Concepts
This section explains concepts such as trust accounting, recording fees (WIP) and billing client’s.
Trust accounting and trust transfers
Trust funds refer to funds held by an attorney on behalf of a client: -
As a deposit for work to be done. Once invoiced, a trust transfer can release the trust funds, allowing the law firm to move the funds from the trust to the business bank account.
To be used by the law firm to pay a third party on behalf of the client; e.g. SARS in a property transaction.
Trust funds can only move between Clients (Matters) and a trust bank account; i.e. the sum of all monies held in trust per client must equal the sum of monies in the trust banks. LawPracticeZA includes accounting controls to ensure that this is always the case. Importantly, LawPracticeZA takes care of the debits and credits, automating wherever possible to provide a simpler solution that both reduces errors and is more efficient.
The Trust Commitment / Investment report, which can be generated on demand as at any date, provides a list of trust creditors, with the corresponding trust banks investments. The report includes Section 86(4) investments, where a client’s trust funds are invested, on the written request by the client, in an individual interest bearing account, for the client’s benefit.
When a trust payment is received from a client, it is posted as a Matter Receipt - Trust. LawPracticeZA will
Debit the Trust Bank account
Credit the client’s matter in trust
Captured fees and disbursements (WIP), when invoiced, can affect the trust transfer (i.e. if there is available trust - trust less any reserved trust - in the Matter). When an invoice is produced from unbilled fees and/or disbursements, LawPracticeZA automatically generates the following accounting entries: -
Debit the Clients Matter in Business with the invoice amount. If there is trust available on the Matter, this Matter becomes eligible for a trust transfer.
Debit Debtors control in the General Ledger with the invoice amount.
Credit Fees / Disbursements with the ex VAT amount (if registered)
Credit VAT (if registered).
The automatic Trust Transfers program interrogates each Matter to establish whether there are funds to transfer; i.e. a business debit (typically the client has been invoiced) and available trust (a trust receipt from a client, taking into account any reserve, e.g. for payment to a third party).
If a Matter has a trust debit balance (trust money paid against the Matter where no trust was available) and/or a business credit (a payment received into business where there was no prior business debit, or a credit note generated where money was previous transferred as a result of the invoice), a negative transfer will be generated.
Note
The automatic Trust Transfer program first displays all Matter where a transfer will take place, with details of the transferable amounts, with the option of deselecting prior to processing. This gives the bookkeeper the opportunity to investigate a Matter with a negative transferable amount (credit, in red) and rectify a possible accounting error, without generating a negative transfer.
A list of Matters that qualify for a trust transfer is displayed, all selected by default. Processing a transfer will
For each selected Matter:
Credit the Matter in Business and
Debit the Matter in Trust, with the transferable amount, which is the lessor of the business or trust balance if different, else the balance amount.
For the sum of the transferable amounts for all Matters
Debit the system ‘Trust Transfer Clearing’ Matter in business and
Credit the system ‘Trust Transfer Clearing’ Matter in trust.
The transfer clearing matter subsequently contains the balances that are to be transferred from trust to business.
Note
If the transfer has been run (and individual matters updated) but the payment from trust of the transferable amount has not been made, the system ‘Trust Transfer Clearing’ Matter will show a credit trust balance, and also feature in the trust investment / commitment report, until the payment is made. The business balance on the clearing matter will similarly remain, until the payment has been posted as received into the business bank account (posted against the clearing matter).
To complete the trust transfer, after the transferable amount (obtained from the Trust Transfer Report) has been paid from the trust bank/s to the firm’s bank account, the two accounting entries must be posted: -
Matter payment - Trust, paid against the ‘Trust Transfer Clearing’ Matter. This will clear the Trust balance in the ‘Trust Transfer Clearing’ Matter.
Matter Receipt - Business, received against the ‘Trust Transfer Clearing’ Matter. This will clear the Business balance in the ‘Trust Transfer Clearing’ Matter.
Billing a client for work done
To bill a client, you first need a Matter to bill (an instruction from a client), and a Matter must be linked to a Client.
So you will need to add a client account, and a Matter, if they do not already exist. If a new matter for an existing client, add a matter linked to the existing client (a client can have one or more matters).
All fees and disbursements are initially captured as unbilled (WIP), and subsequently converted into an invoice (at which stage they become an accounting entry).
Unbilled fees are not accounting transactions, and can therefore be modified or deleted.
Once converted to an invoice, an invoice cannot be modified or deleted, as an invoice is an accounting entry. If an invoice is in error (e.g. for the incorrect client or matter) a credit note must be generated, which can be done automatically from the invoice, and which generates accounting transactions, reversing all the invoiced accounting entries. All invoice line items (from previous unbilled) can be returned as unbilled, with the option to move them to a different account (or modify or delete). As unbilled, they can be subsequently invoiced.
Note
Where a credit note has been generated by LawPracticeZA (a mirror image copy of an invoice), the original invoice and credit note can be ‘hidden’ (including on the client’s statement). See the Reversals Shown / Hidden toggle.
See Trust Transfers for the impact invoices have on trust transfers.
Period end (Month and year end)
LawPracticeZA does not ‘roll balances’ like many legacy systems, but maintains all transactions and calculates balances as required, based on the transaction date, using a ‘freeze’ date to mark both month and year end.
