Outsourced Legal Cashiering

Legal cashiering is the management of the financial accounts in law firms and legal practices, including the accounts associated with client transactions. It goes beyond the scope of traditional bookkeeping in several ways – while both bookkeeping and legal cashiering involve financial record-keeping and management, legal cashiering is tailored to law firms and legal practices specifically.

Legal cashiers bring a wealth of expertise to their responsibilities, including a comprehensive understanding of the rules and guidelines established by regulatory bodies such as the Solicitors Regulation Authority (SRA) and the Council for Licensed Conveyancers (CLC)C. Consequently, legal cashiers are an invaluable asset to law firms and crucial to ensuring the financial integrity of their legal transactions.

The primary responsibilities of legal cashiers include processing accounting transactions, conducting bank reconciliations to ensure financial accuracy, generating regular financial reports for stakeholders, identifying and reporting accounting errors or breaches, handling client billing and invoicing, managing disbursements and expenses, and submitting VAT returns via HMRC's MTD portal.

Legal cashiers maintain separate ledgers for client and office accounts, while ensuring compliance with industry rules and regulations, and liaising with compliance officers, auditors, regulators, and banking accountants to help uphold the financial integrity of law firms.

Outsourcing your legal cashiering can benefit your legal practice in the following ways:

• Save money: Outsourcing can reduce your salary costs by approximately 30% since it eliminates the need to recruit and manage in-house staff or invest in CPD (continued professional development).
• Improve efficiency: Outsourcing can free up time and resources within your firm, enabling your team to focus on what they do best – providing legal counsel and building client relationships. This can improve your productivity, efficiency, and bottom line.
• Stay compliant: Legal cashiering is an essential part of staying compliant. Outsourced legal cashiers stay up to date with current regulations so that you don’t have to, which can reduce your risk of costly fines and reputation damage.
• Adapt to workload: Outsourced legal cashiers can adapt to fluctuations in your workload, providing scalability and flexibility without the need for you to reduce staff hours or make in-house redundancies.
• Maintain confidentiality: Reputable outsourcing partners prioritise data security. They use advanced technology and stringent data protection protocols to safeguard your clients’ data and help you comply with data protection regulations.

To choose the right outsourced legal cashiering provider, start by assessing your firm's unique requirements. Then, search for a provider with a proven track record of delivering the services you need and who is well-versed in working with, or willing to learn about, your CMS. This will minimise hiccups later down the line.

It’s also important to assess the provider’s potential to adapt with your firm so that you won’t have to switch to a different provider as your business grows. Cultural fit is another important consideration – look for an outsourced legal cashiering provider with similar values to those of your legal practice. Following these steps will help to ensure that your law firm's finances are in suitable and capable hands.

In theory, outsourced legal cashiering is suitable for all types of law firms. In practice, choosing whether to outsource hinges on multiple factors. Small to medium-sized law firms, who are more constrained by resources than larger legal practices, often find outsourcing their legal cashiering to be a cost-effective, time-saving solution. Larger firms that deal with high transaction volumes may face more hurdles due to the scale of their operations. Nevertheless, with careful planning and the right strategies in place, outsourcing can still be a viable option for larger law practices. Client expectations also come into play, as some clients prefer direct fund management from the law firm itself.

To decide whether outsourced legal cashiering is a suitable solution for your law firm, conduct a thorough cost comparison, assess the nature of your legal practice, and consider your clients' preferences. Additionally, evaluate the scalability, compliance, security, technology, and reputation of any potential outsourcing partners to ensure you make an informed decision regarding their suitability to work with your legal practice.

Yes, you can customise the services you receive from your outsourced legal cashiering provider so that they align with your firm's specific needs and goals. After selecting your outsourcing provider, specify your unique requirements and overarching objectives.

Begin by providing a comprehensive overview of your firm's current financial processes and systems. Then, work in tandem with your outsourcing partner to perform an in-depth analysis of your financial records and cash flow patterns to identify existing pain points or areas in need of improvement.

With this holistic understanding of your financial landscape, your outsourced legal cashiering provider can tailor their services to address your firm's unique needs, and introduce new efficiencies and best practices that will have a positive impact on your financial operations.

The key regulatory bodies that oversee legal cashiering in the UK are:

• The Solicitors Regulation Authority (SRA)
• The Council for Licensed Conveyancers (CLC)
• The Institute of Legal Finance and Management (ILFM)
• The Association of Accounting Technicians (AAT)

The Institute of Chartered Accountants in England and Wales (ICAEW) and The Association of Chartered Certified Accountants (ACCA) also play a significant role, as they supervise the accountants responsible for reviewing the financial work of legal cashiers.

It's essential for legal cashiers and legal cashiering providers to follow the guidelines established by these regulatory bodies to avoid penalties, safeguard clients, and uphold the integrity of legal transactions in law firms. Legal cashiers must also comply with government regulations, such as the Legal Services Act 2007, the Data Protection Act 2018, and the Companies Act 2006.

At Numero, ensuring the security of our clients’ financial data is a top priority. We always stay up to date with, and diligently adhere to, relevant legal and ethical obligations relating to client confidentiality, such as the General Data Protection Regulation (GDPR) and standards established by professional bodies like the Institute of Chartered Accountants in England and Wales (ICAEW).

We only share sensitive information when it's completely necessary to do so and with your explicit permission, always use secure communication methods, and have a plan in place to respond to unexpected situations. You can trust that your law firm's financial data is well-protected at Numero.

The cost of outsourced legal cashiering varies depending on the services you need – it's not a one-size-fits-all pricing model. At Numero, our fees are tailored to the scope and complexity of the services you choose to outsource. Factors that can influence the cost include the volume of financial transactions, the complexity of tasks, and the level of expertise needed.

To get an accurate estimate of the cost, get in touch. We can provide you with a customised quote based on your specific needs and requirements so that you can make an informed decision about whether to outsource your legal cashiering to Numero.