The best small business accounting software for law firms makes it easy to manage general accounting, handle trust (IOLTA) accounting, track billable hours and manage client billing. We evaluated each product based on the ability to perform these functions plus cost and ease of use. We started with eight products and narrowed it down to our top five.
QuickBooks Online (QBO) is ideal for law firms with an in house accountant or bookkeeper who can customize the software to meet the needs of their firm. Sign up today, and get 50% off.
Top 5 Accounting Software for Law Firms 2018
| PCLaw by Lexis Nexis | (Best overall) Firms looking for an affordable, all-in-one solution with accounting and practice management tools. |
| Xero | Small to medium-sized practice looking for a budget-friendly software that includes payroll processing. |
| QuickBooks Online | Small law practice with a bookkeeper who can customize the software. |
| CosmoLex | Solo law firms looking for a software with built-in compliance features. |
| Zola Suite | A firm that wants an all-in-one system and has ruled out using PCLaw or CosmoLex. |
How We Evaluated Law Firm Accounting Software
We looked at over a dozen accounting software products and compared them based on cost, how user friendly the product is, and how they address common pain points of managing the books of a law firm. Based on our research and conversations with experts like Candy Johnson Bellau, we have identified the most common pain points lawyers and law firms face when doing law accounting.
Listed below are seven key areas that we used to evaluate law firm accounting software:
- Cost – The software should be affordable for small or large-sized firms.
- Setup/Ease of use – Anyone without accounting knowledge should be able to use it.
- Trust (IOLTA) accounting – Ability to create trust accounts, manage all deposits/withdrawals and reconcile to the bank statement.
- Track billable time – Keep track of the time spent by paralegals and lawyers on a case.
- Track client expenses – Easily track every penny spent on a client’s behalf.
- Store receipts electronically – Scan and store all receipts to attach to client invoices.
- Calculate partner distributions – Compute based on partner payment arrangements.
Based on the above criteria and the time we invested in learning how each product performed, we recommend PCLaw as the best accounting software for lawyers and law firms. In addition to meeting our basic criteria, PCLaw also includes a number of practice management features and it is the least expensive custom law firm accounting software out of the three that we included in our list.
PCLaw: Best Overall Law Firm Accounting Software
PCLaw allows you to stay on top of your law practice and manage your accounting needs. You can create trust accounts and track all client expenses to ensure accurate and timely reimbursement. The built-in practice management features allow associates to access client files and track their time and expenses directly from their mobile device.
PCLaw Pricing
The pricing for PC Law is pretty steep compared to general accounting software like Xero and QuickBooks Online. Xero and QuickBooks charge a flat monthly fee that includes a certain number of users, whereas PCLaw charges a monthly per user fee of $39, which is almost double the cost of the QuickBooks Simple Start plan and more than quadruple the cost of the Xero Standard plan!
One of the reasons why the cost is so steep is because PCLaw integrates both practice management and accounting features into one system. On the positive side, PCLaw is more affordable than the other two custom accounting law software: CosmoLex and Zola Suite.
When it comes to cost, PCLaw beats both CosmoLex and Zola Suite hands down:
- PCLaw is $39/user per month versus $59/user per month for CosmoLex and Zola Suite; it is $20/user per month less, which will save you $240 per year for each user!
- An annual five-user PCLaw license will cost $2,340 versus $3,540 for CosmoLex and Zola Suite—a whopping $1,200 per year!
PCLaw Features
PCLaw is easy to set up and use, you can do trust accounting and easily track billable time and expenses. In addition, it goes beyond accounting to include practice management features like calendaring client appointments, case information, contacts, documents and other key information your associates need at their fingertips to stay on top of their caseload.
Setup/Ease of Use
Similar to its competitors, PCLaw is a very intuitive software that allows you to sign up directly from the website and hit the ground running. You’ve got a couple of options when it comes to getting your practice up and running.
- Set things up on your own by using the help database and training resources within the program.
