How it runs for law firms and solo practitioners
The trust bank reconciliation feeds directly into the three-way reconciliation the attorney signs.
What is a bank reconciliation service?
A bank reconciliation service compares the transactions in your accounting software with the transactions on your bank and credit-card statements and explains every difference. The goal is a ledger balance that agrees with the statement after timing items such as outstanding checks and deposits in transit. Done monthly, it catches missing entries, duplicates, bank errors and fraud early.
What we handle for law firms and solo practitioners
- Reconcile operating, trust, payroll and card accounts every month
- Match LawPay and Clio Payments deposits to invoices and to trust receipts separately
- Trace each trust bank transaction to a named client ledger entry
- Age uncleared trust checks and flag items older than 90 days
- Feed the trust bank reconciliation into the three-way reconciliation package
The KPI that matters here
Every account reconciled within 5 business days of the statement with no uncleared trust items older than 90 days without an explanation.
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.
Law firms software we work in
- QuickBooks Online
- Xero
- Bill.com
- Clio
- LeanLaw
- CosmoLex
- PracticePanther
- LawPay
- All 50 platforms
More for law firms and solo practitioners
Other services for law firms
Bank reconciliation in other industries
Frequently asked questions
How do you reconcile card payments that go into trust?
LawPay and Clio Payments route card receipts to trust or operating depending on the invoice, and merchant fees must never come out of trust. We match each deposit to its invoice or trust receipt, confirm fees were charged to operating, and record the client ledger entry for any trust deposit. The reconciliation shows trust deposits gross, exactly as the rules expect.
What do you do about old uncleared checks on the trust account?
We list every uncleared trust check by client, date and amount, and flag anything past 90 days for the attorney. Old items may need a stop payment and reissue or, after the required period, treatment under your state's unclaimed property rules. The decision is the attorney's; our role is to make sure nothing stays hidden in the reconciliation.
How often should a law firm reconcile its accounts?
Monthly at minimum for every account, and most state bars expect trust reconciliations monthly. UK firms under the SRA must reconcile client account at least every five weeks. We reconcile operating and card accounts weekly in practice so the month-end trust package is not held up by operating questions.
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