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I.T in practice: Perfect system makes practice

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Cite as: (2004) 78(10) LIJ, p. 81

The adoption of a legal practice management system will assist firms in maximising efficiency in accounting, financial transparency and document management.

Regional and suburban meetings of practitioners see practice administration, and quite often, computer systems management, appear as a recurring and frequent topic of discussion.

Although there have been some overseas studies of computer use among small practices – most notably in the UK – there have been no similar extensive studies in Australia in relation to legal practices.

In 2002, CPA Australia commissioned a study into the use of computerised record keeping in small business.[1]

The sample of more than 200 interviewees included the service sector, and although the authors do not specifically mention the legal profession, some service businesses were included, and the results would tend to reflect the pattern of computerised accounting systems within the profession.

Where a practice has a legal practice management system (LPMS) in place, it will use the computerised accounting features within this package.

The CPA study found that the implementation of a computerised accounting system is a consequence of growth in revenue and staff numbers. It found that services firms (and this by implication would include legal practices) are more likely to have a computerised accounting system in place.

An interesting finding of the study was that over 85 per cent of respondents believed that the system had a positive impact on the organisation, and that only about 20 per cent of respondents agreed that it was expensive to purchase or to set up.

But what of those firms without an LPMS? The CPA Australia study found that the predominant reasons for not implementing a computerised accounting system were that the present manual system was satisfactory (31 per cent) or that there was a lack of computer skills and knowledge (26 per cent).

Stages of implementation

A practice’s progression to a full-featured LPMS tends to go through four distinct stages, even though these can often take place over a 10-year period.

The initial phase is a manual one, most often found in sole practitioner firms. It is undertaken using firm-developed or off-the-shelf forms. For many micro-practices, this is perfectly adequate for requirements, as the CPA Australia study found.

The second stage in the progression towards a computerised accounting system tends to be driven by the dual requirements of making maximum use of the existing computer systems, and the need to make the mandatory trust accounting paperwork more efficient.

Many firms pair this with keeping matter-based time sheets to assist with billing. Typically, at this stage, the computerisation consists of a set of formatted word processing documents. The reason for this is that the administrative staff who are responsible for record-keeping within the practice use the tool that they are most familiar with – MS Word. Other firms may take advantage of the more appropriate features of a spreadsheet package to keep this financial information.

In line with the CPA Australia study, the third stage of computerising the record-keeping function of the practice comes about because of firm growth. Previously adequate quasi-manual systems of documents and spreadsheets can become unwieldy. The presence of additional equity partners in the firm may force a higher level of financial transparency in terms of profits and work in progress. At this stage, practices may implement an off-the-shelf package to assist with cashbook, invoicing, and timesheet functions. Due to their ability to be implemented with minimal or no external assistance, and their potential for recording time billing data, MYOB and Quickbooks are popular.

The implementation of a full-featured LPMS is a significant step in the life of a legal practice.[2] It is usually justified on the basis of more appropriate terminology and specific features (such as trust accounting, or integration with document management), and an overall closer fit to a professional firm’s requirements. However, a sizeable investment is often required, both financially and in staff time.

The results of the CPA Australia study bear challenging within the legal profession, and invite further significant research. The profession would benefit from a study to test anecdotal evidence that even small law firms have been late adopters of technology but have caught up rapidly and comprehensively.

“To do” List

• Critically assess whether your practice’s accounting systems, be they manual or computerised, meet the needs of the practice.

• Review your practice’s progress in terms of an LPMS, and seriously consider whether you need to progress to the next stage.

• Survey your progress with peers, and consider your strategic competitive advantage in relation to your LPMS.

• If you are moving to the next stage in LPMS implementation, emphasise planning and training.


ADAM REYNOLDS is the principal of Proficio, an independent IT consultant firm.

For more I.T. in practice information, see the contributions of the Law Institute Legal Practice Management Committee and IT special projects department at http://www.liv.asn.au/sections/lpms_it.

itcolumn@liv.asn.au


[1] See Breen, Sciulli and Calvert, “The use of computerised accounting systems in small business”, paper presented at the Small Enterprise Association of Australia and New Zealand 16th Annual Conference, Ballarat, 28 Sept-1 Oct 2003.

[2] See “Selecting a practice management package” (2001) 75(6) LIJ 32, and http://www.liv.asn.au/sections/lpms_it/lpms_it-Accounti.html.

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