- Purchase an annual maintenance agreement that will include custom onboarding for your firm and access to free on-demand training.
Trust (IOLTA) Accounting
Like QBO, Xero, CosmoLex and Zola Suite, you can easily write and print checks to pay expenses on behalf of clients from a trust account or from a general bank account for law firm expenses. You can reconcile all bank/credit card accounts to ensure they remain in balance.
I didn’t realize the importance of making sure a trust account is never overdrawn until I spoke with Candy Bellau, whose firm specializes in managing the books for small and large law firms. Here is what she shared with me regarding the penalties a law firm could face if a trust account is overdrawn:
“Many lawyers do not realize the importance of reconciling trust accounts down to the penny. In addition, a trust account should never be overdrawn. Whenever a trust account is overdrawn, the bank must notify the bar association. This will most likely trigger an inquiry or even a possible audit of the law firm; the most severe penalty of this kind of violation could result in both jail time and disbarment.”
– Candy Johnson Bellau, Owner of Kramerica Business Solutions, LLC
“Many lawyers do not realize the importance of reconciling trust accounts down to the penny. In addition, a trust account should never be overdrawn. Whenever a trust account is overdrawn, the bank must notify the bar association. This will most likely trigger an inquiry or even a possible audit of the law firm; the most severe penalty of this kind of violation could result in both jail time and disbarment.”Track Billable Time
Like its competitors, your staff can track hours spent on client work. PCLaw has a tool called Time Entry Advisor that allows you to reduce unbilled billable time by automating time capture. Each associate or administrative staff can easily track the time spent on a case by using the start/stop timer or entering the total hours worked.
Track Client Expenses
With PCLaw, you can easily track client expenses and supporting documents such as receipts so that you can get reimbursed when the time comes to bill your client. QuickBooks, Xero, CosmoLex and Zola Suite all have this capability.
Practice Management
Unlike QuickBooks for Lawyers and Xero, PCLaw is a practice management and legal accounting software all in one. This allows you to access one system for everything, which will save you time and eliminate duplication of effort. Some of the practice management features are:
- Managing trust accounting and billable time and expenses
- Keeping track of client appointments and client case files
- Ability to document all communications with clients via email, telephone and in-person.
Detailed Reports
Similar to its competitors, you can run detailed reports in PCLaw like the profit and loss report. In addition, you can stay on top of unpaid customer invoices and bills by reviewing the aged accounts receivable and accounts payable reports.
What PCLaw Is Missing
Similar to Zola Suite and CosmoLex, you cannot process payroll for employees with PCLaw. However, you can process payroll with Xero and QuickBooks Online. If you decide to purchase PCLaw, you will need to sign up for a payroll service like Gusto, which is the payroll software we recommend for small businesses. Check out our Best Payroll Software guide for more details.
PCLaw User Reviews
Unfortunately, there are not a lot of reviews for PCLaw as of the writing of this article. However, if you are a current or past user, head over to our PCLaw reviews page and leave a review.
Xero: Best Budget-Friendly Law Firm Accounting Software
Xero is ideal for small to medium-sized firms looking for an accounting software that will allow them to expand without significantly driving up costs. Unlike its competitors, Xero does not charge you a fee per user or limit the number of users you can have per plan; our two recommended plans include payroll processing.
Xero Pricing and Features
Xero has three pricing plans (Starter, Standard, Premium 10). We will only focus on the Standard and Premium plans because they can handle law accounting best. The plans start at $30 per month and include the following features:
- Payroll processing
- Unlimited user access
- Ability to handle trust accounting
- Able to track time and expenses
- Detailed financial reports
Xero Legal Accounting Software Plan Comparison & Summary
| Monthly Pricing | ||
| # Users Included | ||
| Payroll Processing | ||
| Detailed Reports | ||
| Trust (IOLTA) Accounting | ||
| Track Billable Time | ||
| Track Firm Expenses | ||
| Track Client Expenses | ||
| Create Custom Invoices |
Listed below are the two Xero pricing plans and the type of business each is right for:
- Xero Standard Plan:
Xero Standard plan is ideal for a small law firm with no more than five employees. You already have a practice management software and are strictly looking for an affordable law accounting solution that also includes payroll. Similar to QuickBooks Online, you will need a bookkeeper/accountant who is familiar with law accounting to customize Xero for your firm.
