Law Firm Tech Tips

Guide to Closing Out the Year For Law Firms

​We are constantly rushed through everything, especially at the end of the year. We have created this whitepaper to ensure things don’t get missed in our frantic end of year processes.

​We are constantly rushed through everything, especially at the end of the year. From seeing holiday decorations in October to thinking about the year ahead before the current year is over. We are always asked to jump forward in time. Often leaving many things undone or half-done. This is often the case in small law firms. We have created this whitepaper to ensure things don’t get missed in our frantic end of year processes.

Consultants and software companies will be coming out of the woodwork with “How to” checklists. However, the effort here is not to address the How to but the What and Why. The more you can complete in advance, the less stressful the end of the year will be for you and your team. Be one of the small businesses that end the year with confidence and calmness.

​Holiday Appreciation and Outreach

Are you thinking about sending out holiday cards? Then you need to think about aggregating a contact list. If you already have legal practice management software in place this should be relatively easy. If not, get your staff to go through their contacts and get a comprehensive list. Besides the usual mailing information, you will want to update the list to show deceased clients or other contacts. Nothing is more embarrassing than sending a greeting card to your deceased client.

For contacts receiving cards, what kind? Some businesses send separate types of holiday cards while others stick with generic season’s greetings style cards.

​Sending out gifts requires more effort. You need to decide who to send gifts to, what kind, and how much to spend. One way to determine this is to let your billing program tell you who your top clients or referrers are. Set levels based on money received or generated, and apply the appropriate gift based on these levels. This type of specific attention towards your best clients and contacts goes a long way in a small business, and with a comprehensive legal software database, it takes only a few moments to obtain that kind of detail.

Do you offer year-end bonuses? Obtain the information you will need to determine bonus amounts. Does your bonus plan reward the proper behaviour? For example, if you reward by billable hours only, you encourage people to take longer to perform a task. Look instead to reward based on fees collected because of the work performed. With comprehensive legal billing software, like that in Smokeball, you can easily pull stats on employees and reward behaviour that impacts your businesses bottom line.

​Matter Clean-Up

When you let your matter list get out of hand, you invite mistakes. Time and payments get posted to wrong matters with similar names. Inactive matters take up space on your reports and make data analysis more confusing. When your matter list shows only open matters, you can concentrate on the right things.

Determine which matters have had no activity in more than a year. Utilise your legal and billing software to determine inactivity and close those lingering matters out. Make sure the matter is finished and a final bill issued. Does the client owe you money? If so, consider writing it off or turning it over to collections. Keeping uncollectible receivables on your books distorts your profitability reports and your cash flow projections. When matters are finished, return unused retainers in a timely manner. Keeping unused retainers not only violates rules, but it shows a higher than necessary liability on your balance sheet.

Management Reports

Run a firm insights report showing how many new matters you opened last year. If you run the report by month, you may spot trends. These trends could help you determine when to step up advertising or update your website design because you are going into a slow period. It could also help you with staffing. Should you ramp up with interns because a busy season is approaching?

Running the New Matters Report by staff member will tell you who is bringing in new matters. Take it a step further and look at the profitability of each of those matters. Someone who brings in matters you lose money on should not be rewarded just based on the number of new matters brought in. If someone is not bringing in new matters, perhaps you have not properly incentivised them to do so. Is there a disconnect in your compensation or are expectations not being effectively communicated?

​By looking at the New Matters Report by matter type in Smokeball, you can see what areas of law are making up your new business. Do you have enough staff expertise to handle these areas? If not, you could add additional staff or educate existing staff. Are they profitable areas? Should you change your marketing and advertising to leverage this? While knowing what matters were opened last year is valuable, consider the other end of the spectrum, too. Evaluate the closed matters for last year.

Smokeball Law Firm new business insights
Smokeball legal software provides automatic time tracking and firm insights reports, which take into account all staff’s time and activities and give you an accurate view of profitability. Over time you will see which clients and practice areas are the most profitable. Learn where you need to increase focus on specific areas or clients.

Running the Closed Matter Report by month will indicate the number of matters completed each month. Low numbers of closure usually mean the final closing steps have not been performed. It may just be a clerical issue or may mean final bills on matters are not getting done. Provide this report to your responsible staff to review and update. If the report is accurate, a low number of closures may indicate poor matter management. Discover why matters take so long to close. Those that are flat fee matters hurt your cash flow because they are not billed. Matters that linger on are usually grandfathered in for old billing rates and cost your business money. This should be taken care of throughout the year, but at least at the end of each fiscal year before too much money ends up needing to be written off.

Speaking of billing rates, examine your rates. Look at matters that override default rates. A large number of matters not using default rates may indicate too much flexibility in setting up new matter rates.

​If you raise your rates at the start of the new year, it is best to make that determination before time is entered into your billing system in the new year. Determine what the new rates will be, what matters they will apply to, and when the rates will be effective. Make sure to communicate this information to your billing staff. If required by your client agreement send rate-change notifications to your clients before the new rates go into effect.


Once you have procedures in place and understand why each procedure is essential to your business, the year-end process should no longer plague your holiday period. Cards, gifts, and trust bank reconciliations need to be done early. Accounting reports can be handled in January or February. The management reporting and matter cleanup can wait until other year-end work is completed.

Remember, if you ever need assistance with building a year-end process, reach out to a competent consultant or just ask your friends at Smokeball. All of us are here to ensure your holidays involve less stress and more success.

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Jan 12, 2023