IOLTA and client-trust books, reconciled three ways every month.
Client trust money is the part of a law firm’s books with the least margin for error. Funds in an IOLTA or client-trust account belong to clients, must never be commingled with operating cash, have to be tracked on a separate ledger for every client and matter, and must reconcile three ways: the trust bank balance, the trust book balance, and the sum of all individual client-ledger balances, in agreement. On TechBrot’s engagements, that trust ledger and the monthly three-way reconciliation are prepared by TechBrot’s signed trust-accounting specialist practice as a recordkeeping and bookkeeping service, reviewed by a Certified QuickBooks® ProAdvisor before delivery. To be exact about the boundary: neither TechBrot nor the practice ever holds, controls, signs on, deposits to, or disburses from the IOLTA or any client-trust account — the attorney controls the trust account and makes every disbursement and transfer decision. For the firm’s operating books, see law firm bookkeeping.
If your file needs our paid diagnostic first, its fee is credited in full against the cleanup. Either way, you get a fixed fee in writing before any work starts.
Law firm trust (IOLTA) accounting is the bookkeeping for money a firm holds for clients: a ledger for every client and matter, reconciled three ways each month against the bank and book balances. TechBrot’s signed trust-accounting specialist practice prepares it for a fixed monthly fee of $500–$2,500+/mo against a written scope; the attorney controls the account.
TechBrot and its signed trust-accounting specialist practice maintain the trust ledger and reconciliation only; neither holds, controls, or disburses client funds, the attorney controls the trust account, and bar-rule compliance is the attorney’s professional responsibility. Not legal, ethics, or bar-compliance advice.
They took something that felt overwhelming to me as a first-year business owner and made it simple.
Intuit QuickBooks Certification Level 2 and QuickBooks Workforce Certification,held by TechBrot’s senior reviewer (verification on request) · TechBrot, Inc. · Delaware corporation · est. 2023
§ 01 · In depth
Three-way reconciliation, balance by balance.
The three trust balances, why a pooled IOLTA account needs a ledger for every client, how retainers and transfers are recorded, and where the bookkeeper’s role stops — set out in full below.
These are three places trust books break — and any one of them is a problem if the account is ever examined. The monthly reconciliation on a TechBrot engagement is built to surface all three before anyone else does.
Funds are commingled
Trust and operating money mixed.
Client trust dollars sitting in the operating account, operating cash parked in trust to cover a shortfall, or a single account doing both jobs — commingling is exactly what trust-account rules exist to prevent. The recordkeeping fix is a strictly segregated trust account in QuickBooks, a separate ledger per client and matter, and a reconciliation that proves no operating money is in trust and no trust money is in operating. On a TechBrot engagement those records are kept by the signed trust-accounting specialist practice, and any crossover is flagged to the attorney in writing; keeping the accounts themselves separate, and acting on any flag, is the firm’s decision — nobody on our side moves money.
A client is overdrawn
One matter spends another’s funds.
When per-client ledgers aren’t maintained, a disbursement on one matter can quietly draw down another client’s trust balance — an overdraft that the bank statement alone will never reveal because the pooled account still shows a positive total. The fix is a live ledger for every client whose sum is reconciled to the bank and the book balance each month, so a negative individual balance surfaces immediately. The records surface it; the attorney resolves how funds are corrected.
Retainers booked as income
Unearned fees recognized too early.
Retainers and advance fees recorded as revenue the day they land — before the work is done — overstate income, hide an unearned-fee liability, and risk trust-to-operating transfers happening before fees are actually earned. The recordkeeping fix is retainers held as unearned liabilities in trust and recognized as income only as earned and billed, with each transfer to operating tied to billed, earned work. The transfer decision and timing are the firm’s; the books record and reconcile each one against earned fees.
§ 03 · The core control
What three-way reconciliation actually checks.
Three-way reconciliation is the heart of trust accounting: three independently maintained balances must agree. When they do, no client is overdrawn and no trust money has touched operating cash. On a TechBrot engagement, TechBrot’s signed trust-accounting specialist practice prepares this reconciliation every month as a recordkeeping step and flags any break for the attorney to resolve.
