Law Firm Bookkeeping

Trust accounting requires precision. Whether your firm manages a few retainers or hundreds of active cases, IOLTA compliance demands clear records and consistent verification. At Chief Bookkeeping Officer, we provide monthly IOLTA 3-way reconciliations following the California State Bar’s record-keeping format, which closely mirrors the requirements used by most other state bars.

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What the 3-Way Reconciliation Verifies

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An IOLTA 3-way reconciliation confirms that three data points agree:

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1. The trust bank balance from your IOLTA bank statement

2. The trust liability balance within your books, which we maintain and reconcile each month

3. The total of all client ledgers showing funds held for each client or matter

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In many firms, those individual client ledgers originate from practice management software such as Clio, MyCase, Casepeer, or FileVine. Our team confirms each ledger balance against both the firm’s books and the IOLTA bank statement to ensure all three sources align. This prevents overages, shortages, or commingling, all of which are key compliance risks under State Bar rules.

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How We Handle the Process

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Each month, we collect and reconcile three components:

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• The IOLTA bank statement

• The trust liability report from your books (which we build and maintain)

• Client and matter-level data from your practice management software

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Using the California State Bar’s Excel reconciliation template, we prepare client-by-client ledgers and confirm that totals match the trust and liability balances. Any discrepancies, such as uncleared checks, unrecorded deposits, or balance mismatches, are identified, corrected, and documented.

Integrated with Your Operational Bookkeeping

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Our IOLTA 3-way reconciliation service runs alongside your firm’s operational bookkeeping. It can be included as part of your ongoing monthly engagement or added as a separate service for firms that already manage their operational books internally. This flexibility allows your firm to maintain full compliance while keeping day-to-day financial operations simple and structured.

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A Stronger Foundation for Compliance

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The reconciliation process isn’t just about meeting bar requirements, it’s about protecting your clients and your firm. Clean trust records reduce the risk of compliance issues, simplify audits, and build confidence in your financial systems.

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For firms that also want to streamline the operational side of their books, our QuickBooks Online Bookkeeping for Law Firms service extends that same structure across operating accounts, retainers, and case costs, ensuring every dollar is accounted for from trust to income.

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Partner with one of our CBOs and let our team handle your firm’s bookkeeping and IOLTA 3-way reconciliation each month so you can stay focused on your clients. Schedule a consultation below or call us at 213-286-7502.