Managing the finances of a law firm requires more than basic accounting knowledge. From trust account compliance to financial strategy and forecasting, your firm’s financial needs will grow and shift as you scale. That’s why many law firm owners eventually ask themselves: Do I need a bookkeeper, a CFO, or both?
The answer depends on your firm’s size, structure, and long-term goals. While legal bookkeepers and CFOs both play important roles in law firm finance, their responsibilities, expertise, and impact on the business are very different. Knowing which role to hire—and when—can help your firm operate more efficiently and plan more strategically for growth.
What Does a Legal Bookkeeper Do?
A legal bookkeeper is responsible for the day-to-day financial tracking and compliance of your law firm. Their focus is on accuracy, organization, and ensuring all transactions are properly recorded.
Common responsibilities include:
- Categorizing income and expenses
- Reconciling operating and trust accounts
- Recording client payments and retainers
- Tracking billable vs. non-billable expenses
- Managing payroll entries and accounts payable
- Producing monthly financial reports
- Ensuring compliance with IOLTA and trust accounting rules
Legal bookkeepers are especially valuable because they understand the compliance-heavy nature of law firm accounting. They know the difference between earned and unearned income, how to manage client funds ethically, and how to create clear reports that help you monitor profitability.
When Your Firm Needs a Legal Bookkeeper
Most law firms—especially solo and small practices—need a bookkeeper before they ever need a CFO. A legal bookkeeper becomes essential when:
- You’re spending too much time trying to manage your firm’s books
- Your trust account is growing and needs consistent reconciliation
- You want clean, organized financial data for tax filing and reporting
- You’ve outgrown DIY bookkeeping tools and need professional support
- You want to identify patterns in cash flow or profitability
- You’re preparing for your first audit or want to stay compliant year-round
Bookkeepers don’t just “do the books”—they help ensure the financial foundation of your firm is stable, organized, and audit-ready.
What Does a Law Firm CFO Do?
A Chief Financial Officer (CFO) provides high-level financial strategy, planning, and analysis. While bookkeepers focus on what’s already happened, CFOs look forward—analyzing trends, modeling scenarios, and advising leadership on financial decisions.
Typical CFO responsibilities include:
- Creating and monitoring firm budgets
- Forecasting cash flow, revenue, and profitability
- Setting financial KPIs and performance goals
- Analyzing the financial impact of hiring or expansion
- Advising on pricing models and billing strategies
- Presenting financial reports to firm owners or partners
- Supporting investment and financing decisions
Some law firms hire full-time CFOs, while others bring in a fractional or outsourced CFO to provide guidance without the cost of a full-time executive.
When Your Firm Needs a CFO
A law firm typically brings in a CFO once it’s grown beyond day-to-day financial tracking and needs more strategic oversight. You may benefit from a CFO when:
- You’re planning to scale your firm and want detailed financial forecasting
- You have multiple partners and need help managing compensation or distributions
- You want to model the financial impact of hiring, new practice areas, or office expansion
- You’re considering taking on outside financing or applying for a business loan
- You need help improving margins, collection rates, or long-term profitability
- You’re struggling to understand why your revenue isn’t translating to higher profit
CFOs are most helpful when you’re navigating major financial decisions and need someone to help guide strategy, analyze risk, and optimize performance across departments.
Bookkeeper vs. CFO: What’s the Difference?
While both roles support your firm’s financial health, their functions are distinct.
A legal bookkeeper focuses on:
- Day-to-day financial tracking
- Recordkeeping and compliance
- Generating financial reports
- Reconciling accounts
- Managing billing and expenses
A law firm CFO focuses on:
- Financial strategy and forecasting
- Decision-making support
- Analyzing profitability
- Managing budgets and cash flow
- Long-term planning
Put simply, a bookkeeper keeps your financial records clean and compliant, while a CFO uses that data to help you make smarter business decisions.
Do You Need Both?
For mid-sized firms or fast-growing practices, hiring both a legal bookkeeper and a part-time CFO can be a powerful combination. That’s why we offer both services here at Legal Ease! The bookkeeper keeps the day-to-day finances in order, while the CFO builds a forward-looking strategy to increase profit, manage risk, and drive sustainable growth.
Many firms start with a legal bookkeeper and then bring in a fractional CFO as their needs become more complex. Others may work with a bookkeeper who partners with an outside CFO when strategic planning is needed.
How to Decide What’s Right for Your Firm
Ask yourself the following questions to assess your needs:
- Do I have clean, up-to-date books right now?
- Do I understand how much profit I’m actually making?
- Am I spending too much time trying to manage financial tasks I don’t fully understand?
- Am I making big decisions—like hiring or expanding—without data to back them up?
- Do I have financial reports that help me identify which practice areas are most profitable?
- Do I know how much cash flow I need to cover expenses in a slow month?
If you’re lacking in organization and day-to-day tracking, start with a legal bookkeeper. If your financials are in order but you’re feeling uncertain about the future or struggling to grow, it may be time to bring in a CFO.
Think you’re ready to hire a legal bookkeeper or CFO?
Every law firm needs reliable financial systems—but not every firm needs the same kind of support. A legal bookkeeper helps you stay organized, compliant, and audit-ready. A CFO helps you scale, plan for growth, and make data-driven business decisions.
As your firm grows, you may find that the right approach is a combination of both. By starting with strong bookkeeping and layering in strategic financial leadership when the time is right, your firm will be positioned for both stability and long-term success.
If you’re unsure which financial role your law firm needs, reach out for a consultation. With the right support in place, you can stop guessing and start growing with confidence.