uLaw visits TriOS college students for an introduction to legal accounting with Canada’s most trusted practice management and legal accounting software.
TORONTO, July 15, 2020: Since the pandemic first hit in March, paralegal students at TriOS College Toronto have been working remotely on projects and assignments to prepare themselves for a future career in one of Ontario’s fastest growing professions.
Now, midway through July, students are now going through the legal accounting component of their studies, where they will learn how to create and manage various books and records necessary to stay in compliance with regulators. Part of that journey involves the introduction of uLawPractice, canada’s most trusted digital legal assistant. It’s a semi-automated cloud-computing suite tailored specifically for Canadian legal practitioners.
“I think it’s important that students get exposure to different software. Given that we’re now in a remote learning environment, it is an excellent time for unlocking the doors for the next generation of paralegal in terms of what uLaw is offering,” says John-Paul Rodrigues, paralegal program coordinator for TriOS college’s Toronto campus.
This announcement comes on the heels of several major partnerships struck in 2020 which would see the implementation of uLawPractice in paralegal colleges across Ontario. TriOS students are getting a useful and wide-ranging introduction to the software and how it’s used in the workplace.
“I think it’s important that students get exposure to different software. “Typically, students will be given an introduction to the uLaw interface and how it pertains to critical practice management and legal accounting procedures. Then, depending on the individual needs of the school, our EDU team will outfit the college with numerous faculty and student access accounts free of charge,” says uLawPractice CEO Terry Curtis.
The webinar, held at 5 p.m. on July 15th, was titled “Everything Practice Management”, and can be watched on demand by visiting uLaw’s youtube page.
Due to the nature of the services lawyers and paralegals provide to the general public, special obligations are placed on legal practitioners in Canada in order to remain in compliance with federal and provincial regulators.
The collection of tax and reporting of income is regulated at a federal level. As with any business in Canada, companies (law firms) and individuals (sole proprietors) are expected to produce accurate and up to date financial information about their enterprise to the Canada Revenue Agency (CRA).
Provincially, law practice providers are also obligated to report additional financial and practice-related information about their firm to Law Societies, which have long been entrusted by legislatures to regulate the legal profession. Since before Canada became a country, representatives of government, to varying degrees, relied on self-regulated groups of legal practitioners to maintain public trust of the legal profession.
In an effort to combat corruption and ensure integrity, each province’s Law Society has a vigorous framework established to ensure legal practitioners are accountable to the people they serve.
As is often the case for lawyers (and, increasingly, paralegals) acting on behalf of a client, money is held in trust and disbursed during the course of a legal matter. Various internally-produced journals, books and ledgers must be congruent with the flow of funds from one account to the next. The same data generated by these documents must also be corroborated with meticulously collected source documents, which often take the form of bank statements and deposit slips.
One particular advantage to the strict reporting obligations for Canadian legal practitioners is the byproduct that it creates for law firms. Data produced through compliance documents actually serve as useful tools when making decisions about how a firm is running its practice.
Accounting systems explained
Law Societies across Canada have long been educating licensees about the different styles of accounting available, because their auditors are the ones responsible for mulling over all the financial data every time a spot audit is conducted on a firm.
Today there are roughly five different types of legal bookkeeping styles currently used by law firms. Depending on where a firm is placed in its life cycle (i.e. just starting out vs. a more established, multi-partner law firm) can be a factor in determining which method is most suitable.
Manual double entry
Manual double entry bookkeeping is a tried and true, paper-and-pencil method of accounting that has been used for centuries. According to historical records, the first evidence of manual double entry was found during the Goryeo Dynasty in pre-modern Korea between 918-1392 C.E.
To this day, some lawyers continue to use manual double entry due to its simplicity, but also as a force of habit. Sole practitioners with decades of experience working for themselves may find it difficult to see any reason to change the manner in which they handle their accounting: with the use of a simple, single-margin notebook.
One of the advantages to manual double entry is that, at its core, the system is very straightforward and inexpensive. Each time a transaction occurs, it is recorded and accounted for in at least two places. Using this method provides self-checking accuracy while also creating an adequate audit trail–both of which are important when running a business of any kind.
Double entry bookkeeping works by recording both debits and credits captured during the accounting of a firm’s financial activities.
