Six things to consider before outsourcing your legal fund

When you run a law firm, it can be tempting to want to oversee every part of the day-to-day administration that comes through your doors, especially when it comes to your legal accounts.

Knowing exactly how much money is going in and out of your office and accounts receivable is essential for stability, growth and, of course, business compliance – that’s why so many law firms rely on the contribution of cashiers dedicated to their team.

But is doing your collection in-house the smartest way to do it?

At Quill, we often talk about how managing your law firm’s cash “smartly” is essential if you want to succeed in an increasingly competitive legal marketplace. There are many ways to achieve this, including investing in new technology or going completely paperless.

But there’s one tactic in particular that more and more law firms are using: outsourcing.

Why outsource your legal fund?

There are a wide variety of reasons a law firm may wish to outsource its cashier functions. But, for us, there is one factor that stands out: compliance.

In the legal sector, accounts are governed by heavy rules. This means that ongoing compliance poses a huge challenge, especially for busy firms dealing with large volumes of transactions, where the risk of making mistakes increases.

By handing over your cashier duties to an outsourcing expert, it becomes their responsibility to help you ensure that your accounts comply with strict regulatory rules. You have peace of mind that your accounts are up to date without compromising on compliance.

But it is not the only reason. Some of the other major benefits sought by law firms include:

  • improved business continuity, without disruption of services, even during peak holiday or sick leave periods
  • cost savings without the extra salary, training, office space and other overhead associated with employing an in-house cashier
  • a strong personal relationship with external cashiers who act as an extension of your team, even if they are located miles away
  • tailored support that you can tailor to your workload volumes and individual processes and procedures

Things to consider before outsourcing

As with any transition between different ways of working, there are many factors you need to consider carefully and seriously before making any major commitments.

When it comes to outsourcing, there are six important considerations that will help ensure a successful transition.

1. Come with a new mindset

“Outsourcing” can conjure up images of a nameless, faceless person doing a mediocre job from afar with little knowledge of your business.

But experienced outsourced legal tellers couldn’t be further from this stereotype.

The key to a successful relationship is changing your mindset about how you view an outsourced partner. The best approach is to think of an outsourced cashier as a part-time employee, who works remotely.

By treating them as an extension of your staff, you entrust the Legal Cashier to act in your best interests and with the right level of autonomy to bring efficiencies to your business.

More than that, if the pandemic has taught us anything, it’s that we need to think about how a business would manage without a skilled employee. With an outsourced cashier, you have business continuity in place to pick up exactly where your accounts left off without any interruptions, including any back-ups.

2. Clear Communication

Communication in all its forms is a fundamental concern for you and your outsourcing partner. You will likely be assigned a named cashier whom you can contact as you see fit and as often as needed.

These lines of communication open up from the moment you start engaging with potential partners, continuing through the onboarding phase until you eventually team up with the cashier of your choice. Good communication ensures that your outsourcing company delivers exactly what you want.

3. Cost and Scalability

Every business has its eye on the bottom line and cost is an essential part of any business decision. This means understanding where you are spending your money and where you can save money.

Outsourcing providers tend to charge fees based on your transaction volumes, so they go up (or down) based on how active (or quiet) you are. This is extremely useful in terms of budgeting and financial planning.

4. Regulatory Compliance

Compliance with the Solicitors Regulation Authority (SRA) is at the heart of your accounting. Or, at least, it should be. Not only is this important for complying with regulations, but it also allows your compliance officers to perform their role satisfactorily.

One of the tasks of your outsourced cashier is to generate weekly compliance reports which go a long way in keeping your finances, compliance officers for legal practice and compliance officers for finance and administration on the safe side industry regulators.

If there’s anything to sway your decision in favor of outsourcing, it’s probably compliance assurance.

5. Established processes

It is crucial to establish processes for the proper maintenance of your accounts and an effortless flow of information between your law firm and your outsourcing partner. These are simple but vital efficiencies that simplify who does what and when.

Some flexibility and trust may be required here; for example, conveyancing specialists could give their outsourced cashier access to their UK Land Registry portal to post transactions directly from Land Registry records as an additional time-saving measure.

Read-only access to bank statements or your online payment portal are examples of streamlining, as they make bank reconciliation much easier.

6. Adapt to change

Let’s be honest, we all get stuck in our habits. But that doesn’t mean the usual method is the right one. It’s easy to get used to having a cashier in an adjacent office, who you can just throw bits of paper at throughout the day.

With outsourcing, everything changes and it can sometimes be difficult to adapt to this more structured way of working. However, the time spent familiarizing yourself with a new, more streamlined process is well worth it in the long run.

Your outsourcing partner will collaborate to design the best methodologies that eliminate inefficiencies. It’s a big change, but if you get buy-in from all parties involved, the move to an outsourced help desk will be that much easier.

When is the best time to choose outsourcing?

While the majority of law firms tend to choose outsourcing when setting up their new business, in reality outsourcing can be turned on at any time. Besides start-ups looking to reduce their administrative workload, typical triggers include cashiers retiring or resigning (requiring ongoing support), or staff shortages due to vacations or unplanned absences ( requiring temporary support).

As with most disruptive business decisions, there’s no perfect time to start outsourcing your collection. But there is always a good time.

And trust us. When the right time comes, you will know it.

The Law Society has partnered with Quill to provide cash legal services to our members.

This article is adapted from Quill’s “Guide to legal cashiering: how outsourcing works” webinar in collaboration with guest speaker Chas Arya of Ratio Law. Learn more