How a Law Firm Caught a Trust Account Discrepancy Before It Became a Bar Complaint
Sam's List Editorial | 2026-06-06
How a Law Firm Caught a Trust Account Discrepancy Before It Became a Bar Complaint The managing partner didn't steal anything. He didn't intend any harm. He was doing the reconciliations himself, every month, and he thought the account was clean. Featured firm Legal Ease Bookkeeping Brandy Derrick runs Legal Ease Bookkeeping — a Sam's List bookkeeper focused on law firms and property managers. Trust accounting, IOLTA compliance, three-way reconciliations, and owner statements that hold up under a bar or state audit. View profile on Sam's List → “They have made my life a lot easier. For attorneys, managing multiple accounts and especially an IOLTA trust account can be a lot of work. Working with Brandy and her team, it is easy to keep everything straight — every dollar that comes through my accounts is organized and accounted for every week.” — Andrew Deegan · ★★★★★ · Read on Sam's List It wasn't. There was a $12,500 discrepancy in the firm's IOLTA trust account — client funds disbursed before a settlement check cleared, inadvertently covered by another client's trust balance. On a bank statement review, nothing looked wrong. The overall account balance was positive. The problem was invisible until someone ran a proper three-way reconciliation with per-client ledgers. Legal Ease Bookkeeping ran that reconciliation. They found the discrepancy. They found it before the state bar's annual review period. That timing made all the difference. The Client and the Situation The firm was a four-attorney litigation practice. The managing partner had been handling trust account reconciliations personally since the firm's founding — a reasonable approach for a small firm, and a common one. The QuickBooks setup had been configured years earlier by an accountant who wasn't a law firm specialist. It tracked trust account activity in a single account with client matter information noted only in the memo field of each transaction. There were no per-client sub-ledgers. The account tracked total trust balance — not what belonged to each individual client. This setup is more common than it should be. QuickBooks doesn't automatically create per-client trust ledgers. Setting them up requires someone who knows to do it and knows how. The firm's original setup didn't include them. The managing partner reconciled the total trust account balance against the bank statement each month. The numbers matched. He filed the reconciliation and moved on. Nothing in that process would have caught a per-client ledger imbalance,...