When a single transaction takes place, a manual double entry system will record the movement of money in two instances: once on the left-hand side of the accounting equation, and another on the right-hand side. In this way, the system acts as a check and balance against the flow of money within an account.
There is one notable downside to this style of accounting. It is the potential for human error to take place and remain undetected, sometimes for years at a time. This is because manual double entry heavily relies on whomever is filling out the information and performing the arithmetic tasks necessary to properly account for transactions taking place within the firm. Another downside to manual double entry accounting for lawyers and paralegals is that this method can also be time consuming, especially if a firm has a large number of transactions to record.
Also known as single-entry accounting, this method captures data using only a single logbook. This method is often perceived as being simpler because it doesn’t require data to be inputted twice, as it is with double-entry.
To properly use this method of bookkeeping, users must be sure to delineate between revenues and expenses. See the table below for examples of both three and five column one-write accounting logbooks.
Sole practitioners who are first starting out may opt to use either manual double entry or one-write accounting styles because the number of transactions taking place may be small enough to handle with the simple logbook approach. As a firm matures, practitioners may increasingly see the advantages of more sophisticated bookkeeping solutions. This is all the more pertinent once a lawyer starts accepting retainers and managing trust accounts.
Once a firm begins to conduct higher volumes of transactions, a one-write system can become cumbersome. This may lead to the need for a firm to migrate to another accounting system. Also, similar to manual double entry, another disadvantage to the one-write system is that undetected arithmetic errors may arise.
Widespread computer usage since the 1990s has solidified spreadsheet software as an industry standard for bookkeeping in virtually all industries. Now more than ever, companies have a wide array of software options available for producing spreadsheets. Some are free and work as a “software-as-a-service’: meaning they no longer require individual files to be stored on a device’s hard-drive.
One large advantage of spreadsheet software is that it can automatically perform arithmetic tasks. Improper or mistaken usage of formulae and data entry into incorrect spreadsheet cells, however, can create problems which may be hard to detect. This leads bookkeepers down the unfortunate route of pouring over months of financial data to find the source of a bookkeeping error. Depending on the situation, some bookkeepers might not even notice these problems until they get audited.
General Accounting Software
Spreadsheet software may be the de-facto manner of handling books and records for most businesses. A whole industry of software providers have risen up to provide general accounting software to further assist the work of bookkeepers across many industries.
General accounting software makes automatic calculations and posts data to sub-ledgers, which is a boon to anyone who is tasked with handling the books and records of a business. Overall, this method far outperforms older styles of bookkeeping. As one may expect, this style of bookkeeping is more expensive but generally worth the money as it saves a lot of time and minimizes arithmetic errors. Many private businesses, large and small, make regular use of general accounting software for their needs.
General accounting software does not discriminate the type of industry that it can be used with. While this makes for a pleasant general-purpose solution for a wide array of industries, this method of bookkeeping has an essential weakness for specialists, such as legal practitioners, since law firms are often handling trust accounts and retainers from clients.
If a law firm is dealing with trust accounting, it might be a good idea to plan a proper bookkeeping and accounting solution developed specifically to produce the types of financial reports which need to be generated to remain in compliance with the law society.
5. Legal Accounting Software
This is the gold standard of legal bookkeeping, and it’s a method that is well known by Law Societies as being superior in its delivery of the basics of accounting as well as some of the more advanced bookkeeping requirements to be a practitioner throughout Canada’s provinces and territories.
Since legal accounting software is specifically geared for the needs of law firms, many forms and reports are easily generated while also utilizing data that has already been inputted into the system. Using this method is the fastest and most efficient way to prepare a firm for optimal financial compliance with regulators, as evidenced by its glowing recommendation in internal law society literature (for LSO bookkeeping guidelines for lawyers and paralegals see ‘types of accounting systems’).
One notable downside to legal accounting software is that it does require some training before its users can make full use of the system. Thankfully uLawPractice, Canada’s only legal accounting and practice management software, will guide you step by step on how to prepare for audits before you run into trouble.
Canadian legal practitioners (and their staff) interested in migrating their practice to a secure and cloud based practice management and legal accounting solution may benefit significantly from making use of a 30-day free trial. Just click the link below to begin.