Balance 1
The trust bank balance
The reconciled balance of the client-trust or IOLTA account itself, taken from the bank statement and adjusted for outstanding items — the actual cash on deposit, independent of anything in the books.
Balance 2
The trust book balance
The trust-liability balance recorded in QuickBooks — what the firm’s books say is being held for clients in total. It must equal the reconciled bank balance to the penny.
Balance 3
The sum of all client ledgers
Add up every individual client’s trust ledger balance. That total must equal the book balance and the bank balance. When all three agree, no client is overdrawn and no trust money is commingled; if any one diverges, the break is flagged to the attorney to resolve before the period closes.
§ 04 · What TechBrot handles
What a trust engagement covers, record by record.
Every engagement is scoped to your matters and the practice-management software you use, and prepared in your own QuickBooks file by TechBrot’s signed trust-accounting specialist practice, with every close reviewed by a Certified QuickBooks ProAdvisor before it reaches you. The practice maintains the records and reconciliation; you control the trust account and every disbursement, and your CPA files.
A separate, live trust ledger for every client and matter, so each balance is provable on demand and a single matter can never quietly draw on another’s funds — the foundation every other trust control sits on.
Trust bank balance, trust book balance, and the sum of all client ledgers reconciled to agreement every month, with an aging so nothing sits stale — prepared as a recordkeeping step, with every break and every negative ledger flagged to the attorney in writing.
Retainers and advance fees held as unearned liabilities in trust and recognized as income only as earned and billed — so revenue is real and trust-to-operating transfers track to fees actually earned.
Clean, matched records of each transfer the firm authorizes from trust to operating as fees are earned, each tied to the bill it pays — the practice records and reconciles what the attorney moves; neither it nor TechBrot ever initiates, signs, or makes a transfer.
Untangle commingled history, rebuild per-client ledgers from source records, resolve stale and unidentified balances, and reconcile the trust account back to a known-good, documented baseline — oldest month first, each month carried to a full three-way comparison before the next.
A law-firm trust structure in QuickBooks and your practice-management and payment tools — Clio, MyCase, LawPay and the rest — connected so trust activity reconciles cleanly into per-client ledgers.
§ 05 · The monthly process
The monthly trust close, step by step.
Every month, in the same order, once the trust bank statement is in. The steps are the ones set out in the monthly trust reconciliation checklist; on a TechBrot engagement, TechBrot’s signed trust-accounting specialist practice runs them in your own QuickBooks file.
Step 1
Records in
The trust bank statement with check images or debit detail, the month’s deposit and disbursement detail, and the client-ledger report from your practice-management software where trust ledgers are kept there. No signing authority is ever needed, or asked for.
Step 2
Trust journal brought current
Every deposit and disbursement dated on or before the statement date is entered in the trust journal, and every entry names the client or matter it belongs to. Bank charges and interest that appear on the statement are recorded too.
Step 3
Trust bank reconciled
The trust bank account is reconciled to its statement. Deposits and disbursements the bank has not yet processed become the outstanding lists, and last month’s outstanding items are carried forward until they clear.
Step 4
Client ledgers totalled
Every client ledger is run as of the statement date, not today’s date, and added up. Any ledger below zero, and any balance sitting unchanged for months, goes on the exception list.
Step 5
Three balances compared
Adjusted bank balance, trust journal balance and the sum of client ledgers, side by side. A difference is traced to the transaction that caused it and corrected at its source — never plugged with an adjusting entry to force agreement.
Step 6
Report and sign-off
The reconciliation report, its schedules and a written exception list go to the attorney to review and sign, with every close reviewed before it reaches you. Anything that needs money to move is the attorney’s decision.
What you receive each month
The three-way reconciliation report. The adjusted bank balance, the trust journal balance and the sum of every client ledger, side by side, as of the statement date — and whether they agree.
Its schedules. The bank statement it was built from, the outstanding-deposit and outstanding-disbursement lists, the month’s trust journal and the client-ledger listing, so anyone reviewing the file later can rebuild each balance.
A written exception list. Every difference and how it was traced, every negative or stale client balance, and every item that needs a decision about money.
Transfer records. Each trust-to-operating transfer the firm made that month, matched to the billed, earned fee it pays.
The operating close, where it is in scope. The firm’s own books reconciled in the same QuickBooks file, so trust and operating close together and the trust liability on the balance sheet matches the client ledgers.
