Trust accounting and three-way reconciliation
Client funds held in trust must reconcile three ways every month: the bank statement, the trust ledger control account, and the sum of the individual client ledgers. All three have to agree exactly, and the reconciliation has to be documented and retained.
- Monthly three-way reconciliation with retained documentation
- Individual client ledger maintenance with no commingling
- Earned fee transfers performed only against issued invoices
- No negative client balances, ever, including brief overdrafts
- Unclaimed client funds handled under your state's escheat rules
- Reconciliation packages prepared to survive a random bar audit
Most trust violations are not theft. They are administrative: a disbursement made before a deposit cleared, an earned fee transferred a week early, a client ledger that drifted. Discipline in the process is what prevents them.
Matter and practice area profitability
Firms track billable hours obsessively and profitability rarely. Realisation, the gap between time recorded and cash collected, is where the money goes: written down at billing, written off at collection, or never billed at all.
We report by matter, by practice area and by originating attorney so that the decisions about which work to take and which clients to keep are made on contribution rather than on gross revenue.
Contingency and case cost accounting
Advanced case costs are receivables, not expenses, and treating them otherwise distorts both the balance sheet and the tax position. Contingency practices need cash forecasting that models settlement timing probabilistically, because revenue arrives in irregular lumps while payroll does not.
Partner compensation and firm tax planning
Guaranteed payments, distributions, capital accounts and the timing of year-end draws all interact with the partners' personal returns. We coordinate the firm-level plan with the individual positions so that the December decisions are made with the April consequences already calculated.
Frequently asked questions
Do you work in Clio or PracticePanther?
Yes. We work inside the practice management system you already use and reconcile it to the accounting ledger rather than maintaining two disconnected records.
Can you fix a trust account that is out of balance?
Usually. Reconstructing client ledgers from source records and identifying where the drift started is careful work but it is normal work. The important thing is to start before an audit requires it.
How do you handle a contingency firm's cash planning?
By modelling expected settlements against a probability and timing estimate, and holding a reserve sized against the fixed cost base, so a delayed case does not become a payroll problem.