IOLTA Reconciliations and Trust Accounting
Three-way reconciliations and trust account support for attorneys handling client funds under state bar rules.
What This Is
IOLTA accounting is the bookkeeping work attorneys are required to perform on client trust funds. Every retainer, settlement deposit, and disbursement has to be tracked against the specific client it belongs to. The bank balance, the firm’s internal book balance, and the sum of the individual client ledgers all have to agree.
This is a specialized area of bookkeeping with rules set by the state bar. We handle the three-way reconciliations, maintain accurate client ledgers, and produce the records your firm needs to stay in good standing.
Three-Way Reconciliation
Three-Way Reconciliation
Each month we reconcile the trust bank statement against the firm’s internal trust ledger and against the total of all individual client balances. All three figures must match. If they don’t, we find the discrepancy and resolve it before the books are closed.
Client Ledgers
Client Ledgers
Every client with funds in trust has a dedicated ledger showing deposits, disbursements, and the current balance owed to that client. These records are kept current and ready for review by the firm, the client, or the bar.
Why It Matters
Trust account violations are one of the most common reasons attorneys face disciplinary action. The rules are strict because the money in an IOLTA account does not belong to the firm. Each dollar is owed to a specific client, and the firm is responsible for proving that at any moment.
Mistakes happen even with careful attorneys. A bank fee posts to the trust account by error. A disbursement is recorded against the wrong client matter. A deposit is held in trust longer than it should be. Without monthly reconciliations, small issues can grow into the kind of shortage that triggers a bar inquiry.
Bar Compliance
Bar Compliance
State bar rules require regular reconciliation and detailed recordkeeping for trust accounts. We keep the documentation organized in a way that holds up to a random audit or grievance review without scrambling at the last minute.
Separation of Funds
Separation of Funds
Commingling client money with firm money is one of the fastest ways to create a serious problem. Earned fees need to be moved out of trust on a defined schedule, and operating expenses can never be paid from the trust account. We keep that line clear.
What Changes
Your trust account is reconciled every month and the records are ready for inspection. You know exactly how much belongs to each client, what has been earned and moved to operating, and what still needs to be disbursed. The administrative burden of trust accounting is no longer something you carry on top of practicing law.
If a question comes from the bar or a client asks for an accounting of their funds, you have the answer. The work has already been done correctly, documented properly, and saved in a way you can hand over without hesitation.
Audit-Ready Records
Audit-Ready Records
Reconciliation reports, client ledgers, deposit records, and disbursement documentation are organized and accessible. If the bar requests records, we can produce a complete file rather than reconstructing one under pressure.
Focus on Practice
Focus on Practice
Trust accounting takes time and attention that most attorneys would rather spend on client work. Handing the reconciliation work to someone who does this regularly removes a recurring monthly task and reduces the risk of an honest mistake creating a real problem.
Trusted Accounting for Small Businesses
First Step:
Start With a Call
Tell us about your business and what you need help with. We'll ask a few questions, evaluate your current situation, and let you know how GMJ can support your books, taxes, and day-to-day operations.