- Xero Premium 10 Plan:
Xero Premium 10 plan is ideal for a growing law firm that has more than five employees. If your practice is growing rapidly and you need an accounting solution that won’t charge you each time you add a new team member, Xero Premium 10 is ideal for you. Unlike its competitors, payroll is also included at no additional cost.
Based on our minimum criteria, here is how Xero stacks up against its competitors:
Setup/Ease of Use
Like QBO, Xero is general accounting software that is not customized for a law firm. Therefore, you will need an accountant/bookkeeper on staff who can properly set up Xero to meet the needs of your firm.
Trust (IOLTA) Accounting
Like its competitors, you can create, manage and report on client trust accounts. This includes all income and expenses as well as bank accounts. By connecting your bank accounts to Xero, you can also reconcile accounts on a daily, weekly or monthly basis to ensure you are in compliance.
Track Billable Time
Similar to its competitors, associates can track their billable time directly from their mobile device with the Xero app, or they can do so from their laptop computers. Xero billing allows you to easily transfer these hours to an invoice so you can bill your clients in a timely manner.
Track Client Expenses
Keeping track of client expenses can be done in a variety of ways in Xero. Listed below are some of the ways that you can stay on top of client expenses:
- Scan receipts using the mobile app so that they automatically sync with your Xero account and are stored in the cloud
- Enter and pay bills on behalf of clients
- Automatically download payments made on behalf of clients from bank and credit card accounts
Practice Management
Unlike PCLaw, CosmoLex and Zola Suite, Xero does not include practice management features that most law firms require. However, Xero integrates with a product called CaseFox, which includes the following features:
- Client and Case Management – Manage all client case information, export client data to an Excel spreadsheet
- Role-Based User Access – Ability to give attorneys access to only cases they are working on as well as control the data accessible by other staff members
- Tasks Management – Create tasks and calendar cases by attorney for the entire firm
Detailed Reports
Similar to its competitors, Xero has detailed reports like the Profit and Loss statement as well as aging reports to help you stay on top of open customer invoices and outstanding bills. You can also run bank reconciliation reports to ensure that your trust accounts agree with the actual bank account balances.
What Xero Is Missing
Similar to QuickBooks Online, Xero is not law firm accounting software like PCLaw, Zola Suite and CosmoLex for the legal industry. In addition, it does not have the large ecosystem that QuickBooks has, where you can easily find someone who can teach you how to use Xero. Lucky for you, we’ve got a free Xero course that includes step-by-step video tutorials to get you up to speed quickly.
Xero User Reviews
Xero users like how intuitive the user interface is and how easy it is to navigate within the program. However, users also feel that the program lacks relevant features that small businesses need, like cloud storage and tax software integration. Check out the Xero User reviews page to see all customer reviews.
QuickBooks for Lawyers: Best Law Firm Accounting Software for Law Firms with Accountant/Bookkeeper on Staff
QuickBooks Online (QBO) is ideal for law firms that have an accountant/bookkeeper on staff who can customize the software to meet the needs of their firm. While QuickBooks for lawyers can take care of your law accounting needs, it does not include practice management features. However, QBO does integrates with Clio, a practice management tool for law firms.