Note
There are two major benefits to using a freeze date, made possible by the increased power and capacity of computer technology: firstly, there is no month or year-end delay and secondly, because all balances are calculated ‘on the fly’, reports can be extracted for any period or as at any date, without the need to restore a backup.
Month end
The following example illustrates how month-ends are managed in LawPracticeZA
During January, transactions are posted dated January: they fall into the January financial period.
If during the beginning of February,
Fee Earners produce invoices, the accounting entries produced fall into the February financial period.
If the Bookkeeper posts transactions (for example, from a bank statement)
dated January, the accounting entries produced fall into the January financial period.
dated February, the accounting entries produced fall into the February financial period.
When the bookkeeper has completed all posting relating to the January period, he or she sets the Period end - month to the 1st February, and no more transactions can be posted into January.
Year end
Once the month-end postings have been completed and the month-end ‘freeze-date’ set, if the last month in the financial year, the year-end ‘freeze-date’ is also set.
Setting Year-end identifies the financial year for report purposes, e.g. the Income and Expense report.
Note
To accommodate exceptions where it is necessary to post into a previous financial period (for example, to capture auditor adjustments, which could be received months after a financial year end) a special setting is provided to release the ‘freeze’ date. To change this setting requires Auditor privileges.
Take on from legacy system
Many firms that decide to change to LawPracticeZA are operational Law Firms that have existing systems.
LawPracticeZA includes a number of Import modules, to cater for importing Clients and Matters, Suppliers, and General Ledger accounts. In addition, any WIP (fees that have been captured but remain unbilled) can also be imported, as can ‘Posting codes’: a firms customized tariff. The following are some typical scenarios: -
Firm elects to ‘start with a blank slate’. This would also apply to new firms. In this instance, LawPracticeZA is set up with no Clients, Matters or accounts loaded - just the default settings, including a standard chart of GL accounts.
Import existing Clients and Matters, and possibly Suppliers, but no General Ledger (as it sometimes takes time for the legacy system to produce a balanced trial balance). LawPracticeZA provides options for importing Clients and Matters, with or without balances (which can be imported later), from a spreadsheet. Instructions are included in the import module, and a spreadsheet template can be provided with the format required. A similar option is provided for Suppliers. The General Ledger can be imported at a later stage, but should be ‘as at’ the same date as the Clients and Matters (i.e. the sum of the Matter business balances must equal the Debtors control in the General Ledger).
Import an entire, balanced system: Matters and Clients, Suppliers and General Ledger, from spreadsheets, each formatted as per the import modules specifications. Generally this data will be exported from the legacy system to spreadsheets and formatted as per the requirements of each import module.
Note
When we import data from a legacy system, we do not import historical transactions, only balances. So it is important to retain access (whether printed or online) to historical data, i.e. transactions prior to the conversion to LawPracticeZA.
Reports using Pivot Tables
Pivot tables in spreadsheets provide an extremely flexible and powerful yet simple reporting tool.
Because reporting requirements vary between law firms, LawPracticeZA has optimised a number of reports for Pivot Tables, the most common being Unbilled Fees and Pending Disbursements and Invoiced Fees and Disbursements.
In both the above, fees can be analysed by Client, Matter, Fee Earner, accounting period and more, with a simple drag and drop. Together with a number of other reports, LawPracticeZA includes Pivot Tables in the exported spreadsheet (option EXCEL PIVOT).
Apart from creating Pivot Tables, the existing ones can be easily modified, by dragging and dropping fields, to accommodate various ways of looking at the data.
Note
There are many excellent tutorials on YouTube for both Excel and LibreOffice Pivot Tables. Also worth investigation Excel ‘Text to Table’ and LibreOffice ‘Filter’ for other report formats, such as the General Ledger transaction analysis (Statement of Accounts)).
VAT on the Invoice basis
Where a firm is required to be registered for VAT, LawPracticeZA applies VAT on the Invoice Basis. LawPracticeZA does not accommodate VAT on the Payment basis, as it is inappropriate for law firms (because VAT on the payment basis requires each invoice issued to be associated with a payment received, which is particularly problematic in the case of trust transfers). Each payment to a supplier must also be associated with a suppliers invoice. VAT on the Payment basis was generally designed for small, cash businesses, and is restricted to a maximum turnover during the preceding 12 months.
Cash flow is often raised as a reason for selecting the payment over the invoice basis, where this choice is available.
Proforma invoices can alleviate the potential impact that VAT can have on cash flow. By presenting client’s with proforma invoices, arrangement can be made for settlement prior to invoicing the client. It is only at the time of invoicing that the liability for VAT arises.
Taking deposits where possible, although in some cases this is not possible, will eliminate the problem. Deposits for work to be done are deposited in Trust (and to the trust balance of the client’s Matter) and once an invoice is generated, can be immediately released from trust.
In addition, as soon as a vatable invoice from a client is posted, the VAT credit is claimed, rather than waiting until the supplier is paid.
Auditors
This section explains where to find the reports that the auditors typically require.
Note
Where a report includes transactions, you can select a ‘from - to’ date (e.g. Account Enquiry), and where a report contains accounts with only balances (e.g. Financial Reports), an ‘as at’ date.
In LawPracticeZA, all transactions are maintained and balances calculated on the fly (as opposed to legacy systems where transactions are generally rolled up into a brought forward balance at month and year end). This has the significant advantage that reports can be drawn for any period, without restoring backups.
