Lawyer Guide to Working Effectively With a Bookkeeper

Authors: Don Terrillon and Brenda Hersh
Questions / comments? Please contact Felicia Ciolfitto
Copyright © 2006 The Law Society of British Columbia

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Choosing your Bookkeeper

An important practice decision every lawyer faces in setting up shop is whom to hire for the job of bookkeeper. Your job as owner of your business is to be familiar with the bookkeeping requirements of your practice as set out in Part 3, Division 7 of the Rules, and to hire and supervise competent staff to meet those requirements.

In the near future as the Law Society goes to the Self-Reporting Trust Report, it will be very important for you to be knowledgeable of the Part 3, Division 7 Rules and Trust Administration Rules.

The Bookkeeper’s Role

There is a prevalent notion among practitioners that the bookkeeper’s role is akin to that of a data entry person with a basic understanding of bookkeeping. However, the person you employ will not only be responsible for the day-to-day posting of transactions for your trust and general accounts, but is usually delegated the more important role of conducting month end procedures that include the preparation of the monthly trust bank reconciliations, billing and accounts receivable work, payment of client disbursements and office accounts, preparation of periodic financial statements and monitoring cash flow for your business.

Some lawyers have only a vague notion of what the bookkeeper does for their business, and may hire a friend or relative for this job without careful deliberation or a review of their qualifications. All too often, the Law Society becomes involved in law practices where bookkeepers have not performed their duties due to improper supervision by the lawyer. As many lawyers have experienced, changing bookkeepers can be expensive, time-consuming, and may lead to costly administrative suspension by the Law Society if books and records are not kept in accordance with the Rules. There may even be a requirement by the Law Society to hire a public accounting firm to rebuild the records.

Law Society Rules emphasize that it remains the lawyer’s personal responsibility for ensuring the books and records are kept in accordance with the Rules whether or not any duties are delegated to a bookkeeper.

Therefore, it is incumbent on every practicing lawyer to be familiar and have a working knowledge of Part 3, Division 7 of the Rules.

Full-time or Part-time Bookkeeper?

You have the option of hiring either a full-time person or a free-lance bookkeeper who attends your office on an as needed basis. Whether you hire full time or part-time staff depends on a number of factors: the number of financial transactions that occur each month, the timelines in which financial transactions must be entered to be in compliance with the Rules, the size of your practice, and the type of law you practice.

For example, a small law firm of three lawyers that deals with a high volume of transactions such as a conveyancing practice would probably be best served by a full-time bookkeeper to keep on top of all the trust transactions. If your practice is involved only in low-volume corporate work, a part-time bookkeeper may adequately meet your needs.

Whom to Hire?

Define Your Expectations

In engaging a bookkeeper, it is imperative that you define your expectations from the onset of the bookkeeper’s employment with your firm. You should direct your mind to some of the following functions normally carried out by a legal bookkeeper:

  • day to day recording of all trust and general account transactions undertaken by your practice,
  • reconciling and balancing monthly trust and general bank accounts,
  • preparing and posting of the Statements of Account (fee billings),
  • maintaining client’s trust ledger, accounts receivable sub-ledger and accounts payable accounts,
  • preparing payroll,
  • preparing necessary government remittances such as GST, PST, WCB and payroll deduction remittances,
  • preparing periodic financial statements,
  • organizing, maintaining accurate records for the required retention periods, and
  • preparing TAF remittances
Write a Job Description

Once you have defined your expectations, write a proper job description and communicate all your expectations to the potential candidate. You should delegate a lawyer on staff to supervise and review the work performed by the bookkeeper on a regular on-going basis. Pay special attention to review of your monthly trust and general reconciliations, proof that required remittances are made on time, and that internal controls are in place for handling any funds received and disbursed by your practice.

Qualifications

It is extremely important that the bookkeeper possess a good working knowledge of law firm processes and procedures. Candidates from another business sector such as retail or industry will not be familiar with the unique processes of trust bookkeeping in a law firm, such as anticipated disbursements or many matters for one client.

Secondly, if your practice utilizes legal accounting software instead of a more generic accounting package, it is important that the successful candidate be familiar with your type of software. If not, you may need to provide the necessary training.

Good bookkeepers should possess above-average analytical skills, as they are often required to identify and rectify discrepancies in the course of their duties. The bookkeeper should possess good communications and people skills for working with members of your staff and other members, clients, banking staff, vendors etc., and be able to convey information about any trust or general account transaction undertaken by your practice.

A competent bookkeeper will be able to anticipate year-end requirements for your business for preparation of year-end financials, which can equate to lower costs from your external accountant.

Lastly, it is highly recommended that the successful candidate receive training in Law Society Rules.

Where to Look

Once you have made a realistic assessment of your practice’s needs and defined your expectations, you will need to hire the best candidate available that you can afford.

Newspaper advertisements may still be your best search tool. Online employment websites may also be an option for those with internet access. Employment agencies can be expensive and, with few qualified candidates, may refer all those that respond.

It may be worthwhile to check with employment referral services associated with the accounting bodies: the Institute of Chartered Accountants, Certified General Accountants or Society of Management Accountants.

Other Considerations

Check with colleagues or contacts from your local bar association. Always check the candidate’s references and speak directly with the lawyer who worked with the candidate, not only a co-worker.

It is a good idea to have your external accountant interview your successful candidate to assess understanding of basic accounting principles prior to making the job offer.

Ask the successful candidate to sign a confidentiality agreement to protect client information and financial affairs of your practice. You may also want to consider placing a fidelity bond on any staff with access and knowledge to the assets of your practice.

For your own peace of mind, choose your bookkeeper with the same care and consideration your clients should invest in choosing you as their lawyer.