A file you can produce on request. Each month’s package kept in your own QuickBooks file and in a shared folder you own, for the retention period your state’s rule sets.
How an engagement starts. Either with a trust structure built in QuickBooks before the first deposit — see IOLTA setup in QuickBooks — or with a cleanup that rebuilds the months that were never reconciled, oldest month first. Either way, the first full three-way comparison sets the baseline every later month is measured against.
§ 06 · Who does what
Who does what on a trust engagement.
One engagement, one QuickBooks file, and a clear line between who keeps the records and who controls the money. This is how the work divides on every trust engagement.
The work on a law firm trust engagement, who does each part, and what it means for the firm
The work
Who does it
What that means for you
Trust ledgers, the trust journal and the monthly three-way reconciliation
TechBrot’s signed trust-accounting specialist practice
Per-client ledgers kept current, the reconciliation prepared every month with its schedules, and every break flagged to the attorney in writing — on TechBrot’s engagement, in your own QuickBooks file.
The operating books: billing, receivables, payroll, expenses and the monthly close
Your senior bookkeeper
Your operating books are prepared by a senior bookkeeper who works in your software, or by a signed specialist practice when your books need one. Your engagement letter names which.
The trust account: deposits, disbursements, transfers and corrections
The attorney
You control the account and make every decision about money; the records follow your decision. Neither TechBrot nor the practice is ever a signatory.
Signing off the monthly reconciliation
The attorney
You review and sign each month’s report. Where your state requires a certification, it is yours to give; no bookkeeper can give it for you.
Questions about what your bar rule requires
Your state bar and your own counsel
When a rule question comes up in the records, we say that it is one and route it there, rather than answering it.
Tax returns
Your CPA or EA
TechBrot does not prepare or file tax returns; we work with your CPA or EA.
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Law-firm trust accounting engagements are backed by a specialist partner practice that has signed with TechBrot for this work.
§ 07 · The boundary, stated plainly
What we do — and what we never do.
Trust accounting is the most boundary-sensitive work a bookkeeper can touch. We hold a single line and we hold it without exception. TechBrot and its signed trust-accounting specialist practice are a recordkeeping service: the practice maintains the trust ledger and prepares the three-way reconciliation. Neither of us will ever:
Hold or control client funds. We never take custody of, or have control over, money in the IOLTA or any client-trust account.
Sign on the trust account. We are never a signatory; we have no authority to authorize anything on the account.
Deposit to the trust account. The firm receives and deposits client funds; the books record the deposit, and neither of us makes it.
Disburse from the trust account. Every disbursement to a client, third party, or the firm is made by the attorney; the books record and reconcile it.
Decide or initiate transfers. Trust-to-operating transfers as fees are earned are the firm’s decision and the firm’s action; we never initiate one.
Give legal or ethics advice, or certify compliance. We don’t interpret bar rules or certify that the firm is compliant.
What TechBrot’s signed trust-accounting specialist practice does, on TechBrot’s engagement, is keep the per-client trust ledger and prepare the three-way reconciliation as a recordkeeping service — producing the clean, reconciled records that let the attorney meet their professional obligations. The attorney controls the trust account and makes every disbursement and transfer decision. Bar-rule compliance (for example ABA Model Rule 1.15 and your state bar’s specific rules) is the attorney’s professional responsibility; for rule specifics, talk to us about the records and defer to your state bar and your own counsel.
§ 08 · Where the rules come from
Which body answers which question.
Trust-account rules are set by the jurisdiction where the lawyer is licensed, and they are not uniform. The ABA Model Rules are a model: they bind no one until a state adopts a version of them, and states differ on numbering, how often the account must be reconciled, how long records must be kept, and what happens when an account overdrafts. So this page does not tell you what your rule says. It tells you who does.
Trust-accounting questions, the body that answers each, and where the authoritative text lives
The question
Who answers it
Where the authority lives
What my trust-account rule actually requires
The state bar or high court of every jurisdiction where the lawyer is licensed — not the ABA.
That state’s adopted rules of professional conduct. Each state adopts its own rule; the numbering and the text can differ from the model rule.
Which records I must keep, and for how long
The state bar’s recordkeeping provision.
