Paul W. Carlson, CPA (00:00):
Hey, this is Paul Carlson, CPA with Law Firm Velocity. Here, we're looking at how to run immigration law firm cases through Soluno. Immigration law firms have two key accounting puzzles they need to solve. So, one is the heavy trust account activity, and then two is most of the firms run on a flat fee basis, and they want to have some idea of how much uncompleted flat fee work they have. So, let's start with the trust account piece. So, this is the client ledger within Soluno, and this screen allows us to see the financial history of a matter. I have this turned on to have all of the possible options in one screen, that if, just because I'm used to looking at this, sometimes you can turn this so you can just see trust or you can just see operating. This is busy because it's everything.
(00:55):
So, this portion of the screen is just trust account activity. So, let's click into a few of these transactions. So first, we have the trust account deposit. And so, here we have, we received $4,000 from the client, all deposited to trust. I took the time and I split out the four pieces within the trust account deposit so we can see the detail later. If we built this out for an immigration firm, we would use activity codes that you would type in a code and then now would auto-populate the explanation that would provide for various consistent explanations over time.
(01:35):
So here, we have the money, went into trust. Click back to my ledger. And here we have trust disbursements. So here, we have filing fees going out to USCIS, and so it's just the filing fee going out. So, the nice thing with Soluno is we can record the trust account transactions, we do our weekly and monthly bank account reconciliations, and behind the scenes, Soluno is doing all the work to run the trust account reconciliations. So, a firm can have 100 trust account transactions a month, and we just post them into the client, and then we do the bank rec and the IOLTA reconciliations are complete. Yeah, we'll talk to firms that are trying to use either spreadsheets, it's just a big mess. Or if you're using a tool like Cleo and QuickBooks or some other case management tool that doesn't have built-in accounting, that all this trust account activity has to be duplicated in the case management system and over in QuickBooks.
(02:45):
And then, if there's any exceptions, you have to go back and research those exceptions. And it's just a ton of work and it's fragile because it's not accounting and case management in the same tool. So, at volume, Soluno is great. With this piece, I think we have a client with over 1,000 active cases, and it just keeps chugging along. It's tremendous to see. And the other piece that this is more advanced concept that we use for some of our CFO services, is a lot of immigration firms work in states where they can put the prepaid flat fee, they can pull that from trust and put that into operating before the case really begins. That they don't have to wait for the case to be concluded, they can pull that flat fee right over into the operating account.
(03:38):
Well, what happens is the firms will, they've pulled the money over to operating, but that work's not going to be completed for several months. And so, the firm is actually running a negative backlog or negative WIP, that they have money in the firm operating account that they owe to clients because the work has not been completed. And a lot of times, firms don't know what that dollar amount is. And so, it's just like, it's something we should know as part of just managing the firm well. So the trick we're using within Soluno is we are putting the money, we're transferring the money from the trust to the operating account, but we're not making an invoice. And so, those funds sit in what Soluno calls the operating retainer balance.
(04:30):
So, this is money that is in the operating account that has not been billed out to the client. There's some states back East that allow, like hourly firms, that they can put prepayments for hours directly into the operating account and then earn out those fees with invoices. And so, we're using that same process to get accounting reports out of Soluno, even though, yeah, we're just tricking the process to get those accounting reports. So, from here, we can do, so this one case, we can see we have a $2,200 open retaining balance.
(05:10):
Now, we can run a... So, let's go run a report to see all the open retainer balances for our clients. We go views and reports, ledger client summary. And so, from this report, we can see that we have $6,200 in operating retainer balances. So, what this is showing us is that we've pulled money into operating for these two matters, and we haven't invoiced the matter to say that the work is complete. So, over time, you being an immigration firm and you could have 100 matters that are partially completed, and all those matters would be listed on this report.
(05:54):
And then, when the cases are closed, you could let us know that they're closed and we'll create the invoice and bill them out. You could create the invoices internally, but this is giving us a running balance of how much money the firm has in operating that we have not billed out to the client as complete. In a way, this also kind of provides a nice listing of all of the open cases within Soluno. So, let's say that this case is completed, and let's go make an invoice and wrap this case up.
(06:25):
Okay. And here's what the client ledger looks like after we have billed out the firm's fees, that we added a charge for expenses, the $200 in soft costs, and we added a charge for $2,000 in legal fees. And here, we have the invoice for the $2,200 in firm fees. And at the bottom summary, we have $0 in unbilled. It shows that we bill $200 in legal fees, we billed $200 in soft costs, and then we receive $2,200 into the operating account. And so, with that, just an overview of showing how Soluno can accurately handle stronger volumes of IOLTA trust account activity within an immigration firm, and then how we can use this operating retainer process to keep track of the amount of unearned fees that the firm has.
(07:18):
Thanks. Bye-bye.
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