QuickBooks Online Software Pricing and Features
QuickBooks Online offers three pricing tiers (Simple Start, Essentials, Plus). In this guide, we will cover the two tiers that are robust enough to do law accounting (Essentials, Plus). Pricing starts at $35 per month and both plans include the following features:
- Allow you to give access to your staff and accountant/bookkeeper
- Create and manage trust accounts
- Track time and expenses
- Access detailed reports such as Profit and Loss, A/R Aging and A/P Aging
QuickBooks Online Legal Accounting Software Plan Comparison & Summary
| Monthly Pricing | ||
| # Users Included | ||
| Detailed Reports | ||
| Trust (IOLTA) Accounting | ||
| Track Billable Time | ||
| Track Firm Expenses | ||
| Track Client Expenses | ||
| Create Custom Invoices | ||
| Inventory Tracking | ||
| Budget/Forecasting | ||
| 1099 Reporting |
Listed below are the QuickBooks Online pricing plans and the type of firm each is right for:
- QuickBooks Online Essentials Plan:
QBO Essentials is ideal for a law firm with no more than three lawyers and at least one bookkeeper or accountant on staff who understands law firm accounting. Since QBO is not customized for the legal profession, you will need to hire a certified bookkeeper or QuickBooks expert who is familiar with law firms to customize it to work for your firm.
- QuickBooks Online Plus Plan:
QBO Plus Plan is ideal for a firm with five lawyers and a bookkeeper or accountant on staff who understands law accounting. Similar to QBO Essentials, your accountant will need to set up the program to work for your law practice. If your bookkeeper needs to get up to speed on how to use QBO, check out our free QuickBooks Course that includes step-by-step video tutorials.
Based on our minimum criteria, here is how QuickBooks for lawyers stacks up against its competitors:
Setup/Ease of Use
In general, QuickBooks for lawyers is easy to set up and navigate. Like Xero, you should consider hiring a QuickBooks ProAdvisor who is familiar with the legal industry to set up your practice on QuickBooks. If you’re just starting out, it shouldn’t take more than a couple of hours to set up your chart of accounts, items list and tweak a few other areas.
Trust (IOLTA) Accounting
Similar to its competitors, you can easily create trust accounts in QuickBooks to manage all income and expenses for all of your clients. If you connect the trust accounts to QuickBooks, you can easily download the transactions and reconcile them every day or every week, as opposed to waiting until the end of the month when you receive the bank statement.
Track Billable Time
You can keep track of the hours worked by attorneys, staff and associates in QuickBooks. Time can be entered manually or you can use the built-in timer to keep track of hours worked. Like its competitors, you can easily transfer hours to an invoice so that you can bill your customers right away.
Track Client Expenses
Stay on top of expenses paid on behalf of your clients in QuickBooks for lawyers. You can keep track of expenses in the following ways:
- Scan receipts using your mobile device so that they sync with QuickBooks
- Enter bills into QuickBooks and tag them with the appropriate client for reimbursement later on
- Write checks directly from client trust accounts for appropriate expenses
Practice Management
As discussed, QuickBooks does not include all of the practice management tools that you will find in CosmoLex, Zola Suite and PCLaw. However, there is an app called Clio that includes practice management tools for law firms and it integrates seamlessly with QuickBooks Online.
Detailed Reports
Similar to its competitors, QuickBooks Online is no slouch when it comes to reports. You can run Profit and Loss and Cash Flow reports to see the overall health of your law firm. In addition, you can run detailed accounts receivable aging reports to stay on top of open customer invoices, and accounts payable aging reports to stay on top of unpaid bills.
What QuickBooks for Lawyers Is Missing
Unlike the three software products we have listed that are law firm accounting software, QuickBooks Online is not customized for a law firm. However, if you invest a little time upfront, it can be customized to fit the needs of most solo and small law firms.
QuickBooks Online User Reviews
QuickBooks Online users like how easy the software is to use and the ability to access their data from any mobile device using the QBO app. A few users said that QuickBooks Online is not as powerful as QuickBooks desktop, but that it does all of the accounting basics that they need to run their businesses. You can see all of our customers reviews on the QuickBooks Online user reviews page.
