Bookkeeping & Billing for Law Firms

Bookkeeping for law firms and solo practitioners: how LedgerBPO runs it

LedgerBPO provides bookkeeping for law firms that keeps the operating ledger and the client trust ledger strictly apart: a named dedicated accountant posts fees, costs advanced and trust movements in Clio, LeanLaw and QuickBooks Online, prepares the monthly three-way reconciliation for the supervising attorney and closes the operating books on time. We never hold or move client funds.
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What we handle

LedgerBPO provides bookkeeping for law firms that keeps the operating ledger and the client trust ledger strictly apart: a named dedicated accountant posts fees, costs advanced and trust movements in Clio, LeanLaw and QuickBooks Online, prepares the monthly three-way reconciliation for the supervising attorney and closes the operating books on time. We never hold or move client funds.
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Billing and books together

Operating books and client trust ledgers kept separate and reconciled monthly
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Reconciled every month

Three-way reconciliation prepared for the responsible attorney's review and signature
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What you see

Fees, costs advanced and retainer draws billed from Clio or LeanLaw into your ledger
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A named accountant, a backup and a team lead

Inside your own software, on a fixed close calendar, with a reply from a person within 1 business day. Call +1-657-777-0006 or start a quote.
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Bookkeeping for law firms and solo practitioners: how LedgerBPO runs it36 seconds · captions on · no audio

Updated September 2026 · Reviewed by Nimra Khalid

Law firms accounting challenges

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Trust accounting errors carry professional consequences
Most US state bars follow ABA Model Rule 1.15 and require client funds to be held in a separate IOLTA or trust account with individual client ledgers. A single overdraft or a negative client balance can trigger a bar inquiry, which is why the three-way reconciliation has to be done every month and kept for the retention period your state sets, often five years.
02
Costs advanced are lost or billed late
Filing fees, court reporters, expert witnesses and process servers are paid from operating cash and must be recovered from the client. When advanced costs are posted to general expense rather than to a client-matter receivable, they are never rebilled and the firm quietly funds its clients' litigation.
03
Retainer draws and earned fees are confused
A retainer sitting in trust is the client's money until it is earned and transferred. Firms that record the deposit as income overstate revenue, and firms that forget to transfer earned fees leave their own money in trust, which also breaches the rules in most jurisdictions.
04
UK firms face the SRA Accounts Rules clock
The SRA Accounts Rules 2019 require client account reconciliations at least every five weeks and an accountant's report within six months of the accounting period end unless the firm is exempt. Missed reconciliation dates are one of the most common findings in SRA reviews, and they come from bookkeeping that runs behind.
05
Realization and collection lag
Time is recorded, then written down at billing, then discounted again at collection, and the ledger only shows the last step. The mechanism is simple: every day between the work and the bill lowers what the client accepts, so a firm that bills 45 days after the work collects less than a firm that bills within 10.

What we handle for law firms and solo practitioners

Operating and trust ledgers kept apart

We maintain the operating ledger in QuickBooks Online or Xero and mirror the trust ledger from Clio, LeanLaw or CosmoLex, so no client fund ever touches an operating account in the books.

Three-way reconciliation support

Each month we prepare the three-way reconciliation comparing the trust bank statement, the trust ledger and the sum of individual client ledgers, and hand it to the supervising attorney for review and signature.

Billing from your practice management system

Invoices for fees, costs advanced and retainer replenishments are generated from Clio, LeanLaw or PracticePanther and synced to the ledger, with the billing attorney's approval recorded.

Costs advanced tracked by matter

Filing fees, expert invoices and court reporter bills are posted to a client-cost receivable by matter and rebilled on the next invoice, so nothing the firm advances is forgotten.

Partner and matter reporting

Monthly reports show billed, collected and written-off amounts by attorney and practice area, alongside realization and collection rates.

Collections under the firm's name

Our DunningDesk cadence sends reminders and makes courteous first-party calls in the firm's name, with the responsible attorney able to hold any matter at any time.

