The trust account can be one of the places that’s a significant sticking point for bookkeepers and accountants. I can’t even count on one hand how many times an attorney will tell me, “I kept the spreadsheet, so my trust accounts are correct,” and I discover upon investigation and deep diving into their accounting and banking, they are not.

I’m here to tell you to stop the spreadsheet!

Manual transactions never lend themselves to accuracy, just errors. If your accounting platform is 100% separated from your IOLTA or trust account software, it also lends itself to be inaccurate. Why? Here are my top two reasons:

It’s disjointed. Keeping it separate might sound like a clean way to do the work, but it mostly results in no validation between the platforms.

You can’t validate to the source or bank account. I often find the attorney will enter transactions into the outside software, for example,, Clio, and then think that it’s correct. It may be accurate as far as the trust ledgers go. However, what if the attorney or staff member did not make the physical transfer to operating – or even worse, the payment not made to the client? You will wind up with messy and inaccurate trust accounting. The only way to validate this is to reconcile to the source, the bank accounts. These things happen. Attorneys get busy. We, as accountants, like to see that validation at the bank level. It shows the real story behind the trust ledgers.

Clio for Practice Management: 

Clio gets a bad rap for not connecting well with QuickBooks. It’s not as seamless as LeanLaw, but if a client wants to be in a practice management software and is already in Clio, we don’t move them. Clio is my number 2 choice in software.

Clio Cons

Moving the trust accounts out of the header and into individualized ledgers is an extra step necessary to keep the trust accounts accurate. This process provides that birds-eye view of the individual trust ledgers. These are the steps needed to make sure that you don’t see any IOLTA account go negative. I have witnessed Clio bring duplicate transactions into QuickBooks, and it has a few other minor hiccups. Overall, if your client needs a practice management software type of product, it is our number one choice.  

Why I Prefer LeanLaw

LeanLaw does not allow you to make a negative Trust balance. The issues I see when using this software are mostly created by the person entering the transactions. For example, a user will enter an invoice in LeanLaw and not in QuickBooks. You have to remember that anything trust-related must stay inside the software your tracking all of the customer transactions. LeanLaw does have a seamless integration, and I don’t see as many problems with it, and that birds-eye view mentioned above happens automatically. The program can be a bit slow when the file is huge. I know they’re working on that.

Finding a beginning 

On a side note, and this question came up with one of our accounting members in the last group meeting of The Accountant’s Law Lab:if you have an IOLTA account that you know is messy and cannot find the starting point, where do you start?

Find that Start Point

Unfortunately, we have found you may have to go to the last time it is balanced and, if that cannot be determined, you have to take that way back machine to the Trust bank account’s very start.

From Zero to Hero 

There have been many times that I’ll throw my hands up with a messy file and say I’m starting a new one—re-entering all the back transactions, something we call back building. Our team will even replicate the entire IOLTA history for the clients. When attorney-client knows their trust account is messy, they’re usually pretty open to this because they know the ramifications of inaccurate trust tracking.

Is there a quick way to do this? Should I use a spreadsheet 

No more spreadsheets! Do this in the accounting platform. If you have to go back to the beginning and the beginning is 2015, you have to start there. Just rebuild the entries in that bank account, especially if it never lived inside of QuickBooks. If the work scope was for us just to do the accounting clean-up for 2020, we will tie the books to the return for 2019 and go forward from there. If the trust bank account is in the books, you may need to start a completely new Quickbooks file, back build the trust accounting, and use the bank feeds and the law specific software. Connect QuickBooks and the legal software and move on with clean records.

As you can see, this is a long process and labour-intensive, but worth it. I like to call it the “getting my attorney-client to sleep at night” method. It can also be costly, so make sure your client knows that upfront.

I hope this helps you determine what steps you’ll take with your attorney-client and messy trust account.

If you’re an attorney and have the exact scenario I described above, reach out, we do this work. We are not only educating accounting professionals on how to do this kind of clean up, but we also provide a service to Law firms and have staff on hand to help you through any trust account challenges.

If you’re an accountant or bookkeeper who needs help and maybe just landed your first attorney-client, join our group, The Accountants Law Lab. We meet weekly and discuss all things attorney accounting related. It’s a fun group.

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