CosmoLex: Best Law Firm Accounting Software with Built-In Compliance Features
CosmoLex specializes in meeting the needs of solo and small law firms that want a software that includes features to help you stay compliant with legal accounting regulations (e.g., automatic alerts when a client’s retainer balance is getting low). CosmoLex includes general accounting, client billing and collection and practice management tools in one integrated system.
CosmoLex Pricing
Similar to a Zola Suite Solo plan, CosmoLex will cost $59/user per month ($708/year) for one user versus $468/year for PCLaw. However, for the additional cost over PCLaw, you get unlimited training and support instead of having to pay an annual maintenance fee like you do with PCLaw, and it includes credit card processing through LawPay.
CosmoLex Features
Out of all six products, CosmoLex leads the pack with the amount of features included for the cost. In addition to the features outlined in detail below, it also includes the following features:
- Ability to send automatic reminders to clients when their retainers balances get low
- Ability to connect all bank/credit card accounts and automatically reconcile them on a daily basis to ensure compliance with legal accounting regulations
Set Up/Ease of Use
CosmoLex has a very user-friendly interface and it is easy for both the novice user as well as anyone with an accounting/bookkeeping background to use. To sign up, you need to provide a few contact details about your firm and your account will be set up in no time.
Trust (IOLTA) Accounting
CosmoLex has built-in features that allow you to keep track of client trust accounts and operating accounts separately, as well as built-in safeguards to prevent commingling of client funds with the firm’s and it will alert you if the action you take will cause an overdraft on a trust account.
Track Billable Time
Similar to its competitors, CosmoLex makes it easy to keep track of time spent on a client matter. You can easily have one timer or multiple timers going for every case file that you are working on. Like its competitors, CosmoLex also saves you time by allowing you to email invoices out to clients in bulk as opposed to one by one.
Track Client Expenses
Like its competitors, you can write checks and keep track of scanned receipts in CosmoLex to ensure that you have the support you need to bill clients for expenses you have paid on their behalf. This helps you to get paid faster because you don’t have to keep up with paper receipts, and it also ensures you get paid for every dime that you have spent on copies, parking fees, court filings and other common expenses.
Practice Management Tools
Similar to its competitors, CosmoLex includes a number of practice management features like a smart calendar and task tracking tool, unlimited secure document storage in the cloud that ensures all emails and scanned documents are automatically filed under the appropriate client matter, and a secure client portal where you can exchange messages and share documents with clients.
Detailed Reporting
CosmoLex includes detailed reports like Profit and Loss and the Balance Sheet that will provide you with the overall health of the firm. In addition, you can run fee collection and compensation reports to help you calculate partner distributions as well as billable hours by attorney and client.
What CosmoLex Is Missing
Similar to the other legal accounting software products, PCLaw and Zola Suite, CosmoLex does not have payroll functionality. This means you would have to sign up for a payroll service like Gusto to take care of paying your employees.
CosmoLex User Reviews
Online user reviews for CosmoLex are mixed. On the positive end, customers like the cost, user friendliness and the combined practice management tools and accounting features in one. However, customers feel that the system is a bit rigid when it comes to updating the chart of accounts and they feel it should be easier to bring over historical information from an existing system the firm is using.
Zola Suite: Best Law Firm Accounting Software as Another Law Firm Accounting Software Option
Zola Suite is a great legal accounting software for law firms, but it’s the priciest option on our list. It doesn’t offer any features that you can’t find in the other two legal accounting software products on our list. In addition, it will cost you $240 more per year for one user than PCLaw! Therefore, we do not recommend this product over any of the other competitors on our list.
Zola Suite Pricing and Features
Zola Suite has three pricing plans that start at $59/user per month for a solo practice and $68/attorney per month for a firm with no more than four users. On average, you will spend $708 for a practice that has only one user or $816 per user per year for a law practice with up to four users. Similar to its competitors, Zola Suite does include both accounting and practice management software in all three plans.
