Texas IOLTA Bookkeeper: 5 Questions to Ask First

Texas IOLTA Bookkeeper: 5 Questions to Ask First

A Texas IOLTA bookkeeper is the person who keeps your clients' money in the trust account honest on paper: who it belongs to, what has been earned, what has not. The IOLTA account holds client funds that are small or short-term enough that interest on them would not be worth sending to each client. The law treats that money as theirs, not yours, and the records have to show it at any moment.

That makes the hire different from hiring a bookkeeper for the operating side of a firm. The five questions below are the ones to settle before you hand over the trust records. The numbering is a sequence, not a ranking.

Our partner roster lists two Texas bookkeepers. Legal Ease, based in Fort Worth, is a law firm bookkeeping specialist and is written up below. The SaaS Bookkeeper, based in Austin, is named here so the Texas roster is complete, and is not written up. Legal Ease is a vetted Sam's List member and a paying member of our featured program; payment does not buy the language we use or its reviews. How we chose is at the end.

1. Ask How a Texas IOLTA Bookkeeper Reconciles Each Month

Start with the monthly reconciliation, because everything else hangs on it. A trust account is reconciled three ways: the bank statement, the firm's book balance for the account, and the total of the individual client ledgers. All three should agree. This is the three-way reconciliation, and a bookkeeper who describes only a bank-to-books match is describing two-thirds of the job.

Ask what the output looks like. You want a dated reconciliation, a list of every client with a balance and a note on anything unmatched. Ask how soon after the statement closes it is finished, and who signs it.

Ask also what happens when the three numbers disagree. A good answer is that nothing is posted to make them agree until the cause is found.

The limitation: a clean reconciliation proves the records agree with each other. It does not prove every deposit was allocated to the right client, which is why the next questions matter.

2. Ask How Earned Fees Leave the Trust Account

The most common trust accounting problem is not theft. It is timing. A flat fee is earned in stages, a retainer is drawn down as work is billed, and the money has to move to the operating account when it is earned, not weeks later and not before.

Ask how the bookkeeper knows a fee has been earned. The honest answer is that the lawyer decides, and the bookkeeper records the transfer once the lawyer approves a bill. Be wary of a process where the bookkeeper makes that call alone.

Also ask how often transfers happen and how the bookkeeper catches the two opposite errors: earned fees left in trust too long, which is commingling, and fees taken out before they were earned.

The limitation: whether a fee is earned depends on your fee agreement and the work done. The bookkeeper can flag a gap in the records, but the lawyer carries the decision.

3. Ask What Trust Accounting for Law Firms Looks Like on Your Desk

Trust accounting for law firms produces paper, and the paper is for you. Ask what lands on the managing attorney's desk each month and whether you could hand it to a reviewer without cleaning it up.

A reasonable monthly set is the three-way reconciliation, a client ledger report, a list of disbursements from trust with the matter each was for, and a short note on open items. Ask whether the reports are stored where you can find them years later. Trust records are generally kept for a set number of years, and the period comes from the Texas rules, so check the current requirement with State Bar of Texas materials.

Ask who in the firm reads the report. A reconciliation nobody reads protects nobody.

The limitation: reports show what was recorded. If a deposit went to the wrong client at the bank, the report will faithfully repeat the mistake until someone notices.

4. Ask How a Texas IOLTA Bookkeeper Handles Odd Deposits and Old Balances

Every trust account eventually collects something strange: a deposit with no matter attached, a client who overpaid, a balance that has not moved in years. Ask how the bookkeeper handles each.

For an unidentified deposit, the answer should be to hold it as unidentified, investigate and not assign it to a convenient client. For an overpayment, it should be to flag it for the lawyer to refund or apply. For a balance that has sat for years, it should be to escalate it, because what to do with unclaimed client funds is governed by Texas law and the lawyer's duty, not by the bookkeeper's tidiness.

A bookkeeper who says "I move small leftovers to operating to clean it up" has just described a problem. Leftover money in trust still belongs to someone.

The limitation: tracing an old balance can mean calling clients and digging through closed files, and it may not end with an answer.

