap. Sometimes we do most of the work or often we supervise your bookkeeper in making corrections. Some firms have the resources to do it internally. This really depends on each attorney’s individual situation.

STEP 1
We perform a simple review of your QuickBooks file

  • Is your chart of accounts set up properly? If not, your reports will not make sense.
  • Are your bank and credit card accounts being reconciled?
  • Are you using the Accounts Payable function in QuickBooks correctly? We need to enter bills when incurred not just when the check is written so you know what obligations there are when a case is settled.
  • We are looking for obvious problem areas with this part of the diagnosis.

STEP 2
Next, we analyze your client cost advances

  • We look at your normal vendors that should be coded to client cost such as court cost, medical and experts. We do this by running certain reports in QuickBooks to analyze the coding.
  • We look at a couple of your main vendors like disbursements for MRI and Chiropractors, etc. We request a schedule from the vendor of bills and payments over the last six months or so and reconcile to QuickBooks.
  • On a sample basis we request the check images for some transactions and match to QuickBooks. We have seen many problems in this area.
  • Our next action is for you to pull a few client case files and match the actual bills to the QuickBooks report.

STEP 3
We analyze your entire system regarding your Trust (IOLTA) account

  • Is the bank account being reconciled each month on a timely basis?
  • Is the attorney reviewing the bank reconciliation detail and looking at the check images?
  • Does the schedule of Client Trust Liability tie into the bank account? Do we know whose money is in the account?
  • We may pull a couple of closed cases and see if we can reconcile them to QuickBooks. Let us us know what is possibly slipping through the cracks.
  • How is the firm documenting the disbursements from the trust account to the operating account? Ideally, we would like the operating account to invoice the trust account for fees and cost reimbursement.

STEP 4
How are you processing payroll?

  • We prefer to use a service like ADP or Paychex. It just makes it so easy.
  • If you were using QuickBooks, we would trace the tax payments from the reports to the bank statements. If we think there is a problem, we can request a transcript from the IRS.
  • The attorney should review the payroll detail report each payroll. Do not just look at the total number. It only takes a few minutes. I have seen a situation where the bookkeeper added their boyfriend to payroll, and none noticed because they did not look.

The objective of the diagnosis is to see where your firm is financially and makes corrections and creates a system where you have confidence going forward that you are making business decisions based on factual information