If the bar asked for your trust records tomorrow, you'd have them by lunch.
A three-way reconciliation every month, client ledgers that stay current, and the workpapers filed behind them. Most firms we look at can't produce last month's — and that's the first thing a bar audit asks for.
Three-way reconciled monthly
So a trust error surfaces in weeks, not when the bar asks
Every client balance current
So no client’s money is ever quietly covering another’s
Earned fees moved out on time
So nothing you have earned sits in trust, and nothing unearned leaves it
The audit trail already built
So a bar audit letter is answered with a folder, not a scramble
The five errors we find in law-firm trust books
None of these start as theft. They start as bookkeeping shortcuts — and the bar doesn't grade on intent.
No three-way reconciliation
The trust bank balance, the firm's trust ledger, and the sum of individual client ledgers must match on the same date, monthly. A plain bank rec only proves the total — it can't catch money misposted to the wrong client, or funds still held for a matter that closed six months ago. The full anatomy is in our three-way teardown.
Overdrafts and negative client balances
A trust account dipping negative even by a few dollars for a few hours is a reportable event in most states — the bank notifies the bar, and an inquiry follows. A negative client balance means one client's money is covering another's, which is the thing trust accounting exists to prevent.
Firm bank fees hitting the trust account
Wire fees, check printing, and monthly charges posted to trust create an unintentional shortage and are a form of commingling. Fees belong on the operating account — set up that way with the bank, in writing.
Earned fees left in trust, or unearned fees pulled early
When a retainer is earned, it moves to operating. Leaving earned fees in trust is commingling; drawing fees before they're earned is spending client money. Both are violations, and both happen by drift, not decision.
Plug entries to force a reconciliation
Dropping a balancing figure into the books hides the error instead of finding it. A hidden error is exactly what a bar audit is built to surface, and "the bookkeeper plugged it" is not a defense the bar accepts.
The three-way lock
Bank = trust ledger = sum of client ledgers, same date, every month. A plain bank rec proves the total; only the three-way proves whose money is whose.
Trust accounting run like the bar will read it
The monthly three-way IOLTA reconciliation is the core: bank equals trust ledger equals client sub-ledgers, with the reconciliation report, bank statement, and client ledgers saved as an audit trail. Client-level trust ledgers stay current, so any matter's balance is answerable on the spot. Where your practice-management system — Clio, MyCase, PracticePanther — carries the trust sub-ledger, we reconcile it to QBO instead of assuming they agree.
Earned and unearned fees are tracked separately, with trust-to-operating transfers made as fees are earned, not when someone remembers. Firm funds stay segregated from client funds. Bank fees get routed to operating, and we set that up with the bank in writing so it stays fixed.
Records are retained to your state's period — the ABA baseline is five years after a matter closes, and some states require seven. When a bar audit letter arrives, the answer is a folder, not a scramble.
Where software stops and a person starts
Software can flag a negative client balance, and it should. But a person decides when a fee is earned, whether a disbursement is authorized, and how to correct a misposting properly instead of plugging it.
We run the reconciliation and keep the records; the client sub-ledger stays your fiduciary responsibility as the attorney. We're the bookkeeping layer that makes that responsibility auditable.
Where it lands depends on three things: how many matters hold client funds, how many trust accounts you operate, and when the last true three-way actually happened. Tell us those and you'll have a real figure inside a day. Getting a neglected trust account clean again is quoted separately.
Get your numberWhat attorneys ask us
L-1Do you perform a proper three-way IOLTA reconciliation every month?
Yes — bank, trust ledger, and client sub-ledgers matched on the same date, with workpapers saved. It's the center of the engagement, not a checkbox. If your current bookkeeper can't produce last month's three-way, that's your answer about what they're running.
L-2What happens if my trust account goes out of balance — how fast do you catch it?
At the monthly close, at the latest — and a negative client balance gets flagged the day it appears in the ledger. The point of the cadence is that an error lives for weeks, not quarters, and gets corrected properly with a documented entry.
L-3How do you keep earned and unearned fees separated?
Unearned retainers sit in trust with a client-level balance. As fees are earned and billed, we move them to operating and record the transfer against the matter. Nothing earned lingers in trust, and nothing unearned leaves it.
L-4Do you reconcile my Clio / MyCase trust ledger to QBO?
Yes. The practice-management system and QBO drift apart in every firm we've seen — a voided check here, a fee posted twice there. Reconciling the two monthly is how those stay corrections instead of findings.
L-5How do you keep firm bank fees off the trust account?
We have the bank charge all fees to operating, in writing, and we watch the trust statement for strays anyway. Any fee that lands in trust gets moved out and documented the same month.
L-6What records do you keep for a bar audit, and for how long?
Monthly reconciliation reports, bank statements, client ledgers, and transfer documentation, retained to your state's requirement — five years after matter close as the ABA baseline, longer where your state says so. The goal is that an audit letter is answered with a folder.
L-7Can you handle many matters and clients within one trust account cleanly?
Yes. One IOLTA account with clean client-level sub-ledgers is normal structure. The discipline is in the ledgers and the monthly tie-out, not in multiplying bank accounts.
Show us the firm file you're least confident about.
Thirty minutes, your books on screen. We'll tell you what's actually wrong with them and what it costs to fix. If they're fine, we'll say that instead.
Run something we haven't listed?
Most of what breaks in a set of books is universal — miscoded owner money, unreconciled deposits, a plug nobody cleared. Tell us what you run and what's going wrong, and we'll tell you straight whether we're the right fit.