Reports include an option to extract to PDF or a spreadsheet (e.g. Excel). In a spreadsheet, data is more easily analysed, especially by using tables and pivot tables.
The following are typically the reports required by auditors, and where to find them in the bookkeepers menu. Tip: type part of the report name in ‘Filter menu…”
Trust Investments / Commitments: The spreadsheet / PDF includes three ‘tabs’: -
All client’s matters that have a trust and/or investment balance, with totals.
Trust Bank/s, with the total balance/s equal to the total of the trust balance in the first tab.
Individual Section 86 (4) investments, with the total equal to the total of investments in the first tab.
Trust Transfers, under Reports. For each trust transfer there is a PDF report, listed in date sequence. Each report identifies the matter/s where monies have been transferred, with a total amount to be paid from trust to business.
Client Statement. A selected Matter or all Matters for the selected client, with an option to include matters with zero balances (as at the ‘to’ date). If this option is not selected, an account where the balance has become zero (e.g. an invoice paid) will not be included. The statement shows all accounting transactions, in separate sections for Business, Trust and Investments.
Statement of Account(s): General Ledger accounts with transactions for the selected period. This report extracts all general ledger accounts for the selected period, with any transactions preceding the ‘from’ date represented as an Opening balance. To analyse accounts, it is recommended to extract to a spreadsheet and convert to table (Excel) or Filter (LibreOffice) where columns provide filtering (e.g. of one or more accounts and/or a particular transaction type), sorting, etc.
Audit Trail. Includes all accounting transactions, both automatically generated (e.g. from invoices) and captured (e.g. Receipts and Payments) for the selected period. Transaction are in chronological order of date recorded and show the time and user. The Audit Trail includes a filter to make it easier to find specific transactions.
A Bank Recon can be run for any period, showing the LawPracticeZA opening balance, any unreconciled transactions at the time, with a calculated closing balance, which should equal the Bank Statement balance of the same date.
Matter Movement shows all business, trust and investment transactions for all matters for the selected period.
Debtors Age Analysis lists all Clients Matters with a business balance, with aging to 120 days. The trust and investments balances are also shown, for information purposes.
Suppliers Age Analysis lists all creditors with a balance, aged to 120 days.
Invoiced fees and disbursements. This report has been optimised for a spreadsheet Pivot table, where the fees and disbursements can be analysed in a variety of ways; e.g. by Period, by Fee earner, by Client and/or Matter, with or without VAT, etc.
VAT Report. Can be extracted for any period (as defined on Firm details: i.e. for Odd or Even months, or Monthly). A completed VAT 201 PDF is produced for the period, with detailed transactions with corresponding totals in an accompanying spreadsheet.
Financial Reports. These are produced as a PDF document or Spreadsheet, as at the selected date, with tabs for
Trial Balance. A list of all General Ledger accounts (including the system Debtors Control, representing all Clients Matters Business Balances, and Creditors Control, representing all suppliers balances). Separate columns are included for Trust and Investment balances.
Income and Expense report. All income and expense accounts, with the difference between the two the profit or loss.
Balance Sheet. All assets and liabilities (including owners equity), including the calculated profit or loss (from Income and Expense).
Note
Account categories and sub categories can be configured. See GL Account categories and option ARRANGE.
Frequently asked questions (FAQ’s)
Questions asked by LawPracticeZA users, with answers.
Where has my Matter gone? (archived Matters)
To retrieve an archived Matter,
Select Matters in the bookkeeper menu.
Click on Expired for a list of all archived Matters.
If you need to search for a Matter, enter part of the Matter description, or code, in the search field.
Click on the Matter description, and the Matter is loaded.
Top right corner is the unarchive icon (sun): click and the Matter will be returned to ‘live’.
How do I correct an incorrect posting?
Mistakes do happen.
LawPracticeZA provides the option to reverse entries; i.e. LawPracticeZA will post accounting transactions opposite to the original entry, thereby reversing the entry.
Accounting entries cannot simply be modified to correct a mistake. To protect the accounting data integrity, an adjusting accounting transaction is required, which will appear on the audit trail. This is why it is also advisable to include a clear explanation for the reversal - one that both the client (on the Client Statement) can understand, as well as the auditor - perhaps six months after the reversal.
Note that unbilled fees and pending disbursements can be amended or even deleted. This is because they are not accounting entries. When invoiced, they are converted.
Because invoices are generated by the system, special functionality is provided - as described below.
Note
Because a reversal produces a mirror-image of the original transaction (i.e. all the same transactions are posted, but in reverse) you can ‘hide’ reversals: i.e. the original entry and the reversal, including on the clients statement. You can toggle between Hide and Show Reversals.
Reversing invoices: generating Credit Notes
With invoices, as with all accounting records, once generated, the details cannot be changed. To cancel an invoice, you need to create a Credit Note and, if necessary, re-invoice.
LawPracticeZA provides a number of options to automate what would otherwise be a laborious process.
If an invoice needs to be credited (e.g. to wrong client or has incorrect address),
Select the invoice (tip! for invoice INV1005, for example, in the Search bar type invoice INV1005 and select - or click on INV1005 in Account Transactions ). With the invoice selected, click the icon for ‘Copy to unbilled’ (icons in top right of screen). This will reinstate all the unbilled fees and/or disbursements. Then click the back-arrow icon to generate the Credit Note. You can enter a reason: e.g. incorrect address.