The state’s trust-accounting rule. How long records must be kept, and when that period starts, is set by that rule.
How often the account must be reconciled
The state bar.
The adopted rule. Some jurisdictions state a frequency; others require only that records be current and accurate, which is a different obligation.
Whether a particular fee is earned or unearned
The lawyer, with their own counsel — and in many states a bar ethics hotline or advisory service.
State ethics opinions and the bar’s advisory guidance. This is a legal judgment about a specific fee agreement; it is not a bookkeeping determination and we do not make it.
Where IOLTA interest goes and how it is remitted
The state’s IOLTA program administrator, which may be a bar foundation rather than the bar itself.
The program’s own enrollment and remittance rules, which are separate from the conduct rules.
What happens if the trust account overdrafts
The bank, and then the bar.
Your state’s rule may require the bank to notify the bar of a trust-account overdraft, independently of anything the firm does. This is the reason a reconciliation that surfaces a shortfall early matters operationally, not just tidily.
Whether the firm is compliant
Nobody outside the firm can answer this. The obligation is the lawyer’s, and the bar is the body that examines it.
The bar’s own audit or random-examination program where one exists. No bookkeeper — including us — can certify compliance, and any who offers to is telling you something worth noticing.
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Why this page will not tell you your rule. A bookkeeping firm that tells a lawyer what a bar rule requires does two harmful things at once: it offers legal advice it is not authorized to give, and it invites reliance on a reading that the bar — not the bookkeeper — will ultimately judge. The division is clean and we keep it that way: the records and the three-way reconciliation are ours to keep, prepared by TechBrot’s signed trust-accounting specialist practice; the rule belongs to the lawyer, their own counsel, and the bar. When a rule question comes up during an engagement, we say at the time that it is one, and route it to your state bar or your counsel rather than answering it. A firm licensed in more than one jurisdiction can be subject to more than one rule set at once, and how the records satisfy each one is a question for your own counsel.
§ 09 · Platforms we reconcile
Reconciled to how the trust account moves.
QuickBooks Online — trust and operating books in one file, kept strictly separate
Clio — matter management and trust ledgers reconciled to QuickBooks
MyCase — trust activity and billing reconciled to QuickBooks
PracticePanther — matter billing and retainer tracking
CosmoLex — built-in trust accounting reconciled to QuickBooks
LawPay — trust and operating card payments kept on separate rails, matched to ledgers
Smokeball — practice management synced to the books
Bank & trust-account statements — the source for the three-way reconciliation
On different software? If it tracks matters, billing, or trust activity and reports to a bank account, it can be reconciled into per-client trust ledgers. Ask on a call.
§ 10 · Beyond the trust ledger
Clean trust books are the floor, not the ceiling.
Sound trust accounting is non-negotiable — but it’s the floor, not the whole building. Once the trust ledger reconciles three ways every month and your operating books are matter-accurate, the question shifts from “are our records clean and defensible?” to “what do the numbers tell us to do?” Which practice areas actually carry the firm, where realization and collections are leaking, how partner compensation should be structured, when to hire. That broader, firm-wide view starts with the operating books on law firm bookkeeping.
From there, law firm advisory turns clean books into decisions: a QuickBooks ProAdvisor who knows your numbers translating them into profitability, compensation, and cash-flow judgment. Trust-account compliance always remains the firm and its attorneys’ professional responsibility; what we add on top is the analysis. Explore fractional CFO & advisory
The recordkeeping errors that break a trust account, how each shows up in the books, and the mechanisms named states use to bring an account to the bar’s attention.See the errors
The operating books: QuickBooks set up for matters and billing, prior months caught up, and a monthly close with matter-level billing and costs, payroll and partner draws — the companion to this trust deep dive.Explore law firm bookkeeping
Reliable monthly close with three-way trust reconciliation and matter-level operating books, delivered in your own QuickBooks file.Explore monthly books
Turn clean firm books into practice-area profitability, partner-compensation, and cash-flow decisions.Explore advisory
§ 12 · Questions
IOLTA & trust accounting questions.
Does TechBrot hold, control, or disburse money in our trust account?
