Trust Accounting & Billing | 3 min
May 16, 2023
Trust accounting is one of the most important processes law firms manage for their clients. Attorneys are ethically obligated to protect their client’s assets and follow the relevant rules of conduct related to trust accounting practices. Unfortunately, as many law firms perform their accounting workflows manually or with outdated accounting systems, they often don’t have the processes in place to avoid mistakes that could cost their firm thousands of dollars and damage their professional reputation.
As trust accounting rules evolve across multiple states, law firms need to invest in implementing a software solution that will help them protect their clients and their ability to practice law. This article will cover how cloud-based trust accounting software can support law firms in establishing compliant trust accounting practices through evolving regulations.
Legal trust accounting software is a digital system that allows bookkeepers and attorneys to manage and track their client’s accounts and related transactions. The right software can make it easier for law firms to ensure that client assets being held in trust are protected and distributed correctly.
Based on an attorney's jurisdiction, the consequences of trust accounting errors and noncompliance can range in severity. While there are extreme cases of trust accounting malpractice, as we've seen with former attorney Tom Girardi of Girardi Keese law firm, trust accounting errors and misuse of funds damage the client-attorney relationship, expensive lawsuits, and potential disbarment. All of these consequences can have lasting impacts that can be avoided with the right software solution.
Download our "Time is Money: Avoiding the Pitfalls of Poor Accounting Practices" whitepaper to learn how inefficient and noncompliant accounting workflows can impact your law firm's success.
Law firms struggle to maintain compliant trust accounting practices because they lack the time to manually enter data and perform reconciliations, leading to inaccurate records and data entry errors. These issues are eliminated by legal trust accounting cloud software. Cloud trust accounting software simplifies trust accounting workflows, allowing bookkeepers and attorneys to easily and compliantly manage data to perform complex transactions. In addition, automated reconciliation, billing, invoicing, and reporting features reduce the potential for data-entry errors, which helps prevent inadvertent malpractice.
LEAP makes it easy for attorneys and bookkeepers to work with peace of mind with IOLA, IOLTA, and state bar rule-compliant trust accounting. Automated legal trust accounting features help prevent errors, perform complex transactions accurately, create dashboards to have real-time views of trust account balances, and run reports to reconcile funds accurately. LEAP also offers user permission controls that ensure only authorized staff members can access financial information. Additionally, QuickBooks Online and Xero integrate with LEAP to seamlessly save every transaction to the relevant matter and securely store disbursement, invoice, and client transaction data in one place. These features help ensure that professional obligations are met and mitigate the risk of accidental mismanagement of funds.
For law firms that offer real estate law services, LEAP helps real estate attorneys and title closing agents seamlessly handle a high volume of real estate transactions. As the only legal practice productivity solution, real estate attorneys have everything they need to manage their matters to stay organized and properly handle real estate trust funds.
Legal trust accounting is a massive responsibility but an essential part of operations and serving clients for law firms. While data errors and poor accounting workflows can lead to extremely damaging consequences, there are cloud solutions available that law firms can leverage to protect their clients and their reputation.
LEAP legal practice productivity solution is the only choice for law firms looking to automate their workflows and eliminate the challenges that lead to inadvertent accounting errors, which could jeopardize their business and even their ability to practice law.
Keep your law firm IOLA, IOLTA, and state bar compliant with LEAP.