Update the client address (and name if applicable); change to the correct invoice name and address and (re) invoice.
If you invoiced the incorrect client, after step 1 select the Matter and under unbilled, click MOVE SELECTED to move the unbilled fees and/or disbursements to the correct Matter, then invoice the correct Matter.
Remember that unbilled fees and pending disbursements (WIP) can be edited or deleted, as until invoiced, they are not accounting records.
Does LawPracticeZA have short-cuts?
There are a number of short-cuts in LawPracticeZA that will save you time.
Press / to load the search (same as clicking the magnifying glass). To find a Matter, enter any part of the client or matter details or code. For other options, press ?. There are options for finding suppliers, or specific transactions such as invoices or receipts, and more.
Press \ for the menu filter (where you can enter any part of a menu item name - for example
au will display the Audit Trail option for selection.
com the Trust Investments / Commitments option.
86 both the Section 86(4) Investment Withdrawal and the Section 86(4) Interest / Charges options.
Time-based fee calculations appear incorrect. How can this be?
LawPracticeZA uses the national and international standard for lawyers of billing per 6 minutes, or tenths of an hour: e.g. 40 minutes as 0.7 hours.
The reason this standard has been adopted is because a calculation based on minutes will often result in strange amounts. A recent query from a client: 40 minutes at R950 an hour would result in R633.3333333 (recurring). Based on per 6 minutes, the amount charged will be R665.00. Accountants tend to charge per 15 minutes, but this is because each attendance by an accountant tends to be longer than an attendance by an attorney; i.e. an accountant’s attendance will be a minimum of 15 minutes.
LawPracticeZA does nevertheless provide the option to change the basis of calculation (for example to minutes or per 15 minutes, whether to round up, etc. These options can be found in Firm details). But for the reason above, this is not recommended.
What is recommended is that in your terms of engagement with your client, together with your other conditions, you state that, as per the national and international standard, you charge per 6 minutes or part thereof.
There is also an option in Firm Details to show the unit as fractions of an hour rather than minutes: for example, 40 minutes could show on the invoice as 0.7.
Warning
Changing the minute-block setting will cause some of your previously entered WIP (draft item) to fail a calculation check when invoicing. Either make the change when you have billed/cleared your WIP, or load and update each WIP entry so the system will recalculate the WIP totals.
Why is the VAT total of my invoice not exactly a percentage of my ex-VAT amount?
In LawPracticeZA, VAT is calculated on each line item of the invoice and rounded to the nearest cent. This is an acceptable way of calculating VAT. This means that each line item could introduce an small difference of between -½c and ½c. If, for example, you have 100 items then this could result in a maximum difference of 50c. In many cases the small increased difference will mostly cancel out the small decreased difference, but it can still lead to a small descrepancy if you take the final total and multiply it by your VAT amount (say 15%).
Some companies prefer the VAT to be calculated on the sub total of the invoice. This is possible, and it can be set Per Department, under Department Settings. In this case, however, if one sums the VAT column it will not add up exactly to the VAT total at the end of the invoice, and therefore an additional line item is added to the end of the invoice called “VAT Rounding” to make sure that the column will summed up perfectly to the invoice’s VAT total. The option of choosing whether to do the calculation from the inclusive amount or the exclusive amount is available. If you quote prices including VAT you’ll probably want the VAT rounding to inclusive amount, if you want VAT rounding.
The “VAT Rounding” line item can be hidden on client invoices, this is also an option in Department Settings. Note that there could be more than one “VAT Rounding” line item, as Fees and Disbursements are calculated seperately. When the VAT Rounding lineitem is hidden then if one adds the individual VAT items together, you will not always get to the invoice total.
Not all items attract VAT, so it would be an incorrect assumption to assume all line items are the same VAT percentage. If VAT is rounded to invoice total, each VAT type is summed separately and VAT is calculated.
LawPracticeZA uses the Bankers Rounding Strategy, also known as Half to Even rounding, according to the IEEE 754 standard of 1985.
Invoices: can I include my own message at the bottom of an invoice?
You can add a message to invoices sent to client’s. Go to Firm details (you must have Administrator privileges) and add the message under banking details. An example of a message is “payment must be made 30 days from date of invoice”. Note that this message will appear on all invoices. It can be changed (e.g. for December you could include an additional message). Messages can be on separate lines. Before invoicing check messages with a proforma invoice.
Note
If you are sending an individual invoice, you can send a message with the email. When you click send, you get a prompt to add a message to the email.
Matter Receipts: can I show outstanding invoices when capturing?
To view outstanding transactions on a matter, you can view them under Transactions, on the Matter, or via Account Enquiry. You could also produce a Proforma, which you could tab to in the browser when doing the receipt.
How do I print a Matter Receipt?
The automatic production of a Matter Receipt was removed, at the request of users. The option to print a receipt is still there, but needs to be selected from the receipt transaction, which can be accessed from Matter Transactions, or searching for the receipt.
For split receipts, a Matter Receipt is generated for each Matter, not only the total amount received.
In the Cash Book, how can I see to which matter the funds are allocated?
