Learn LeanLaw: Trust Accounting

You heard the buzz that LeanLaw and QuickBooks provide the best method for tracking trust accounting. Just this reason alone may be why you investigated a free trial of LeanLaw. 

Every client I have, for the most part, has trust accounting. The trust accounting workflow is a feature where LeanLaw shines! Almost every client I have met has a different scenario or workflow around tracking trust retainers and managing their IOLTA account. It is important to find the best legal software program to handle this particular and vital task.

I studied many of them, and by far, LeanLaw wins in so many ways! It is why this app is an integral part of my workflow when working with attorneys.  If you would like to learn about the billing workflow, click here.


Trust Accounting:   LeanLaw makes it simple. All you have to do is follow these steps:

  • Create a client
  • Create a matter
  • Receive a retainer
  • Create the invoice
  • Receive the payment out of the retainer or trust account.
  • Recognize revenue

In the video below, you will see it in action. There are multiple ways to do this, and depending on the firm and your firm's location, you may have to write checks to move the funds, or you may even be able to make bank to bank transfers as we can in Florida.

Settings are essential when I work with an attorney or the attorney's staff. My favorite method, which provides the least amount of errors, is to have each transaction recorded directly deposited into IOLTA as individual deposits and then when the revenue is recognized automatically booked into the operating bank account. Settings, settings, settings! 

Some firms prefer to have a pile of checks deposited at the same time for a monthly run of trust payments applied to the law firm's invoices. If your firm does the combined check deposit method, you need to use the undeposited funds account in QuickBooks.

One of the reasons I only use QuickBooks Online Advanced is because of that workflow feature. Besides tracking accounts receivable and payables, the workflow feature can be set to remind the user when payments are sitting up in undeposited funds. That's probably the number one error when processing payments. People just flat out forget they are there. They forget that step to deposit the payments or cash into the bank account in QuickBooks.


Trust Accounting:   The proper settings ~ use undeposited funds or not? 

If you leave payments in undeposited funds, the client matters will be correct, but it won't match the bank balance. It will make it difficult to track and verify with a three-way reconciliation. If the bank account is lower in dollars than the individual trusts, the first place I look is in undeposited funds to see if they haven't put those funds into the bank. 99% of the time, that is the error. 

That's why I like to do the individual payments method directly to the bank. Do you have a bank that lets you deposit a check using a mobile app? Individualizing each transaction, primarily if you use the check method because you have to because of your state's legal rules, making individual deposits is an excellent clean way of tracking.

But again for me, it's all about working with the law firm and making sure the workflow works for them. If you work with a larger firm that once a month processes the payments, sometimes it's easier just to use undeposited funds. Remember, with bank feed matching, you should only be matching those payments and deposits. You should not be creating payments to invoices via the bank feed and connecting a bank feed match to an invoice.


Trust Accounting:   Next week....

Next week we will dive into hard cost and soft costs. It's a part of QuickBooks and LeanLaw that can sometimes trip people up when coming from other software.

If you are an attorney stuck in some antiquated software that's just not working, reach out. I can invite you to use my demo file and take a test drive of my QuickBooks plus Lean Law workflow. You will be amazed at the implementation of the two products and how easy it is. No more crashing computers. No more hard restarts. Just perfect automation!   

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Lynda Artesani

Lynda Artesani is the president of Artesani Bookkeeping​ where she uses her expertise and organizational skills to help her clients grow, thrive, and become more profitable. Her firm specializes in working exclusively with the legal industry. She is passionate about helping her attorney-clients migrate from antiquated systems and become future-ready.​ ​ She is a Top 100 ProAdvisor, alumni member of the Intuit Advisory Committee and a member of the Intuit Trainer Writer Network. As the co-creator of QB Community Live, Lynda dedicates her time to mentoring and helping other accountants and small business owners succeed.​ Lynda lives in Southwest Florida. She is a registered yoga teacher and teaches at a local studio called Fusion Yoga and Spa. In her free time, you will find practicing yoga or walking on the beach.​