Trust accounting software records money a law firm holds on behalf of clients, separately from the firm's own money. It keeps a ledger for each client, records every deposit and disbursement against that client, prevents spending one client's money on another's matter, and produces the records a firm needs for its regulator, such as client ledgers, a transaction journal and a monthly reconciliation.
For IOLTA and other client trust accounts, the key controls are simple to state and easy to get wrong by hand: no client ledger may go negative, funds should not be used before they clear, and the bank balance, the firm's books and the total of client ledgers should agree.
LawAOS holds trust accounts inside its Finance module. Each account is flagged IOLTA or not, each client has a ledger, and the database refuses any drawdown, fee or transfer larger than that client's cleared balance. Rules differ by jurisdiction, so LawAOS guides the process and the firm checks its own requirements.
- No overdrawn client ledger
- A drawdown, fee or client-to-client transfer larger than the client's cleared balance is refused by the database itself, not only by the screen.
- Uncleared until someone clears it
- Deposits start as Uncleared. A person marks them Cleared once the bank has cleared the funds, and only cleared money can be spent.
- Postings are permanent
- Deposit, Drawdown, Interest, Fee and Adjustment postings cannot be edited or deleted. A mistake is corrected with an Adjustment, so the history stays complete.
- Transfers write both sides
- Moving money from one client ledger to another writes both entries in a single transaction, so a half-finished transfer cannot exist.
- A balance check on every view
- The account header compares the account balance with the total of client ledgers and turns red if they disagree.
A firm can hold several trust accounts, for example a pooled IOLTA account and a separate interest-bearing account for one large client. Each account records the bank, the last four digits of the account number, a jurisdiction code, currency, the responsible attorney and the date it was opened. Trust postings also flow into the firm's general ledger, so the balance sheet shows client money held as a liability.
An 8-item client-funds control checklist sits alongside the accounts. It is generic by design: it lists the controls most regulators expect without claiming to state any one jurisdiction's rules.
Software can make trust errors harder to make and easier to find, but it cannot know every state bar's or regulator's current rules on record retention, interest, reporting or reconciliation frequency. LawAOS does not claim that any account meets a particular jurisdiction's IOLTA rules by default. Read our guide to IOLTA trust account rules for the common principles, then confirm your own jurisdiction's current requirements with your regulator.
Create the trust account
Add the account, flag it IOLTA or not, and record its bank details, jurisdiction code, currency and responsible attorney.
See the modulePost a client deposit
Record the retainer on the client's ledger. It starts Uncleared, and a person marks it Cleared when the bank clears the funds.
See the moduleDraw down against an invoice
Record a drawdown or fee against the client's cleared balance. If the amount is larger than the cleared balance, the database refuses it.
See the moduleReconcile each month
Enter the bank statement closing balance and run the guided three-way reconciliation; the filed record is append-only.
See the moduleExport the records
Export transactions, accounts, client ledgers and a compliance report for your accountant or regulator.
See the module
Stated plainly, so you can decide before you sign up rather than after.
- LawAOS has no bank feed or bank statement import for trust accounts; the statement balance is entered by a person.
- No state-specific IOLTA rules are built in. The control checklist is generic and the firm is responsible for its own jurisdiction's rules.
- There is no screen to pay an invoice directly from trust; the drawdown and the invoice payment are recorded separately.
- Three-way reconciliation is guided and run by a person each period; it does not run automatically or continuously.
Anything the list leaves open, our team answers directly.