We do not show the opposite entry in the Bank Account enquiry. We have adopted the approach that everything can be exported to a spreadsheet (e.g. Excel), in order to provide flexibility in reporting. This has been done to accommodate the varied requirements of many different law firms.
You will see in the manual that some reports are well suited to being rendered as a Pivot Table. For these, we have optimized the reports accordingly.
Others are well suited to be analysed as tables, where you can filter the report using a standard and flexible filter that can be assigned to every column at the click of a button. In this instance I would use the Matter Movement where you can, for example, filter the reference column to include only transactions that start with TP (Trust Payment). This will produce a list of all Trust Payment per client’s matter, with full details. You can have multiple filters, sort data, etc.
How are bank accounts managed in LawPracticeZA?
In a law firm, a lot of transactions posted originate from bank statements. It is important to understand how banks are managed in LawPracticeZA. LawPracticeZA does impose rules to ensure the integrity of accounting data, and this requires different types of transactions (e.g. a receipt from a client and a payment to a supplier) to be dealt with in different ways. It also simplifies posting transactions.
Firstly, banks contain a Receipt Method (e.g. EFT, Cheques and Cash, etc.). The reason for this is that whereas EFT’s are reflected immediately in the bank, cheques and cash are first held at the office before being deposited into the bank. In addition, the deposit could (and often would) include multiple items, each of which will be receipted against a specific matter or account, whereas the deposit in the bank will reflect the sum of all cheques and cash. For this reason we create separate ‘In-house’ banks (Business and Trust), and use the bank transfer to transfer the deposit from the in-house bank to the bank account. Petty Cash is also treated as a bank, using the bank transfer to, for example, post the cash float received from the business bank. If receiving payments from clients via credit cards or bitcoin (or similar), the process is the same as using the in-house bank: for example, create a ‘Merchant Bank’ where credit card payments are individually reflected and once transferred by the bank into the bank account, process a bank transfer for the full amount (as this is what will appear on the bank statement). This will clear the merchant bank.
There are a number of options available in the LawPracticeZA menu to cater for the various types of banking transactions (Matter Receipts, Matter Payments, Supplier Payments, Business Receipts and Business Payments), but note that the preferred method is using Reconzilla, where you can import your bank statements and then post directly from the imported statement.
Why did LawPracticeZA send a client multiple emails for the same invoice?
The user requested the system to send a set of unsent invoices, but 1 of them had a faulty email address (e.g. should not include quotation marks). So the entire batch was reported to be rejected to the user, while actually some of the invoices were successfully sent. The user then tried to resubmit the entire batch a few times, resulting in multiple invoices being sent to some client’s.
As a result of this, some modifications have been made to LawPracticeZA
Improve email validation, using a live email validation tool that we have created.
Remove bad characters (such as quotation marks) from email addresses automatically.
Change the sending of invoices to be batched. They’ll still go out ASAP, but are processed one at a time, which allows only the offending invoice to ‘bounce’ back to the user as an issue. The issue will identify the problem with the email (e.g. invalid domain).
How do I account for VAT when I capture an expense with VAT directly into the business cashbook?
You do not capture directly into the Cash Book. Input VAT can only be derived from a suppliers tax invoice (even if an alternatively accepted invoice such as thr policy for an insurance premium can be used as the invoice).
To follow correct procedure without introducing additional work, LawPracticeZA has introduced the option of immediate payment on Suppliers Invoices.
Note
Tip: Open a COD Supplier to be used for these type of postings.
This means that posting one entry will generate the correct accounting entries to accommodate VAT. We have also provided an automatic one-click feature for posting bank charges (and interest) directly from an imported bank statement (Reconzilla), where you can also post all other transactions from the bank statement.
Can I integrate LawPracticeZA with some of our other systems?
From our website, under Developers: LawPracticeZA has been built with an API-first approach. All business logic operations and data IO can be performed over our secure RESTful JSON API mounted at /api. This means that developers are free to integrate LawPracticeZA with other systems such as document generation, business management, customer relationship management, etc.
Note
For larger firms with internal IT expertise, this functionality can prove extremely useful. We have also used the API to enable integration with e4 transfers, for example.
What if I receive an error message?
This calls for an explanation of how LawPracticeZA deals with errors.
Error messages can be ugly and annoying: so we’ve put furry animals on them. We call them Error Animals. It helps our users understand different kinds of errors.
For example, a bunny usually indicates that there is something invalid about the data. For example, a matter cannot be opened for a client that didn’t yet exist.
Another kind of animal that might appear is the Llama. Llama’s are the most vague, and often indicate there is a bug in the system, or we’ve encountered a situation that the system wasn’t expecting at all. If you do see a llama, it’s time to contact support. (Although all llama errors do get automatically sent to our central ‘Sentry’ system for us to analyse and resolve, so we might already know about it. But all additional information is helpful.)
The border collie occurs when the address (URL) is incorrect - this could be due to a broken link or incorrect parameters or perhaps a link getting garbled or cut off in an email - or partially cut-and-paste. If you followed a link from within LawPracticeZA please contact our support so we can fix it. If you followed a link from another website please tell them so they can fix it.
Note
At the bottom of every page in LawPracticeZA is SUBMIT A SUPPORT REQUEST. Please use this for reporting any errors, or even if you have a query. The reason is: the details you SUBMIT are immediately sent to our logging system and everyone in LawPracticeZA is informed, both on our computers and cell phones. A screen shot (typically of an error) is automatically sent with the message, as is all other other information that can assist us with resolving the problem or answering the query.