5. Ask What Happens When Your Process Depends on One Person

Small firms often have one person who understands the trust account. Ask what happens when that person is out, leaves or is the bookkeeper themselves.

Look for a written description of the monthly routine, a second pair of eyes on the reconciliation and a way for the lawyer to see the account without asking permission. Ask who has bank access and who can approve a disbursement. A bookkeeper should not need unilateral authority to move trust money, and a sound setup does not give it to them.

Ask what the first month of an engagement looks like. A new bookkeeper should begin by reconciling the last few months before taking over, so that anything inherited is found early and is not blamed on the new person.

The limitation: more checks mean more time on every trust transaction. A small firm has to decide how much review fits its volume, and the lawyer's duty does not shrink with the size of the firm.

Where Legal Ease Fits

Law firm bookkeeping is the specialty Legal Ease describes. It is based in Fort Worth, Texas, founded in 2016, with 12 employees, and serves clients nationwide. Its live profile describes a law firm bookkeeping specialty and lists SMB Owners, Solo and small law firms and Solopreneurs as specialties.

Legal Ease has 9 verified client reviews on Sam's List. Each review is submitted by an individual who identifies as a client of the firm and rates it on communication, subject-matter knowledge, and overall satisfaction. Reviews reflect those individual experiences and do not represent an endorsement by Sam's List. Legal Ease is a paying member of our featured program, and payment does not buy its reviews. Ratings and rankings are not indicative of future performance or results.

The limitation, plainly: the profile lists a $500,000 revenue minimum, so a smaller practice may fall outside what it takes on. The profile does not say which trust account reports it produces, so ask for a sample reconciliation and ask who at the firm reviews it.

Frequently Asked Questions

What is an IOLTA account in Texas?

It is a pooled trust account where a lawyer holds client funds that are nominal in amount or held for a short time, with the interest going to a state program instead of to the client or the firm. The money belongs to the clients, so it must be kept apart from firm funds.

What is a three-way reconciliation?

It is a monthly match of three numbers for the trust account: the bank statement balance, the firm's book balance and the sum of all client ledger balances. All three should agree. When they do not, the difference is investigated before any entry is made to force a match.

Can a bookkeeper manage my trust account alone?

A bookkeeper can keep the records and prepare the reconciliation, but the lawyer remains responsible for the account. A sound setup gives the lawyer review of each reconciliation and does not give the bookkeeper unilateral power to move trust funds.

How often should a Texas law firm reconcile its IOLTA account?

Monthly is the common standard, and it should happen soon after the statement closes. A prompt reconciliation catches a misposted deposit while the paperwork is fresh. Confirm any specific timing rule with State Bar of Texas materials.

Before you hire, ask any candidate for a sample reconciliation with the client names removed. You can browse bookkeepers on Sam's List, including Legal Ease, and ask each one the five questions in this post.

How We Picked This Firm

You should be able to check our work, so here is how this post was built.

The pool. The pool is the vetted Sam's List partner roster, a snapshot of partners and their listed locations. As of its last update, two partners on it list a Texas base: Legal Ease in Fort Worth and The SaaS Bookkeeper in Austin. This is not a survey of every Texas firm that does trust accounting, and many Sam's List members and other firms not written up here could fit.

How it is organized. The five items are questions to work through in order, not a ranking. Legal Ease is the only firm written up, because it is the only Texas partner in our featured program, so there is no order of firms. The SaaS Bookkeeper is named and linked, with no write-up and no recommendation.

What review counts mean here. We cite Legal Ease's verified review count and its date from its profile. A count shows how many clients wrote something down. It does not measure technical quality.

What payment does and does not buy. Listing on Sam's List is free, and so is being named in this article. The firm written up here is a paying member of our featured program, which is why it gets a write-up. What payment does not buy is the language we use about a firm, its review count, or a promise that it fits you.

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About the author: Kimberly Green is the cofounder of Sam's List, where business owners and high earners find vetted CPAs, financial advisors, and fractional CFOs. She's met one-on-one with 400+ financial professionals and writes from the real data behind thousands of client-advisor matches. Ask her anything about finding an accountant - she's heard it all, including the questions people are afraid to ask.