Triggered by the ongoing pandemic, paralegal/law schools across Canada are establishing contingency plans on how curricula will be delivered to students in the coming months and years.
Now more than ever, a readily-available cloud-based solution for legal accounting and practice management can be implemented into paralegal and legal curriculum models without added financial strain on schools or students. That’s because uLawPractice, an Ottawa-based software company, is offering all academic institutions (paralegal colleges, law schools) exclusive academic access to Canada’s most powerful and compliant digital legal assistant.
uLaw can provide a framework for exercises and grading for faculty and an opportunity for students to learn compliance and audit preparation measures necessary to run a legal business. Along with academic access, uLaw is offering educational materials to colleges and universities which can be incorporated into the curriculum.
In uLaw’s browser-based environment, students can work in a real-world interface on their digital devices (mobile, desktop, laptop, etc) to produce all books and records necessary to pass a practice audit. This will be indispensable knowledge for when students enter the workforce.
Compliance is key
Nearly a decade ago, our company’s award-winning compliance coding team (CCT) used LSUC’s own bookkeeping guidelines as a blueprint to develop the backbone of uLaw’s interface.
Law has continuously evolved to keep its users compliant and ready for an audit at all times. It’s also rich in features such as court form automation, docketing, conflict screening, and more. Check out the video below to get a good understanding of what we strive to provide users.
Recently we’ve been having a lot of discussions with clients who transitioned to become entrepreneurs after working as employees in larger law firms.
Here are some things they told us:
You’re in control of what you want to be
As a sole practitioner and independent businessperson, your successes and failures rest squarely on your shoulders. While this is a great and empowering predicament, your professional activities must be well calculated and risks must be monitored closely for optimal growth and sustainability.
In 2019 the uLaw team conducted a survey which suggests slightly more than half of Canadian legal practitioners are either self employed or work in small firms.
Being entrepreneurial means you work for yourself or a part of a team that you put together. You don’t have to follow any rules, and instead you can make them for yourself or anyone who works for you, or with you.
It’s good to start small
A big trend that we’re seeing in the legal industry today across Ontario and other provinces is that people are starting out small and focusing on their strengths. Simultaneously, many solo lawyers are building networks with other entrepreneurs as well.
small while growing and building a network of similar solo entrepreneurs. Over time, these networks of practitioners continually grow until they solidify, sometimes into partnerships which can slash costs and limit liability, allowing teams of lawyers to tackle larger and potentially more lucrative clientele, depending on their area(s) of practice.
This can differ based on silos of practice, but we’re seeing a big trend on how solo entrepreneurs get together to form small firms over time.
Being aware of potential business failure
As a business owner, you’re supposed to be shooting for a success ratio.
While you might be able to stumble across numerous successes, your business is bound to hit some tough times as well. When this happens, there won’t be anyone to blame but yourself.
As an entrepreneur, the only way to handle this is to calibrate your brain and expect the unexpected. Problems will continually appear during the course of your private practice, and it’s up to you to adapt and conquer your challenges.
Understanding the types of obstacles and challenges you may face will set you miles ahead if you’re able to brace your business model and manage any potential financial loss from negative circumstances.
Preparing for financial insecurity
When you start fresh, you’re either going to be using your own money, the bank’s; or perhaps a private loan.
No matter how you shake it, this can be uneasy ground to be treading on, but it isn’t unmanageable nor should this deter you from becoming an entrepreneur. Awareness is key
The first year is always the hardest year
During its first 365 days of operation, a business will most often be faced with high levels of expenditures. Combined with potentially low returns, significant mental and physical resources will also be drained repeatedly to market the service.
Your first year is often seen as a “make or break” window. As a software company providing services to young practitioners or solo lawyers, our team knows how difficult this can be. This is why uLawPractice offers recent entrepreneurs a discounted student package to use our practice management and legal accounting software suite.
In comparison to the costs accrued when hiring an external bookkeeper (or even managing your bookkeeping yourself), uLawPractice alleviates the workload associated with managing the business component of running your own private practice.
Using your network
If you see yourself becoming the master of your own destiny in the near future, one of the greatest things you can do is to start building a network of people who may be needing your services, or who can support you in your future endeavours. Whether it’s friends, colleagues, or acquaintances: they should all be made aware of who you are and what you can accomplish!