Midsize Law Firms are Optimizing their Legal Accounting Software to Boost their Bottom Line: Here’s How 

Running a midsize law firm in 2025 means balancing the demand of client expectations with the realities of operating a profitable business. More often than we would like, those two priorities can be at odds with each other. In these situations, front-office and client-facing activities are frequently prioritized by firm leadership, however back-office activities are just as critical to firm health. In fact, most successful midsize firms separate themselves from competitors by levelling-up their financials, accounting, and operational processes to unlock efficiency, reduce risk, and enable smarter decision-making.  

Forward-thinking midsize firms realise that strengthening their back-office positively impacts both firm profitability and client experience. Here are six ways firms are focusing on financial and operational excellence by boosting their bottom line. 

1. Prioritizing compliance and audit readiness 

While it may not be glamorous, compliance is a crucial element to running a law firm. It’s a cornerstone of financial integrity and firm reputation. Many law firms handle law society audits, trust accounting rules, and local tax requirements as a box-checking exercise, without realising how much time it is costing them. Processes are frequently handled manually or use multiple disjointed systems. 

However, successful firms are finding ways to make compliance more streamlined, often through upgrading their choice in software, creating a drastic reduction in compliance risks and cutting the time trust operations take to complete. This frees up personnel of these firms to focus on client service. 

What your firm can do: 

• Automate trust accounting as much as possible to ensure funds are recorded, reconciled, and reported properly. Three-way trust reconciliation is a must-have to save time and increase peace-of-mind. 

• Having your financial data housed in one, central location helps cut down on time spent doing multiple entries, reconciling entries, and opens the door for more accurate financial reporting. Some programs like Actionstep Legal Accounting, can quickly generate audit-ready reports as well. 

• Choosing a software designed for legal accounting, as opposed to a case management program with some accounting features, or even more dangerous–a non-compliant, generic accounting solution, have saved firms countless hours. Many firms spend multiple billable hours a week performing manual checks to avoid compliance violations. With the right technology, these checks would be done automatically, reducing human error, saving time, and protecting against regulatory penalties. 

2. Creating real-time visibility into firm finances 

Profitability starts with knowing where your money is going, but it also requires firms to know how money is coming in. Having clear visibility into financial and productivity data makes it easier for law firms to understand which efforts see the largest return on their investment. Too often, decision-makers at midsize law firms rely on delayed reporting, spreadsheets, or even just anecdotal evidence to make their business decisions. 

Optimized firms are finding ways to leverage their financial data and making it do more, faster. Data is an important asset for your firm; use it to make proactive decisions such as reallocating resources or addressing underperforming practice areas. 

What your firm can do: 

• Track revenue, expenses, and productivity in real-time, and build dashboards to help make that data easy to visualise. 

• Monitor firm-wide KPIs beyond just profitability. Setting goals and performance indicators such as billing realisation and accounts payable turnover are also important pulse-checks for your firm. 

• Combine your firm’s billing data with expense management tools to forecast cash flow. 

3. Structuring back-office teams for maximum impact 

Technology alone isn’t the be-all and end-all of back-office excellence. How your firm organizes its personnel is also a primary lever that can be adjusted to increase efficiency. Positioning your firm’s back-office team as a strategic partner rather than just a support function is not something law firms always do, but when its done well it can eliminate duplication of effort and give all members of leadership access to data-driven insights that will drive the business forward. 

The challenge for midsize law firms is often balancing lean staffing with the need for specialized expertise. However, successful midsize firms treat their back-office as a strategic business unit, not just an administrative obligation.   

What your firm can do: 

• Unify your back-office team, rather than spreading financial responsibilities across different roles. Productive midsize firms find a way to consolidate billing, collections, payroll, and trust accounting under a unified finance team.  

• Create specialized roles for key functions; such as billing coordinator, or collections manager. Firms that have dedicated back-office roles often see fewer errors and greater accountability. Specialized personnel develop deeper expertise and allow them to spot inefficiencies or compliance risks faster than generalists. 

• Standardize workflows across all your offices: for firms with multiple locations, inconsistency in processes is a common bottleneck. Collating and regulating financial policy and process and using the same accounting technology for operations reduces friction and creates better firm-wide efficiency. 

4. Streamlining billing and collections 

Billing delays and inconsistent collections can create major cash flow challenges for midsize law firms. Recognizing that profitability depends not only on generating revenue but also on capturing it efficiently, is critical. Firms that build consistency into their billing processes make it easier to clients to pay while ensuring that at every turn cash flow is supporting growth instead of holding it back. By accelerating the billing cycle, firms shorten the time between work performed and cash received. 

What your firm can do: 

• Automate time capture and billing as much as possible to reduce missed billable hours and speed up invoicing. This may include using calendar and email capturing tools so that none of the firm’s hard work slips through the cracks. 

• Implement e-billing and online payment options: this decreases the time between invoice and collection but also reduces the time between collection and final accounting, as the payment will already sync into your accounting solution. 

• Create systematic follow-up processes such as reminders and collections workflows to keep receivables in check. 

5. Controlling expenses through vigilant reporting 

Unchecked spending or inefficient use of resources can erode margins quickly. Consider approaching expense management strategically, because without ongoing visibility, small oversights can turn into major profit drains. There is opportunity for firms to go beyond simply setting budgets. Frequently performing transparent reporting that highlights where money is being spent and whether it aligns with the firm’s goals, allows firms to make faster, smarter adjustments to protect their margins. 

What your firm can do: 

• Establish recurring reporting cycles beyond just year-end reporting. At a quarterly (or even monthly) cadence, ensure that overhead and matter-related expenses are in keeping with goals. 

• Drill down into practice area or matter-level spend to uncover inefficiencies, hidden opportunities, or costs that can be recovered by the firm. 

• Share expense reports with partners and team leaders so accountability for financial discipline is spread across the firm, not simply siloed in accounting. 

6. Leveraging integrated technology 

Disconnected tools and manual processes waste valuable time and increase the risk of mistakes. Frequently, law firms simply “make-do” with time consuming and manual processes because it is what they have always done. To align with forward-thinking midsize firms you’ll need to reassess processes and make tweaks to workflows and your firm’s tech stacks for maximized productivity.  

What your firm can do: 

• Choose software platforms that not only complements the way your firm wants to work but also integrates with each other. This creates a firm ecosystem that reduces duplicate entry and friction-points as a matter moves from intake to invoice.  

• Ensure your legal accounting tools are specialized for the legal industry; generic accounting drastically increases compliance risks and requires exponentially more time to reconcile at month and year-end than a specialized software does.  

• Select cloud-based software ‘ecosystems’ that are designed to integrate with each other so that your firm creates one source of truth across matter management, billing, accounting, and reporting. 
  • Note: For North American law firms, Actionstep Practice Management and Actionstep Legal Accounting can be leveraged to keep front-and back offices in perfect sync, with one source of truth for your matter, time, and financial data.

At the end of the day, profitability for midsize law firms isn’t driven by client growth alone. How efficiently their back office runs is also a crucial component to a practice’s success. Transforming your firm’s financial operations from a cost centre into a source of competitive advantage optimizes every aspect of a law firm. From billing, to compliance, to personnel, law firms are more likely to thrive when they recognize that back office processes are front-line drivers of their bottom line.