Does LeanLaw Track Trust Balances Per Client or Per Matter?

Trust ledgers can be built at the client level, one account rolling up every matter, or at the matter level, each matter its own sub-ledger. Bar rules generally require a firm to reproduce both views; which one is your record of truth is a chart-of-accounts decision, not a software setting.

Two ways to structure a trust ledger

A trust ledger can roll every matter for a client into one balance, so a firm sees a single number for what that client has on deposit, regardless of how many matters that client has open. Or it can hold a separate balance for every matter, so a client with three matters shows three distinct trust balances, some funded and some at zero. Neither structure is more correct in the abstract; they answer different questions, and most firms need to be able to answer both eventually, even if only one is the primary record. Either structure should also be able to produce a report on one client’s trust activity — money in, money out, and current balance — regardless of which one is the firm’s primary view.

What bar trust accounting rules generally require

Trust accounting rules are set by your jurisdiction’s bar, and they generally require a firm to be able to produce a client’s trust activity and current balance on demand, along with the transaction-level detail behind it. Many jurisdictions expect that detail to hold up at the matter level too, particularly when a client has more than one active matter with different funds behind each. None of that is satisfied by choosing a piece of software. The rule belongs to your bar and your firm’s own recordkeeping obligations, and no product, LeanLaw included, certifies compliance with it. What software can do is make the records easy to produce in whichever structure your jurisdiction and your own bookkeeping actually require.

Bringing that structure into QuickBooks Online

However a firm decides to track trust activity, that structure has to live somewhere in the chart of accounts, and a client trust liability account is the mechanism QuickBooks Online uses to hold it: money a firm is holding on a client’s behalf is a liability, not income, until it’s earned. LeanLaw supports tracking trust activity at the client level and at the matter level, and it feeds that structure into QuickBooks Online rather than maintaining a separate, disconnected version of it. Which one a given firm should treat as its primary record is a decision about the firm’s own client and matter structure, made before go-live rather than after.

What this depends on

• Your jurisdiction’s specific trust accounting and recordkeeping rules, since requirements vary by state and by bar.
• How many matters your typical client has open at once, and whether they usually share funds or keep them separate.
• How your chart of accounts is currently built, and whether it already distinguishes clients from matters.
• Who prepares your three-way trust reconciliation and what level of detail they need to produce it.

The question to bring to whoever builds your chart of accounts

Before assuming either structure is the obvious choice, ask what your bar actually expects you to produce on demand, and whether your busiest clients tend to run one matter at a time or several at once. That answer, not a default setting, is what should decide how your trust ledger is built.

Related questions

Does QuickBooks show a separate trust liability account for each client, with an option to do it by matter instead? The chart of accounts can be built either way. A client-level liability account rolls every matter into one balance; a matter-level structure gives each matter its own line, and LeanLaw feeds either structure into QuickBooks Online.

Can I see one combined trust balance across a client’s multiple matters instead of tracking each matter separately? Yes, that’s the client-level structure. It shows one balance for everything a client has on deposit, though many firms still need matter-level detail available underneath it for reconciliation.

Some of my clients have several matters and only some have trust funds — is the balance tracked per matter or per client? Either is possible, and firms in that exact situation, some matters funded and some not, often need matter-level tracking so an empty matter doesn’t get lost inside a client’s combined balance.