How it runs for law firms and solo practitioners
Refunds and chargebacks are traced to the original transaction so the client ledger stays accurate.
What is payment processor reconciliation?
Payment processor reconciliation is the work of proving that the money a processor or marketplace deposits equals your gross sales less its fees, refunds, chargebacks, reserves and adjustments for the same settlement period. Each payout is broken into its parts and posted so revenue, fees and sales tax are correct and the bank deposit matches to the cent.
What we handle for law firms and solo practitioners
- Split each payout into operating fee payments and trust deposits
- Record trust card deposits gross with fees charged to the operating account
- Apply fee payments to invoices and post processing fees to firm expense
- Trace refunds and chargebacks to the original invoice or client ledger entry
- Log exceptions and clear the processor clearing account before close
The KPI that matters here
Every processor payout matched to the bank within 2 business days with trust deposits recorded gross and no fee charged to a client ledger.
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
Payment processor reconciliation in other industries
Frequently asked questions
Why must card fees never come out of the trust account?
Because the trust account holds only client money, and a processing fee is the firm's cost, so deducting it from trust would mean the firm was using client funds. Legal payment processors are built to charge fees to the operating account, and our reconciliation confirms that setting every payout. If a fee ever hits trust, it is flagged the same day for the attorney to correct.
Can you reconcile Stripe if we use it for non-legal products?
Yes, some firms sell document packages or subscriptions through Stripe alongside LawPay for legal fees. Each processor gets its own clearing account and payout workflow in ReconBot, with Stripe receipts applied to invoices in the operating ledger. Month-end includes a check that both clearing accounts are at zero.
How do you handle a chargeback on a retainer paid by card?
The chargeback reduces the client's trust ledger balance, and if funds were already applied to earned fees the client may now owe the firm. We post the reversal against the original entry, log the exception and notify the responsible attorney, who decides whether to dispute it through the processor. The three-way reconciliation reflects the reversal in the same month.
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