Running a law firm involves more than legal work. Managing client funds responsibly is just as important. Law firm trust accounting ensures client money is handled correctly, recorded accurately, and kept fully compliant with legal and ethical requirements. When trust accounting is done right, it protects clients, reduces risk, and gives law firms peace of mind. What Is Law Firm Trust Accounting? Law firm trust accounting is the process of managing and tracking client funds held in trust. These funds may include retainers, settlements, or advance payments and must always be kept separate from a firm’s operating accounts. Accurate records, clear documentation, and regular reconciliation are essential to meet bar regulations and avoid violations. Why Trust Accounting Is Critical for Law Firms Trust accounting mistakes can lead to serious consequences, including audits, penalties, and loss of client trust. Many law firms struggle with trust accounting because the rules are strict and the
