Trust Account & IOLTA Reconciliation for Law Firms
Client trust funds are the one area of law firm accounting where “close enough” isn’t acceptable. Azar Insights reconciles your trust accounts every month, so your records are accurate, your client ledgers balance, and you’re ready if your state bar ever asks.
What Is a Three-Way Trust Reconciliation?
A three-way reconciliation confirms that three records agree:
The bank statement for your trust or IOLTA account
Your trust account ledger (the firm’s record of all trust deposits and disbursements)
The total of your individual client ledgers (what you hold for each client)
When all three match, you can show exactly whose money is in the account. When they don’t, it’s an early warning of a posting error, a missed transaction, or a bigger problem.
What We Do Each Month
Reconcile each trust and IOLTA account to the bank statement
Tie the trust ledger to the individual client ledgers
Flag negative client balances, uncleared items, and unexplained differences
Keep firm funds and client funds clearly separated
Deliver a reconciliation report you can keep on file
Common Trust Accounting Problems We Catch
Earned fees left sitting in the trust account
Firm expenses paid from trust by mistake
Bank fees or charges hitting the trust account
Client ledgers with negative balances
Deposits recorded to the wrong client
Frequently Asked Questions
How often should a law firm reconcile its trust account?
Many state bars require regular reconciliation, often monthly or quarterly. Monthly is the safest standard, and it’s what we provide. Check your own state bar’s rules for your exact requirement.
What’s the difference between a trust account and an IOLTA?
An IOLTA (Interest on Lawyers’ Trust Accounts) is a pooled trust account for client funds that are small or held for a short time. The interest goes to a state program that funds legal aid. Firms may also hold separate trust accounts for larger or longer-term client funds.
Can you work with firms outside our state?
Yes. We work remotely with law firms nationwide, and we follow your state’s trust accounting requirements.
What if our trust account hasn’t been reconciled in a while?
We can rebuild past reconciliations and client ledgers. See our Law Firm Bookkeeping Cleanup service.
Do you replace our responsibility for trust compliance?
No. Attorneys remain responsible for complying with their state bar’s trust accounting rules. We give you accurate records and reports that make that easier.
Related Services
Law Firm Bookkeeping · Clio & QuickBooks Bookkeeping · Bookkeeping Cleanup & Catch-Up