LAW LEDGERS Accountants for Lawyers
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IOLA and escrow, audit-ready every month.

Trust account management for New York attorneys, structured around Rule 1.15 and the Attorney Grievance Committee's expectations. Monthly three-way reconciliations, individual client ledgers, and the documentation to prove it — every month, not just before an audit.

Overview

Trust accounting done the way the Grievance Committee expects.

Every New York attorney who holds client funds has non-delegable duties under Rules of Professional Conduct 1.15. Those duties include segregating client funds in an IOLA or escrow account, maintaining individual ledgers for every client matter, performing monthly reconciliations, keeping required books and records for seven years, and producing it all on demand if the Attorney Grievance Committee comes knocking.

We build the controls around those requirements. Every IOLA and escrow account under our management is reconciled three ways each month; every deposit and disbursement is recorded to an individual client ledger; every variance is documented and resolved. The monthly close on your trust account is complete audit documentation — not something you scramble to assemble after a complaint lands.

What we do

Four controls that keep your trust accounts compliant.

01

Monthly three-way reconciliation

Every month, we reconcile three numbers to the penny: the bank statement balance, the trust ledger balance in your books, and the sum of every individual client ledger balance. Variances are investigated, documented, and resolved before the month closes. If a client's ledger is carrying a negative balance, we flag it as a Rule 1.15 red flag immediately — not three months later when the quarterly review surfaces it.

Every reconciliation produces a signed, dated reconciliation report that goes into your audit file. Seven years of them, retained for the mandatory retention period.

02

Individual client ledgers

Every client matter that has funds on deposit gets its own ledger showing every deposit, disbursement, transfer, fee charge, and running balance. No commingling, no "general" buckets, no funds held against the wrong matter. The ledger answers every audit question: who deposited what, when, for what purpose, and where the balance stands right now.

When a matter closes and funds disburse, the ledger closes with it — with the final check number, payee, date, and the zeroed-out balance.

03

Fund segregation & fee draws

Earned fees come out of trust only when they're earned, only after proper notice to the client, and only into the operating account via a documented transfer. Unearned fees stay in trust. Contested amounts stay in trust until resolution. Third-party liens and obligations against client funds get tracked to the right client ledger, not the general pool.

For firms that were doing fee draws casually, we rebuild the process: pre-bill review, client notice, draw authorization, documented transfer. The same workflow every time.

04

Escheatment & unclaimed property

Client funds that can't be returned because the client is unreachable don't sit in the trust account indefinitely. Under New York law, unclaimed property in attorney trust accounts must be escheated to the state after the statutory dormancy period with proper due-diligence notice to the client's last known address. We handle the diligence process, the filing, and the documentation — so the balance leaves your books legally, not as an audit finding.

Frequently asked

Trust accounting questions, answered.

What is IOLA, and why does my law firm need one?

IOLA stands for Interest on Lawyer Account. Under New York law, when an attorney holds client funds that are nominal in amount or expected to be held for a short duration, those funds must be deposited into an IOLA account at an approved bank. Interest earned on IOLA accounts is automatically remitted to the IOLA Fund of the State of New York, which funds civil legal services for the poor. Any New York attorney who receives client funds in the course of practice is generally required to maintain an IOLA account.

What is a three-way reconciliation, and why is it mandatory?

A three-way reconciliation verifies that three numbers match exactly: the bank statement balance, the trust ledger balance in your books, and the sum of all individual client ledger balances. If any differ, client funds are at risk and the firm is out of compliance with Rule 1.15. Performing this reconciliation monthly — and documenting it — is a standard item in a Grievance Committee audit.

What does the Attorney Grievance Committee look at in an audit?

Monthly three-way reconciliations with documented variances; individual client ledgers for every matter with deposits and disbursements; proper fund segregation; escheatment compliance for unclaimed funds; supporting documentation for every transaction (deposit slips, cancelled checks, wire confirmations); and books and records retained for at least seven years.

What happens if an audit finds commingling or a reconciliation failure?

Commingling client and operating funds — or a reconciliation that doesn't balance — is a Rule 1.15 violation. Consequences range from private admonitions and required CLE, through public censure, suspension, or disbarment depending on intent and severity. Firms we work with don't get there because the monthly reconciliation catches variances as they arise, not after a client complaint.

Can you help if my trust records are a mess?

Yes. Trust account reconstruction is a significant portion of what we do for firms joining us. We rebuild individual client ledgers from bank statements, deposit slips, disbursement records, and matter files, then perform the historical three-way reconciliations and document every variance. Reconstruction is quoted separately from ongoing service.

Do you handle escrow accounts outside IOLA?

Yes. For client funds substantial or long-term enough to earn material interest, separate interest-bearing escrow accounts are set up for the specific client. We manage both IOLA and non-IOLA escrow accounts with the same controls: individual ledgers, monthly reconciliations, and audit-ready documentation.

Does my practice management software already handle this?

Practice management software tracks the intent — what should be in trust, who the funds belong to, and what's been disbursed. It does not perform the three-way reconciliation against the actual bank statement, and it does not catch bookkeeping errors that cause the bank and the book to diverge. The reconciliation is a separate, required step. We perform it monthly and reconcile the PM software against the books at the same time.

Related services

Trust accounting pairs naturally with:

01

Full-service bookkeeping

Monthly operating-account bookkeeping coordinated with the trust-account reconciliation so operating and trust stay cleanly separate.

03

Payroll services

Attorney compensation, draws, and 1099 contractor payments — kept strictly separate from client funds.

Sleep through the next audit notice.

Schedule a complimentary consultation to review your trust account setup. We'll walk through your current reconciliation process, identify Rule 1.15 risks, and propose a monthly cadence that keeps you audit-ready.

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