No. TechBrot and its signed trust-accounting specialist practice are a recordkeeping service. Neither ever holds, controls, signs on, deposits to, or disburses from your IOLTA or any client-trust account. The attorney controls the trust account and makes every deposit, disbursement, and transfer decision. What the practice does, on TechBrot’s engagement, is keep the per-client trust ledger and prepare the three-way reconciliation so those records are clean, accurate, and reconciled.
What is three-way trust reconciliation, exactly?
It confirms that three independently maintained balances agree: the trust bank-account balance, the trust liability recorded in the books, and the sum of every individual client’s trust ledger balance. When all three match, no client’s funds are overdrawn and trust money has not been commingled with the firm’s operating funds. Your state bar’s rule may set how often it must be done. On a TechBrot engagement, the signed trust-accounting specialist practice prepares this reconciliation every month as a recordkeeping step and flags any break for the attorney to resolve.
How do you handle retainers and earned-versus-unearned fees?
Retainers and advance fees are booked as unearned liabilities held in the trust account, then recognized as income only as the work is performed and billed. A transfer from trust to operating happens only as fees are earned — the firm authorizes and makes that transfer, and the books record and reconcile it against billed, earned work so trust never funds operations early.
Who is responsible for bar-rule and ethics compliance?
The attorney and the firm. Trust-account ethics rules — for example ABA Model Rule 1.15 and the specific rules of your state bar — are the attorney’s professional responsibility. We support compliance by maintaining clean, reconciled records, but we do not provide legal or ethics advice and do not certify that the firm is compliant. For any rule specifics, defer to your state bar and the firm’s own counsel.
Will you tell us whether something complies with our bar rule?
No, and we will say so at the time rather than giving you an answer that sounds helpful. Telling a lawyer what a bar rule requires would be legal advice we are not authorized to give, and it would invite reliance on a reading that the bar — not the bookkeeper — ultimately judges. What happens instead is that the records are kept accurate and current, the three-way reconciliation is prepared, and a discrepancy is surfaced the moment it appears, so that the person who does own the rule is working from something reliable. When a rule question comes up in an engagement we flag it and route it to your state bar or your counsel. No bookkeeping firm can certify that a practice is compliant, and one offering to is worth a second look.
How is this different from your law firm accounting page?
Our law firm bookkeeping page covers the firm’s operating books — QuickBooks setup for matters and billing, catch-up, the monthly close, matter and practice-area profitability, partner draws, payroll and the handoff to your CPA. This page is the deep dive on one high-risk area: client-trust and IOLTA recordkeeping — per-client ledgers, three-way reconciliation, earned-versus-unearned retainers, and the trust-fund boundary. Most firms need both, and both close in the same QuickBooks file; start with whichever matches the problem in front of you.
Can you clean up a trust account that’s out of balance or commingled?
Yes, as a recordkeeping engagement. TechBrot’s signed trust-accounting specialist practice rebuilds per-client ledgers from source records, untangles commingled history, identifies stale or unidentified balances, and reconciles the trust account back to a known-good baseline, oldest month first, then flags for the attorney any items that require a funds correction. The practice documents and reconciles; the firm decides on and makes any movement of money. This is illustrative of how a cleanup is scoped, not a promised outcome.
What does trust accounting cost?
It is quoted as a fixed monthly fee against a written scope — driven by the number of attorneys and matters, whether IOLTA or client-trust accounting is in scope, the practice-management software in use, and reporting needs. Across all engagements, monthly bookkeeping runs $500–$2,500+/mo and one-time bookkeeping cleanup $1,200–$15,000+ depending on scope; see pricing for the canonical figures. No hourly billing, and TechBrot does not file income taxes or provide legal advice.
Ready when you are
Get trust books that reconcile three ways every month.
Or send the details insteadWe reply within one business day. Written fixed-fee scope within 3 business days of your call. No hourly billing.
What happens after you call
01We talk for up to 30 minutes.You tell us where the books stand; we ask the questions that decide the scope. No charge.
02We look at the file if we need to.You add us as an accountant user in your own QuickBooks file, and you can remove us at any time. If the file cannot be priced without working inside it, we say so and propose the paid diagnostic, whose fee is credited in full against the cleanup.
03You get a fixed fee in writing.What we will fix, what you will receive and one fixed fee. Nothing starts until you accept it.