If a fee earner leaves, how do I manage his or her Matters?
When a Fee Earner leaves a firm, they should be ‘expired’ on LawPracticeZA.
From the Fee Earner Menu option, from the ‘old’ Fee Earner’s menu options (three vertical dots), select Expire. This will provide the options for a Replacement Fee Earner and a date on which to expire the old Fee Earner. There is also the option to disable the old Fee Earner; this will prevent the old Fee Earner from accessing the system.
Once accepted, all the old Fee Earner’s Matters will be assigned to the new Fee Earner This can involve reassigning a number of files, so may take a minute or two..
Note
First create the login for the new Fee Earner, if the new Fee Earner is new to the firm, then expire the old Fee Earner, as described above.
Can I charge interest on overdue accounts?
Yes: if you scroll to the bottom of the Debtors Age Analysis, there is an option to charge interest on accounts that have been overdue for a specified period, at a specified monthly interest rate.
Posting disbursements
A disbursement is both a ‘purchase’ (e.g. invoice from advocate) and a ‘sale’ (disbursement charged to your client). The two methods for capturing both the ‘purchase’ and ‘sale’ simultaneously are: -
Capture Suppliers invoice (the ‘purchase’), and select the option to also post the disbursement charge (‘sale’) to the client’s Matter. As with capturing fees, the disbursement charge on the Matter is unbilled until invoiced.
The Fee Earner captures disbursement charge to the client (the disbursement is unbilled until the client is invoiced) when capturing the disbursement and selects Also capture Expense, i.e. post the supplier invoice.
The purchase and sale can also be posted independently of each other, or together via one of the two options mentioned above.
Disbursements, processed correctly in the above manner, result in paying the supplier (e.g. Advocate) out of business (Supplier Payment). If the client has paid a deposit, received into trust, then once the client has been invoiced for the disbursement, a trust transfer will release the funds from trust to business.
Note
If a disbursement is incorrectly paid from trust (e.g. pay an Advocate or Sheriff from trust) then the accounting entry would be a Matter Payment - Trust. In this example the Advocates invoice would not be posted, and the disbursement cost cannot be charged to the client (as the clients (trust) money has been used to pay the supplier). Note that this latter method is incorrect and the former mentioned method should apply. NB! The advocate or sheriff invoices the law firm (VAT / tax implications), not the client, so the invoice must be processed by the law firm, which also means that the supplier cannot be paid from trust.
In the instance where a firm pays for a disbursement such as hospital records, in principle the same procedure applies: in terms of the purchase, if there is no invoice (although there should always be some record, even for petty cash items), the posting can be as follows:
Create a COD or Miscellaneous Supplier and capture the invoice, with the option ‘Paid’. The expense account is ‘Disbursement Costs’. In this way, the system updates the ‘Supplier’ with both the invoice and payment (resulting in zero balance) and the expense account and bank, in the General Ledger.
The client would be charged for the cost in the usual way: under Capture Fees, Disbursements, with a meaningful narration (e.g. Obtaining copy of hospital records).
If the client has money in trust, once invoiced, this will result in a trust transfer. Alternatively, the client is invoiced, and pays the bill.
Reversing an incorrect trust transfer
A ‘Trust Transfer’ is an automatic process that updates Matter business and trust balances, which are the result of transactions such as trust receipts and invoices to clients, reducing both Matter business and trust balances by the transferable amount, with is then available to transfer from the trust to the business bank account.
The Trust Transfer program includes an automatic reversal when there is either a trust debit or a business credit on a matter. A reversal reduces the amount available for transfer if the overall transferable amount is positive, else the payment should be made from the business to the trust bank for the net reversal amount.
If there was an error with a trust transfer, it cannot simply be reversed. The issue needs to be resolved: at the time of the transfer, the system reflected a trust credit and business debit on the matter, so if a subsequent reversal of an automatic transfer is required, it must mean that either the trust or business balance (or both) on the matter were incorrect at the time of the transfer. A transfer results from these balances, which result from individual transactions, so these underlying transactions need to be attended to.
For example, say a receipt of R900 was incorrectly posted to Matter A rather than Matter B, and Matter A has a business debit balance of R600. A transfer is processed and Matter A’s business balance is reduced to zero and trust balance to R300 credit, with R600 available for transfer. The mistake is picked up after the transfer and a trust journal is posted (or a reversal of the original Receipt and new correct Receipt), crediting matter B (where the receipt should have been posted in the first place) in trust and debiting Matter A in trust with R900, resulting in a trust debit of R600 in Matter A. A transfer is run and the system generates a negative transfer on Matter A of R600, reducing the trust balance to zero and reducing the transferable amount by R600 (if the only transfer processed, would need to transfer from business to trust, rather than the usual trust to business).
There is no magic wand to reverse a transfer. A bookkeeping system is simply the recording of actual transactions that have taken place, so if there is an error, it needs to be corrected (which in some cases could even be a payment from trust into business) and the transaction/s recorded. Because the trust transfer is an automated process, it also produces a negative transfer when a matter has either a trust debit of a business credit (to maintain an accurate trust investment vs commitment balance).
