Skip to content
Law Firms
Trust accounting is not a place where the books can be approximately right.
Client funds held in trust carry obligations that ordinary business accounts do not. The reconciliation has to be exact, it has to be current, and it has to be documented.
Steingard Financial maintains law firm books with that separation intact, and reconciles the billing system to the financial statements rather than treating them as two unrelated records.
What makes these books different
Client trust accounts carry obligations of their own
Trust balances must reconcile to the sum of individual client ledgers, and the supporting detail has to exist, not merely the total.
Case costs are advanced and not always recovered
Costs fronted on behalf of a client are receivables, not expenses, until they are resolved — and treating them otherwise distorts the firm’s results.
Revenue timing does not match the work performed
Retainers, contingency outcomes and delayed collection all separate the moment work happens from the moment it becomes revenue.
What the service includes
- Client trust account reconciliation support, including client-level ledger detail
- Case cost advances tracked as recoverable rather than absorbed as expense
- Reconciliation between the practice’s billing system and the financial statements
- Retainer and unearned fee tracking
- Partner draw and distribution recording
- Monthly financial statements with operating and trust activity kept separate
How the engagement works
Separate the records
Steingard establishes clean separation between firm operating activity and client trust activity, with client-level detail behind the trust balance.
Reconcile the billing system
Time, billing and collection data is reconciled to the books so both tell the same story.
Maintain the reconciliation monthly
Trust reconciliation and financial close run on the same calendar rather than being revisited when something prompts it.
What is different here
Client money, firm money, and the line that must never blur
Most industries can absorb a bookkeeping error and correct it. Law firms handling client funds operate under professional obligations where the consequences of a records failure extend well beyond the accounting.
Trust funds are not firm funds
Money held on behalf of clients belongs to those clients until properly earned or disbursed. It must be tracked per client, never commingled, and reconciled on a schedule. The bookkeeping exists to evidence that, continuously.
Costs advanced are not expenses
Filing fees, expert fees and similar amounts paid on a client’s behalf are usually recoverable, not costs of the firm. Recorded as expenses they overstate cost, understate receivables, and go unbilled.
Revenue is earned, not received
A retainer received is not revenue. It becomes revenue as work is performed, and a firm that treats receipts as income has a profit figure disconnected from what it has actually earned.
The rules governing trust accounting are set by your jurisdiction and bar, and compliance is the firm’s own professional responsibility. What bookkeeping does is maintain records that stand up to that scrutiny.
Where this fits best
- Solo practitioners holding client funds
- Small partnerships with distributions to track
- Contingency-fee practices carrying advanced case costs
- Firms whose billing system has never reconciled to the books
- Practices preparing for a review of their trust account records
What the books need to handle
The mechanics that matter in a law practice
The areas below are where legal bookkeeping departs most from ordinary practice, and where problems are least forgiving.
- Client trust ledgers maintained individually. A per-client record, not merely a trust account total. The account balance means little if the individual balances behind it are not known.
- Regular three-way reconciliation. The trust bank statement, the trust ledger control and the sum of client balances should agree. A discrepancy is a serious signal, and finding it late is materially worse than finding it early.
- Client costs tracked as recoverable. Advanced costs recorded against the matter so they are billed rather than absorbed. This is one of the more common quiet leaks in a practice.
- Retainers held as a liability until earned. Unearned funds are an obligation, and the transfer to income happens as work is performed and billed — recorded, not assumed.
- Matter-level visibility where the firm needs it. Which matters and practice areas actually carry the firm is a question the books can answer, if they were structured to.
No part of this substitutes for the firm’s own compliance obligations or for advice from counsel familiar with your jurisdiction’s rules.
Frequently asked questions
Do you handle trust account bookkeeping?
Trust records can be maintained and reconciled as part of the engagement, with the scope defined explicitly. Compliance with your jurisdiction’s trust rules remains the firm’s own professional responsibility.
How often should trust accounts be reconciled?
Frequently and on a fixed schedule — many jurisdictions specify a minimum. Your bar’s requirements govern; the bookkeeping is built to meet them rather than to set them.
We use practice management software. Does that replace bookkeeping?
It usually handles time, billing and often trust ledgers well. What it does not do by itself is reconcile to the bank or produce financial statements, and the gap between the two systems is where discrepancies tend to live.
Can you tell us which practice areas are profitable?
Where matters and areas are coded consistently, yes. That structure is worth setting up deliberately rather than hoping it can be derived later.
What about costs we advance for clients?
Tracked as recoverable against the matter rather than as firm expenses, so they are billed and so cost and receivables are both stated correctly.
A note on scope
Bookkeeping supports compliance. It does not replace professional judgment.
Steingard Financial maintains the records, performs the reconciliations and produces the reporting that a firm’s trust account obligations rest on. What the firm’s obligations are, and whether they have been met, remains a determination for the firm and its own professional advisors.
That distinction matters, and stating it plainly is more useful than implying a broader role. The value here is that the underlying records are complete, current and reconciled — which is the condition every review of them assumes and very few firms can produce on demand.
Services and professional responsibilities are governed by the applicable engagement agreement.
Get the trust reconciliation current and keep it there.
Tell Steingard Financial how the firm bills and holds client funds, and the review will cover the condition of the supporting records.