3-way IOLTA reconciliation every month, trust-ledger-per-matter, and operating books separated cleanly — for solo and 2-attorney firms whose state bar audits are not optional.
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Solo and small law firms have a regulatory bookkeeping requirement that no other small business faces: the IOLTA (Interest on Lawyers Trust Account) trust account. Client funds — retainers, settlement proceeds, filing-fee advances — must be held in trust, never commingled with operating funds, and reconciled three ways monthly: bank statement to trust ledger to sum of individual client ledgers. Violation of these rules is a state-bar discipline matter, not a tax matter. Most generalist bookkeepers either avoid IOLTA entirely or treat it as a single bank account in QuickBooks, losing the per-client subsidiary ledger that the rules require. Pilot is excellent for firms with 5+ attorneys but their pricing and workflow are not built for solos. CosmoLex and Clio Manage handle the trust side but most solos use them poorly — running matter financials in Clio while keeping operating books in QBO with no reconciliation between them. We run both: 3-way IOLTA reconciliation monthly with signed-off documentation, operating books in QBO or Xero, matter profitability pulled from Clio or PracticePanther, and a quarterly compliance pack ready in case the state bar requests records.
These are the niche-specific issues a generic $200/mo bookkeeper either misses or charges extra for.
IOLTA 3-way reconciliation (bank → trust ledger → individual client ledgers) is a state-bar requirement — missing or stale reconciliations are a discipline complaint waiting to happen
Commingling — using a trust account credit card or paying an operating expense from trust by accident — is the leading state-bar discipline trigger
Earned vs unearned fee accounting — moving money from trust to operating only when fees are actually earned — is constantly mishandled
Cost-advance handling (filing fees, expert witness fees paid from trust on behalf of clients) requires separate ledger tracking for cost-recovery accounting
Pilot targets multi-attorney firms with their dedicated law practice tier; Chief Bookkeeping Officer starts at $249/mo but is cleanup-focused; most state-bar-compliant IOLTA services are local CPA firms charging $400-$800/mo with no transparent pricing. The solo and 2-attorney segment is the most exposed.
| Provider | Monthly | Focus | Notes |
|---|---|---|---|
| Multi-attorney, mid-size firms | |||
| IOLTA-aware bookkeeping | |||
| IOLTA + tax + advisory | |||
| 3-way IOLTA recon + operating books + matter profitability, CGMA-supervised |
3 questions. We reply within 1 business day with a specific scope of work and flat monthly rate for your situation.
Three numbers must match every month: (1) the IOLTA bank statement ending balance, (2) the running trust-ledger total in your practice management system (Clio/PracticePanther/CosmoLex), and (3) the sum of every individual client trust balance for matters with funds on hand. We pull all three, identify any variance, investigate (usually a timing item or a misposted earned fee transfer), document the reconciliation with a signed worksheet, and file it for state-bar record retention. The signed worksheet is what saves you in an audit.
Yes — and it is the correct setup. Clio (or PracticePanther) is the source of truth for trust because it natively tracks per-matter ledgers and ties payments to matters. QBO is the source of truth for operating revenue, expenses, and overall firm finances. The mistake most solos make is keeping these two systems disconnected. We reconcile them monthly: every "fee earned" entry in Clio must correspond to a revenue entry in QBO, and every trust-to-operating transfer in Clio must match a deposit in your QBO operating account. We document the reconciliation and surface any unexplained variances.
It depends on your state. Most states require advance fees (retainers) to go into trust until earned, regardless of fee structure. A handful of states (and certain ethics opinions) permit non-refundable flat fees paid for "specified legal services" to be deposited directly into operating — but the engagement letter must be carefully drafted and the rule varies by state and even by county. We default to the conservative position (trust deposit + earned-fee transfer) unless your engagement letter and state rule clearly permit otherwise. We do not write engagement letters; that is your work.
Yes — that is exactly what monthly 3-way reconciliation is for. Within 48 hours we produce: 12 months of signed 3-way reconciliation worksheets, IOLTA bank statements, complete trust ledger, individual client subsidiary ledgers, and the engagement-letter-to-trust-deposit audit trail. If your books were not previously kept this way, we cannot retroactively manufacture the documentation — we can do a forensic cleanup but it is a separate engagement and the state bar will know the difference. The whole point of monthly cadence is that you never need to scramble.