Another alternative is that the amount, for whatever reason, is written off. In this case a credit note can be generated, with an appropriate reason, and this will clear the business balance. Where there is no debit balance on the matter (e.g. where an invoice has been paid) and a credit note is generated (say a refund to the client), an automatic trust reversal will be generated, resulting in a trust credit (the client is owed the money). After the reversal, the business balance will be zero.
Another example: the supplier of a disbursement (e.g. Advocate) is paid directly from trust (reducing the trust balance to zero) and the disbursement is (incorrectly) raised against the client and invoiced, and a trust transfer is run (no transfer takes place as the trust balance is zero). To resolve this, the disbursement charged to the client should be reversed (credited), as the disbursement has been effectively paid by the client (from their trust funds), and cannot therefore be charged to the client.
To re-emphasize: Accounting systems only record transactions and the trust transfer is an automated process that is based on a Matters transactions (balances); i.e. cannot post a journal entry to correct a trust transfer, the underlying transactions that cause the error must be rectified.
Receive refund from Law Society
The Law Society should be created as a Client and Matter.
When you receive trust interest, it is posted as a trust receipt to the Law Society Matter.
Any bank charges that can be offset against the Law Society are posted as a business debit. When a trust transfer is run, the business debit is offset against the trust credit, providing an amount that can be transferred from your business to your trust bank account: i.e. recovery of costs against interest.
The refund is a special case, as normally the Law Society is a trust creditor.
It is suggested that the Law Society should also be created as a supplier (business creditor) for any other fees raised by them. These would then process in the usual way:
Original entry: -
Receive account from Law Society. Process as Supplier Invoice.
Pay Law Society. Process as Supplier Payment.
Refund.
Receive credit from Law Society. Process as Supplier Invoice with negative amount and appropriate narration.
Deposit payment received from Law Society. Process as Supplier Payment with negative amount and appropriate narration.
When someone leaves, how do I remove their login?
If the person leaving is a fee earner, then you should first expire the fee earner. From the Admin menu, under Fee Earners, select Expire from the menu (three vertical dots) for the fee earner leaving: -
Select Replacement Fee earner. This will be the Fee earner who will be allocated the expired fee earners files.
The date - accept the calculated date.
There is an option to disable the login: this will mean the expired fee earner will no longer be able to log into the system (all their ‘Zones’ will be removed).
For a non-fee earner, to prevent the person from logging in future, from the Admin menu,
Select Logins and Update from the menu (three vertical dots) opposite the Fee Earner.
Delete the General zone (x) This will prevent the fee earner from accessing LawPracticeZA.
Click Archive Yes and press OK to update
How do I deal with Third allowances to / from corresponding attorneys?
Using this example where you are instructing another attorney: -
You bill your client in the normal way, for the full amount. If the client pays you a deposit prior to invoicing, receipt into trust and once invoiced, will form part of the next trust transfer (if the client pays after being invoiced, should be receipted into business).
You treat your supplier as a normal supplier: you receive an invoice from her for the amount less the third, which you pay from business. What remains in your business bank (after the transfer or receipt into business of the full amount from your client) is the allowance.
An issue to consider is that the amount invoiced by the correspondent should be posted against your fee account (to reduce your income account by the allowance given).
Create a new General Ledger income account , called something along the lines of “Correspondence costs for fee sharing”. This is the account that you use when posting the Suppliers Invoice - the invoice from the corresponding attorney.
Using the above example: -
You instruct attorney B to do work for your client.
Attorney B agrees to charge R1,4000 (plus VAT to be added) with an allowance of 33.3% of this amount;
Attorney B does the work and sends an invoice/statement for her fee of R933.32 (due and payable) being R1,400 less the allowance of R466.68;
Capture the fee of R1400 in the normal way. The narration may be something like “Summons issued by Attorney B”.
Capture the invoice from Attorney B (Suppliers Invoice, with Attorney B created as a supplier), in the amount of R933.32 and with the income Account “Correspondence costs for fee sharing” selected.
The result in your income and expense account will be the R1400 reflected in fees income (a credit), Attorney B’s costs in “Correspondence costs for fee sharing” income account as a R933.32 debit with the net fee income the difference, i.e. R466.68, your allowance.
When you are sharing your fees with a correspondent it is quite simple: post the fee to your correspondents matter and add the third allowance as a ‘discount’, a negative amount. For example, if the fee is R900, you capture ‘Third allowance’ as -300.
Generating a credit note / writing off a balance / writing off a bad debt.
There are several ways to generate a credit note:
To credit an entire invoice, load the invoice in question (e.g. by clicking on the invoice number under the BUSINESS & TRUST ENTRIES on the matter page under transactions, or from the link in the client’s statement), and then use the REVERSE button to create a credit note for the whole invoice.
If ‘Reversals hidden’ is set, an invoice reversed in this way, and the credit note (if dated the same date as the invoice), will be hidden - both on the transactions displayed and the Clients Statement.
A COPY TO UNBILLED option on the invoice will return all items on the invoice to UNBILLED fees and/or disbursements, which can be edit/delete/moved to a different Matter, and re-invoiced.
