Trust Accounting & Billing | 4 min

Why Legal Trust Accounting Doesn't Have to be Scary

October 26, 2022

Benefits of Trust Accounting Software for Lawyers

Manual trust accounting processes leave law firms vulnerable to inefficiencies, malpractice, and possible disbarment. While this sounds frightening to law firms, trust accounting does not need to be a scary process for attorneys and bookkeepers. Trust accounting software can eliminate the challenges that law firms face and provide automated processes that are simple, scalable, and efficient.

In this blog, we will cover the following:

  • The definition of trust accounting,

  • Trust accounting challenges that law firms face,

  • The definition of trust accounting technology, and

  • The benefits of trust accounting software.

Let’s dive in.

What is Trust Accounting?

Trust accounting is when law firms receive, retain, and manage client funds being held in trust. The firm maintains a responsibility to its clients to:

  • Never mix the trust account’s funds with the firm’s funds.

  • Constantly and accurately maintain records of when funds are requested, deposited, and used in relation to the client’s matters.

While these two rules are true across the board, it is important to note that each jurisdiction will have its own requirements that law firms need to ensure they remain compliant with. Moreover, given how much information needs to be tracked, law firms face several challenges when they manually manage trust accounting.

Trust Accounting Challenges

Trust Accounting Challenges

Whether your firm’s partners, bookkeepers, or external accounting staff are responsible for the trust accounting processes, often, many firms have limited resources to stay on top of all the trusts they’re overseeing. This is especially true for firms that do not have a tech stack to help mitigate the trust accounting challenges that can arise for law firms. Let’s take a look at the three most common challenges.

1. Time

One of the biggest challenges law firms face is finding the time to dedicate to maintaining good trust accounting habits. Court appearances, meeting with clients, preparing for depositions, managing payroll, and more consume the days of lawyers and their support staff, which eats away at the time left for manual trust accounting processes. Therefore, they cannot dedicate enough time to implementing trust accounting best practices.

2. Poor Recordkeeping

Manual, “after-the-fact” receipt management and timekeeping lead to inaccurate records of time spent on client matters and missed reimbursable expenses. These manual processes cause attorneys to guess at the work they’ve done or how much they’ve spent on a client, which takes away even more time they can spend supporting clients.

3. Data Entry Errors

From spreadsheets saved across multiple devices to siloed accounting software, data entry errors are bound to happen when all matter-related data is not saved in a centralized database. As a result, attorneys and bookkeepers are trying to remember the exact amount of time spent on a task or how much was spent, but they can also accidentally type in the wrong information or post it to the wrong trust. These accidental errors can lead to overdrawing the trust and malpractice.

While these challenges sound overwhelming to solve, trust accounting technology can help law firms eliminate these challenges and move to a smoother, automated future.

What is Trust Accounting Technology?

What is Trust Accounting Technology?

Trust accounting software is a digital system that enables attorneys and bookkeepers to manage, reconcile, and audit trust accounts automatically for their clients to meet bar and jurisdiction requirements. The software should also provide access to relevant reports like dormant matters with trust account balances, potential trust to receivables transfer, and retained trust accounts for a holistic view of all trust funds and ensure all money is handled appropriately.

It is important to note that trust accounting software differs from general accounting systems. For example, general accounting systems will not offer the tools and features needed to complete trust accounting-specific functions or label funds appropriately when completing reconciliations at the end of the month.

Interested in learning more how trust accounting technology can help save your firm time and money? Download our whitepaper, “Time is Money: Avoiding the Pitfalls of Poor Accounting Practices.”

Benefits of Trust Accounting Technology

Benefits of Trust Accounting Technology

Trust accounting software supports law firms in several different ways, including:

  • Reduced time on manual work - Technology eliminates the manual tasks required by attorneys and bookkeepers to update spreadsheets, paper files, and multiple systems. Therefore, there is no need for double data entry, so they can focus on completing more work in the same amount of time.

  • Improved recordkeeping - As trust accounts are updated in real-time with a digital trail of all changes, reconciliation becomes easier as discrepancies are reduced, and any changes can be traced back.

  • Ensure compliance - Trust accounting software enables law firms to protect funds from being accidentally overdrawn, misused, or mingled with firm funds helping firms ensure compliance and reduce malpractice risks.


Trust accounting can be a frightening process to manage for law firms if they stick to laborious, manual processes. Without the proper tools, firms waste time and resources and put themselves at risk for malpractice and potential disbarment. Trust accounting software can provide law firms with the automation and reporting they need to eliminate redundant work, improve their records for smoother auditing and client updates, and mitigate non-compliance risks for their practice. The LEAP legal practice management solution provides law firms with everything they need to digitize their business and centralize all data to automate and simplify trust accounting. Learn more about the LEAP trust accounting software features today to simplify complex transactions and remain compliant with local and bar regulations.

Learn more about the LEAP trust accounting software features

Simplify complex transactions and remain compliant with local and bar regulations.