Lucky Number 3 - Three Way Bank Reconciliation for Attorneys

Lucky Number 3?

In the world of trust accounting, Law Firms and Attorneys are expected to have their client & trust ledgers reconciled frequently as well as their trust accounts reconciled promptly too. Those who don’t follow the rules are gambling with their peace of mind. You may be hoping you won’t suffer the consequences of a messy set of books. Sadly, that won’t be the case. And YES, you need three of a kind to satisfy the powers that be. Three properly reconciled accounts that is.

Duces are NOT wild, and snake eyes are just as evil in three-way trust accounting. 

“In order to comply with state bar regulations, the trust bank statement must be reconciled with the client ledgers (and thereby the trust ledger) on a quarterly, or even monthly, basis.” ~Trustbooks

Did you know that the client and trust ledger balances should also match? Well, whether you knew it or not, you’ve likely been dealt a hand that keeps you busy enough without having to put on the accountant hat too. 

I really liked that Trustbooks tells you “How to Perform a Three-Way Trust Reconciliation”. What happens, though, when you encounter errors or can’t get one or even all three of those accounts to reconcile properly? Do you suddenly fold your hand and become your own accountant for a while; are you bluffing with your skillset? In honor of the late great Kenny Rogers…

“You gotta know when to hold ‘em, know when to fold ‘em, know when to walk away, and know when to run...” 

I just mean that your time is so valuable as an Attorney. The Law Firm accounting tasks are not a side hustle that helps you earn more, make partner, or even allow you to focus on serving your clients to the best of your ability. Those cards are best delivered (outsourced) to qualified bookkeeping and accounting professional who knows best how to resolve accounts and ledgers presenting some difficulty. 

If you really want to know more about how to do the reconciliation yourself, use that link that I provided above as a place to start, it’s good information. Proceed with caution, though; I’ve had to unravel years' worth of DIY because someone played the wrong hand by doing it themselves - incorrectly. It’s a costly mistake that always leaves me scratching my head. 

It costs far more money to pay someone to correct the errors than it ever would to just have them keep up the records from the start. 

What’s so lucky about 3? ...it can’t be the fact that there are three accounts to manage, right?! 

Well... 

Attorneys + Law Firm Accounting + Professional Accountant is a pretty good combo! 

In fact, I’m ALL IN on that!

Contact us now if you’re ready to play a better hand. 

If you’re an accountant or bookkeeper and need more guidance, please join our Facebook group, The Accountants Law Lab.