NB! You cannot reverse a Credit Note with a date prior to the current freeze date, as this would cause issues with financial reports and the VAT 201 return if already submitted (if registered for VAT). When reversing the invoice (i.e. generating the credit note) there is an option to change the credit note date (e.g. to within the current period). Under these circumstances, you cannot hide the reversal. If the temporary freeze date has been set to a date prior to the current period, it will be possible to generate a credit note in a prior period, but you must be aware of the implications mentioned above.
For a ‘stand-alone’ Credit Note, capture a Unitary fee on the matter, with a Quantity of 1 and a negative Rate. In other words, prefix the Rate with a minus sign (e.g. -100 or -0.01 if writing off a small amount). You can use any activity: just replace the narration with an explanation for the credit (or you can create an Activity: Masterfile Maintenance ➤ Posting Codes (Fee / Qty)). If the total amount that you want credited includes VAT, you need to calculate the ex VAT amount (total amount divided by 115 multiplied by 100), as VAT will be added. For example, for a total of -115, enter -100 and LawPracticeZA will add R15 VAT.
For a bad debt, the above option, but create a posting code with VAT type selected as Bad Debts (if registered) with an income account (the credit will reduce income) selected as Bad Debts (so that all Bad Debts can be identified via this General Ledger (income) account. After selecting the General Ledger ‘income’ account for the Bad Debt Posting code, the category on the account can be changed in the General Ledger from income to expense (if you prefer it to show as an expense in the Income and Expense report). This has no impact on the financial report totals, but some accountants prefer bad debts to appear under expenses, rather than as reduced income.
Note
Before generating the Credit Note (click INVOICE SELECTED, which will create a Credit Note), produce a PRO FORMA to check that the details are correct (will show as a proforma with negative amounts). Generating the Credit Note will update all accounts (Matter / Fees / Disbursement income / VAT) in reverse to the original invoice.
To open a trust account when starting out I made a deposit from my private bank. How do I post this?
You will need to open a Client and Matter in your name for ‘own’ trust account. Set ‘Reserve trust’ on the matter to the amount that you are advancing (so that it will not automatically transfer until you are ready to do so). You will also need to open a Private Bank account (menu option Business and Trust Banks) and assign a Receipt Method (EFT) to the bank.
Post a Matter Payment, Business, selecting your Private Bank and the above Matter. This will Debit the Matter in Business and Credit your private Bank
Post a Matter Receipt, Trust against the same Matter. This will Debit the trust bank and Credit the Matter in trust.
Once your practice is up and running and your trust bank has funds, you can recover the advance from the trust bank. Clear the reserve trust on the Matter and run a trust transfer. Post the trust payment against the trust transfer clearing matter (Matter Payment, Trust)
Credits the Trust Bank account
Debits the Trust Transfer Clearing Matter. This clears the trust balance.
and the Business receipt to your personal bank account (Matter Receipt, Business)
Debits your personal Bank account (clearing the balance)
Credits the Trust Transfer Clearing Matter. This clears the business balance.
How do I obtain a list of expired or archived matters with option to restore?
Under menu option Bookkeeper ➤ Master file Maintenance ➤ Matters, select VIEW EXPIRED for a list of all expired (archived) matters. To restore a Matter, click on the Matter Description to load the Matter, then the Unarchive icon (top right, sun icon).
Note
You can view an Archived Matters transactions, but cannot post transactions to the Matter, unless you first unarchive the Matter.
To extract the list of Archived matters to a spreadsheet, scroll down and Export to XLS. In the spreadsheet you can reformat the list to include the fields required (tip: use Pivot Tables) and export the result to PDF format as an option.
Why are my clients are reporting that our emails or invoices are being delivered to their spam/junk folder
Unfortunately sometimes emails go into the spam or junk folders. Although we get 100% score on various mail reputation systems including Mail-Tester.com (97%), SenderScore (99%) and 100% delivery on Google’s infrastructure, we seem to get into the junk/spam folder more often on Microsoft’s Outlook.com. (Users of outlook seem to get false positives into their junk folder all the time, so are often accustomed to having to pick our legitimate email out of the junk folder). We’ve tried various approaches to fix this (including using expensive third-party email providers, but with very poor success). The problem is that our emails will never be “aligned” without various setup on DNS on the client side. Alignment refers to the “From” address matching the “Return Path” SMTP envelope address. This gives us the authority we need to send emails on your behalf. To align the emails the client would have to set up three DNS records (SPF, DKIM, and a CNAME). If they already have an SPF record, then they would need to amend (not replace it) or else their own regular email will stop working. All of this is a bit complicated for most users.
An alternative fix for this is to set up SMTP host, SMTP username and SMTP password (under Firm Details). This will send all emails via your own email infrastructure thereby avoiding the complexity of the DNS records above. The downside is that sending emails will be a bit slower. (Although slowness won’t be noticed for batches/bulk sending, as in most cases.) One would need to ask your email provider to provide you with a new email address, for example accounts@[yourcompany.co.za] and enter the SMTP host, SMTP username and SMTP password under Firm Details. Always test once updating this fields as incorrect information here will result in emails not being sent.
One should setup the reply to the email to be sent back into LawPracticeZA. You can do this by setting up an auto-forward to [your-database-name]@u.lawpracticeza.com
Whenever possible, one should ask the recipients of the email to mark the email as ‘Not Spam’. This will help the reputation of the email system.
Note
Always test your emails after editing the SMTP settings. Leaving incorrect SMTP settings will break lots of things.