Law firm bookkeeping cleanup: catching up when the books are behind
When a firm's books fall months behind, the catch-up work is different from a normal small business. Trust activity has to be rebuilt client by client, not only matched to the bank. This guide explains what a cleanup usually covers and the order it tends to follow.
Start with the trust account, not the operating books
Most cleanups begin with client funds because errors there carry the most risk. That means pulling every trust bank statement for the gap period, rebuilding each client ledger, and confirming the sum of client ledgers matches the trust ledger and the bank. Operating accounts come next.
Rebuild the operating side month by month
Once trust is reconciled, operating accounts are categorized and reconciled one month at a time, oldest first. Working in order means each month's opening balance is reliable before the next one is touched, and it produces a usable monthly history instead of one lump correction.
Decide how the books stay current afterwards
A cleanup only holds if someone owns the monthly routine: reconciliations, client-ledger reviews and a close date. Firms usually settle this before the cleanup ends, so the same backlog does not rebuild in six months.
What to check
- How many months of trust and operating activity are behind
- Whether client ledgers exist for every matter holding funds
- Who will own monthly reconciliation once the cleanup is done
- Whether the accounting system separates trust and operating activity
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Frequently asked questions
Why reconcile trust before operating accounts?
Trust balances belong to clients, and bar rules typically require they be accounted for per client. Confirming them first keeps any correction to the operating books from masking a trust problem.
Is this law firm bookkeeping guide advice?
No. Sam's List writes these guides for education. They describe common questions and processes, not advice for your specific situation.
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