Zola Suite Legal Accounting Software Plan Comparison & Summary
| Monthly Pricing* | $58/user per month (non-attorneys) | ||
| Trust (IOLTA) Accounting | |||
| Track Billable Time | |||
| Track Firm Expenses | |||
| Track Client Expenses | |||
| Create Custom Invoices | |||
| UTBMS Coding/LEDES invoices | |||
| Practice Management Features | |||
| Detailed Reports |
Listed below are the pricing plans for Zola Suite and who it is right for:
- Zola Suite Solo Plan:
Zola Suite Solo Plan does not offer any additional features than what is offered by PCLaw, which is why we do not recommend this plan. Instead, you should sign up for PCLaw, which only costs $39/month ($468/year) and save the additional $240/year.
- Zola Suite Team Plan:
Similar to the Zola Solo plan, Zola Team plan does not offer any additional features than PCLaw does, so unfortunately, I would not recommend this plan. You can save $348/year for each attorney ($816 for Zola Team versus $468/year for PCLaw) and $120/year for non-attorneys ($696/year for Zola Team versus $468/year for PCLaw) by signing up with PCLaw instead.
- Zola Suite Enterprise Plan:
While the pricing is not made public for the Zola Suite Enterprise plan, we know that it will be more than the Enterprise plan since it allows for more users. With that said, we do not recommend this plan over our top pick, PCLaw; it is simply far too expensive and does not offer any more than what is offered by PCLaw.
What Zola Suite Is Missing
Zola Suite has missed the boat when it comes to the amount of features offered for the price. Similar to PCLaw and a couple of other competitors, it does offer both accounting and practice management features under one roof, but the price is just too steep to compete with the others on our list.
Zola Suite User Reviews
Overall, users like how user friendly Zola Suite is and the ease of accessing client data along with the ability to do accounting without having to rely on a separate system. On the negative side, a few customers mentioned that they would like more form templates.
Bottom Line
Now that we have provided you with several law firm accounting options that can manage trust accounting, general accounting and client billing, it’s time for you to choose the product that is best for your law firm.
QuickBooks Online is best suited for law firms that chose to customize their accounting or bookkeeping. Sign up today to get 50% off your subscription.
Rakesh (Rick) Kabra
November 12, 2018 at 2:26 pmFull disclosure: I am the CEO of CosmoLex, one of the product covered in this article.
Awesome article. Crystalynn did a great job in researching various options as well as providing detailed easy to understand comparison on key attributes. We need more such well researched materials to educate legal community about their compliance requirements.
This article falls bit short on two fronts. 1st, a software being recommended must also be current with time. In this time and age, recommending a Desktop software is akin to saying that fax machines are better over text / email messages (and in some cases it may be so). Benefits of modern cloud systems for small law firms could have been better covered. Additionally, law firms have far more cumbersome accounting requirements than just IOLTA accounting compliance. I am co-author of a reference book on legal accounting requirements. If anyone is interested, free digital copy can be obtained at: https://www.cosmolex.com/legalaccountingguide/
In any event, I appreciate author’s time in reviewing this intricate topic for solo and small law firms and including CosmoLex in the mix.
Crystalynn Shelton
November 13, 2018 at 8:00 pmHi Rick, thanks a lot for the feedback on our Best Law Firm Accounting software article. There are several criteria that we use to evaluate software products. The #1 criteria that the software must meet is affordability. If the software costs too much, it doesn’t really matter if it’s desktop or cloud-based if the business can’t afford it. In addition to IOLTA accounting compliance, we also looked at the following criteria:
1. Ability to track billable time
2. Ability to track client expenses
3. Ability to track partner distributions
4. Able to store receipts electronically
5. Cost
6. Ease of use
In speaking with several accounting firms that have law firm clients, these were the key pain points that came out of those conversations. However, I’m sure this list varies depending on the firm. Thanks for sharing your insights and your book with our readers, I’ll be sure to check it out!
Best-
Crystalynn Shelton, CPA
@CrystalynnPens