Law firms software we work in

QuickBooks Online
Xero
Bill.com
Clio
LeanLaw
CosmoLex
PracticePanther
LawPay
All 50 platforms

Law firms compliance notes

IOLTA and trust accounting (US and Canada)

Client funds sit in a separate trust or IOLTA account with an individual ledger per client, and the firm may never hold its own money there beyond what the rules allow for bank charges. We support the supervising attorney by keeping the client ledgers current, preparing the monthly three-way reconciliation and flagging any negative client balance the same day. We never have signing authority on trust accounts and never move client funds; the attorney approves and executes every transfer.

SRA Accounts Rules (UK)

Firms regulated by the Solicitors Regulation Authority must keep client money separate, reconcile client account at least every five weeks, return client money promptly when there is no longer a reason to hold it, and obtain an accountant's report within six months of the period end unless exempt. We prepare the reconciliations and the working papers for the COFA and the reporting accountant; the firm remains responsible for the client account.

Retainers, earned fees and transfers

An advance fee deposit is a trust liability until the work is done and invoiced. We prepare the transfer schedule showing which earned fees may move from trust to operating after the invoice is issued and any required notice period, and the attorney authorizes the transfer. Revenue is recognized when earned, not when the retainer is received.

Costs advanced and disbursements

Amounts the firm pays on a client's behalf are recorded as a receivable from that client and matter, not as firm expense. In the UK, disbursements need correct VAT treatment depending on whether the firm acted as agent. We track each cost to its matter and confirm the VAT position with the firm's accountant.

KPIs we report

KPI	Why it matters
Three-way trust reconciliation prepared within 5 business days of the bank statement	Most bars expect monthly reconciliation and the SRA sets a five-week limit; timing is the compliance test.
Zero negative client trust balances at any month-end	A negative client ledger means one client's money has paid for another's matter.
Costs advanced older than 60 days at zero	Unbilled disbursements are firm cash lent to clients without interest.
Invoices issued within 10 days of the billing cutoff	Realization falls the longer the gap between work and bill.
Collection rate above 90% of billed fees within 90 days	The collection rate, not the billing rate, is what pays partners.

Services for law firms and solo practitioners

Frequently asked questions

Do you handle our IOLTA or trust account?

We support trust accounting; we never control it. The supervising attorney keeps signing authority, approves every deposit and transfer, and signs the monthly three-way reconciliation we prepare. Our work is keeping the client ledgers current in Clio, LeanLaw or CosmoLex, preparing the reconciliation and flagging any negative balance or stale item the same day we see it.

Which legal practice management systems do you work with?

Clio, LeanLaw, CosmoLex, PracticePanther, Smokeball and MyCase are the systems we see most, usually paired with QuickBooks Online or Xero for the operating ledger. We work inside your existing setup rather than asking you to change tools. If the firm bills from a spreadsheet, the accounting software setup page for law firms explains how we move you to a practice management system.

How do you make sure earned fees are transferred from trust correctly?

We prepare a transfer schedule after each billing run showing the invoice, the client's trust balance and the amount eligible to move to operating. The attorney reviews and executes the transfer, and we post the matching entries in both ledgers. The schedule and the attorney's approval are kept as part of the trust records.

Can you work with UK solicitors under the SRA Accounts Rules?

Yes, we prepare the five-weekly client account reconciliations, keep the client ledgers in your practice system and assemble working papers for the COFA and the reporting accountant. UK spelling and VAT treatment of disbursements are handled by the team covering UK hours. The firm remains the regulated entity; we do the bookkeeping behind its compliance.

How do you bill and collect for a law firm without upsetting clients?

Invoices are generated from your practice management system with the billing attorney's approval and sent under the firm's name. Reminders follow a cadence the firm sets, and any first-party call is made courteously by a billing agent in the firm's name, never as a collector. Any matter can be placed on hold by the responsible attorney at any time.

What does a law firm receive from you each month?

The operating close with a P&L and balance sheet, the three-way trust reconciliation ready for signature, an aged receivables report with unbilled costs advanced, and a realization and collection summary by attorney. Everything is reviewed by a team lead under our Two-Tier Review process before it reaches the managing partner. The monthly financial reporting page for law firms lists the report formats.

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Bookkeeping and billing for law firms